Though Daniel Ricciardo raced to three victories during the 2014 campaign, the Milton Keynes-based team were never able to fully challenge Mercedes' dominance as the Silver Arrows swept to 18 poles, 16 wins and both the drivers' and constructors' titles.
"The performance of the Mercedes power unit has been hugely impressive - they've done an amazing job to come up with such a refined and complete package," Horner, Red Bull's team principal, said in an interview on the squad's official site.
"Those guys [Mercedes] aren't going to stand still either. It's down to the teams to try and catch Mercedes now and we have a lot of work going on with Renault to try and reduce that gap.
"Looking at the scale of the challenge we faced pre-season, it was quite astronomical. It was without any shadow of a doubt our worst ever pre-season, we were unreliable and uncompetitive. But the turn around, even in time for the Australian Grand Prix and the sheer effort and push from the team for the rest of the season was outstanding.
"[Now] next year seems to have started already. The focus has never been more intense in trying to deliver a competitive car for next year."
Horner also paid tribute to Ricciardo and his 2015 Red Bull team mate Daniil Kvyat, both of who he believes were among the outstanding performers of 2014.
"I think Daniel has been the sensation of the year to be honest with you," Horner reflected. "The way he's raced, he's wheel to wheel racing, his speed, his composure in the car, he's looked like he's belonged at that level. I think he's out done all of our expectations and even his own.
"Other surprises have been Dany Kvyat - coming in as a rookie with no pre-season testing with the problems the Renault powered teams had, he's been fantastic this year.
"The two drivers get on very well and know each other. They both have a bit of banter outside the car, in the car they are both hungry, no quarter given racing drivers. That's going to be an exciting new dynamic and they are going to be pushing very hard."
Though Red Bull's run of four straight constructors' crowns was ended by Mercedes in 2014, they still finished second in the standings. The last time they finished outside the top two was in 2008, when they could only manage seventh.