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Monday 24th October 2016

Generic drugs on the rise

17th October 2007

Over the next five years, analysts forecast a golden era for generic drugs. As patents begin to run out on brand-name medications with more than $60bn in combined annual sales, this could clear the way for generic drugs that could cost from 30% to 80% cheaper than their branded counterparts.

pharmacy 1Q

According to a report from Frost & Sullivan the generic drug sector made $24.7bn in US revenue last year and this figure is set to rise to $49.5bn as 63 of the most popular drugs are made available in generic versions over the next five years.

Generic drug producers are finding that gaining the US FDA approval for new generic versions is now far easier. Companies can launch dozens of drugs a year because the clinical trials needed are short and cheap - they need only prove that their drugs contain the same ingredients as the branded drugs.

This is not good news for the big pharmaceuticals.

Sales of Novartis’ sleeping pill Ambien plummeted from $420m to $91m in a single quarter after the launch of a generic substitute. And sales of the world’s best selling drug, Lipitor (Astrazeneca), have fallen by 25% over the last year.

However, the big pharma are not likely to stand in the way. Some prefer to launch their own generic products but most would rather extend the life of their current patents with new versions of a drug, there is little incentive for firms to keep investing in products when their patents expire.

The disease profile in China and India is moving from malaria and water-borne diseases to chronic illnesses. Heart disease and diabetes in developing countries are set to rise - and so will the demand for generic drugs.

The Novartis challenge against India's generic Gleevec leukaemia treatment was recently thrown out of court. The generic producers have the assurance of US and European governments backing them as they try to cut down on public healthcare costs as the population in the West grows.

Analysts think the industry will see 10% to 13% annual profit growth from now to 2010.


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