The growth is also expected to reach this level due to improved diagnostic techniques, which has already seen the European Central Nervous System (CNS) Therapeutics Markets earned revenues of $22.90bn in 2005.
"The expansion of the CNS market is expected to be based on neurological disorders such as Alzheimer's disease and multiple sclerosis," said Frost & Sullivan Research analyst Sumanth Kambhammettu.
"Psychiatric disorders feature a high level of genericisation and intense competition, resulting in a shift in focus to neurological disorders."
German drug company Schering are one of those to have taken this direction, Campath (alemtuzumab), a monoclonal antibody, for the treatment of Multiple Sclerosis (MS), which is currently in phase II development.
The hope is that Campath could add a novel therapeutic approach to existing MS therapy options.
Likewise, Celera Diagnostics is working with Merck to identify novel targets for drug discovery and diagnostic markers related to Alzheimer's disease.
However the report warns that participants are unlikely to easily achieve market penetration due to factors such as parallel reimportation and reference pricing.
Also, owing to rising healthcare costs, most European nations have implemented stringent cost containment measures, which have in turn squeezed profit margins.
"The National Institute of Clinical Excellence (NICE) guidelines for multiple sclerosis and oral neuroleptics in the United Kingdom and the decentralisation of reimbursement policies in Italy are certain decisions that are likely to have significant ramifications on the CNS markets," said Kambhammettu.
"With most European governments making it harder for products to be reimbursed, market participants will have to devise strategies to price their products competitively, and yet make them affordable."
For mature markets such as depression and psychosis, effective product life cycle management will be critical.
The report said that research would need to focus on expanding product indications and sustaining the market share of blockbuster molecules.
At the same time, marketing collaborations and consolidation by means of alliances as well as mergers and acquisitions could contribute to offsetting the risks of drug development.
Frost and Sullivan's report: "European Central Nervous System (CNS) Therapeutics Markets (B936- 52), is available at the company's >website.