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Future Generics

Future generics - The future is great news for consumers!

The global generic drug market is estimated to be worth between $19 and $22 billion, with compound growth of 11%-12% annually. According to the U.S. Congressional Budget Office, generic drugs save consumers an estimated $8 to $10 billion per year at retail pharmacies. Many more billions are also saved when hospitals use generics.

Although the US represents one of the world's largest economies, its per capita income and spending are now some of the highest in the world. On the back of rapidly growing consumer spending on branded products, total healthcare spending in the US reached an estimated US $2.5 trillion in 2009, which appears very high when compared to the population.

Increasing use of generics to save money

The good news for our customers is that the government is now focusing on reducing healthcare spending by using generics drugs and promoting other lower cost healthcare. This has created huge opportunities in the US generic drug industry and will lead to increased availability and potentially reduced generic prices.

Currently, the generic drug market growth is mainly driven by the emergence of new generic versions of branded drugs coming up for expiry. This trend will continue over the next 3-4 years since most of the worlds top twenty best selling brand drugs will expire during this period.

In fact this expected loss of revenue from the blockbuster drugs shortly losing their patent protection has contributed to the loss of over 200,000 pharmaceutical jobs over the past three years.

Patricia Van Arnum, Senior Editor of Pharmaceutical Technology wrote a fascinating article in Pharmaceutical Technology Europe that skillfully outlined the economic forces that are driving branded pharmaceutical companies to downsize and reorganize.

Anticipating the future growth in generics, big pharmaceutical companies are quickly making deals (and buying) generic drug manufacturers from the Asian countries, like India, to access their products and sell them in the US.

Some amazing generic drug industry growth figures:

  1. The global pharmaceutical market is expected to grow 4-6% in 2010 and reach a value of $825 billion. (Source : IMS)
  2. Market growth at an annual rate of 4-7% is expected to continue through 2013
  3. Size of global pharmaceutical market is projected to exceed $975 billion.
  4. Growth of the US market is only expected to be 3.5% in 2010
  5. Growth of the Chinese market is expected to increase by a staggering 20% per year and contribute 21% to the overall growth of the global pharmaceutical market by 2013.

Blockbuster drug patent expiry - the sooner the better for consumers

The US market is expected to loose nearly $137 billion in revenues in 2013 - mainly due to the patent expiry of many blockbuster products and fewer new drug approvals.

Some of the drugs expected to lose patent protection by 2013 include

  1. Lipitor (Atorvastatin) by Pfizer
  2. Plavix (Clopidogrel) by Sanofi-Aventis and Bristol-Myers Squibb
  3. Seretide/Advair (Salmeterol and Fluticasone) by GlaxoSmithKline.

Lipitor, Plavix and Seretide were the number first, second and fourth best-selling drugs in 2008 with global sales of $13.7 billion, $8.6 billion and $7.7 billion respectively.

Future generics - the rise of emerging generic markets

While the economic size of emerging generic markets is still small compared with those of the US, Western Europe and Japan, it shows that generic drugs will by the likely driver of future growth for the pharmaceutical industry. The lack of innovation and rising costs of branded, prescription drugs in developed nations is the main factor behind the rapid emergence of the generic drug industry.

This explains why companies such as Pfizer are entering the generic pharmaceutical business and why Western drug companies are reducing the number of scientists and sales people in the US and Europe, whislt increasing the sizes of their R&D and sales force staffs in Asia, Eastern Europe and Latin America.

For more info about future generics check out our recent posts:

Future Generic drugs and the rise of India and China

Drugs going off patent through 2020


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