German Drug Cos Go Generic, But Profitability Is Lower

Current interest of Germany's major pharmaceutical groups such as Merck, BASF and Bayer in the generics market has arisen even though the segment appears increasingly questionable in terms of profitability for R&D majors, whose main interest is innovative and original drugs, local sources note.

Boosted by Health Minister Horst Seehofer's reforms, the generics sector rose slightly more sharply in 1993 after a steady rise through the 1980s from 11% to 31% of the public sector market. This is equivalent to producer sales of about 5 billion Deutschemarks ($3.23 billion), and Germany is currently ahead of both the UK and the Netherlands as the fastest-growing generics market in Europe.

Latest figures from the health funds indicate that the rising trend has remained firm in the first half of 1994, while opinions researched in the German drug industry show there is little doubt that health care cost-cutting pressure will continue and will boost generic drug sales.