Blockbusters Going off Patent - Opportunities for Generics

07-17-2007: With an ageing population and expensive drugs driving healthcare costs upwards, generic medicines are gaining significance in Europe. The governments are under tremendous pressure to reduce healthcare expenditure. In this scenario, generics are widely regarded as the best method to allow access to safe, effective and high quality drugs at affordable prices to a vast majority of patients.

New analysis from Frost & Sullivan, Blockbusters Going off Patent - Opportunities for Generics, finds that the European generics market earned revenues of $17.18 billion in 2006 and estimates this to reach $35.90 billion in 2013.

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"Patent expiries, pro-generic reforms in certain countries and need for cheap, effective medicines are the key factors driving growth in the European generics market," notes Frost & Sullivan Research Analyst Sumanth Kambhammettu. "Various studies have indicated the cost savings obtained from generics and several governments in Europe are actively promoting generics."

In addition, with a number of blockbusters expected to lose patent exclusivity in the next five to seven years, there are significant growth opportunities for generics in Europe. Certain countries in the region offer incentives to pharmacists and physicians for prescribing generics and this is likely to have a huge impact on the generics market.

On the other hand, generic manufacturers will have to combat hurdles such as severe pricing pressures, reference pricing, parallel trading and strategies adopted by ethical pharmaceutical companies such as evergreening and re-formulation.

"Several countries have resorted to methods such as generic substitution and reference pricing to lower pharmaceutical pricing, which are expected to result in restricted profit margins," explains Kambhammettu. "Moreover, the strategies of ethical pharmaceutical companies to extend the patent life-cycle of their products are also expected to pose a serious problem in the long-term."

Generics market participants will increasingly aim to leverage low cost contract manufacturing facilities in countries such as India and China to speed their time to market. Strategic agreements between participants operating in different countries are also expected to provide synergistic benefits. Finally, market participants will need to focus on optimising their product portfolio and devising long-term R&D strategies to ensure success in a competitive environment.