Competition Cutting Into US Generics Profits

Even though generic drugs now make up almost half the 2.4 billionprescriptions written in the USA annually, heavy competition has cut industry profits, with four of the top nine companies losing money last year and industry stock prices falling more than 20%. Buddy Mann, a lobbyist for the Generic Pharmaceutical Industry Association, noted that the industry has been struggling with the tough year.

Difficulties Abound A lot of difficulties are facing the sector. For example, it has been said that the US Food and Drug Administration cannot keep up with the backlog of Abbreviated New Drug Applications. One generic lobbyist noted that it now takes 28 months to get a generic drug approved, up from 15 months in the late 1980s.

User fees might help speed approvals, as they did with brand-name drugs, but the user fees proposed in the Clinton budget would replace the 38% cut in funding to the FDA's generic office (Marketletter March 31). "That is not at all what we had in mind," noted Bob Milanese, president of the National Association of Pharmaceutical Manufacturers.