Germany: Survival In The Generics Market

Growing competition and economic problems mean Germany's generics firmsare finding it increasingly difficult to improve their turnover and operating profits, and are having to reduce their profit margins, says a new study.

German doctors' overspending and over-prescribing of only very highly thought-of products reduced these company's sales last year, says the study, which is part of Datamonitor's PharmaVitae: Generics Intelligence series, available through the Marketletter's offices. Moreover, the sector's problems have been exacerbated by more and more central and eastern European generics makers looking to expand in the west. The low labor costs of companies such as Lek, Krka and Pliva cannot be matched by German generics firms.

The German generic companies have responded to these problems in various ways, says the study. Stada, for example, has been actively seeking to acquire companies with significant stakes in European markets as well as Germany. The benefits of this strategy will be reaped before the millennium but will not not ease its immediate problems. The spending required to rationalize and reorganize Stada's subsidies in order to make them cost-effective has forced a public share offering in third-quarter 1997.