Pharma to be creative on generics threat

The market for prescription generic drugs has evolved into a formidable competitive threat to branded pharmaceuticals. Driven by the large number of blockbuster drugs that have come off patent, including Prozac (fluoxetine), Cipro (ciprofloxacin) and Rebetol (ribavirin), the market grew at a compound annual rate of 12.6%, reaching $36.18 billion in 2007, according to a new report by Kalorama Information, World Market for Prescription Generic Drugs, Sixth Edition.

Applications for generic drugs have increased from 307 in 2002 to 973 in 2006. More than $60.0 billion worth of brand name, blockbuster drugs will lose patent protection in the next decade, which should result in continued robust sales growth for generics. However, the generics market is changing, with increased consolidation, competition from eastern Europe, India and China, and brand name companies seeking to protect their franchises by moving into generics.

To combat these difficulties, a new breed of generic company is emerging to threaten brand manufacturers. Using increased revenues generated from generic versions of a growing number of top-selling branded drugs, generic companies are exploring new drug targets, including specialty generics, copy drugs with a distinction, follow-on biologics and proprietary molecules.