Reportlinker Adds the Future of the Generics Industry: Opportunities, Threats and Key Trends

NEW YORK, Sept. 7 /PRNewswire/ -- announces that a new market research report is available in its catalogue:

The Future of the Generics Industry: Opportunities, threats and key trends

Driven by rising demand, patent expiries and pharmaceutical cost-containment policies, generic sales have risen consistently at rates in excess of the pharmaceutical industry average over the past decade. Coupled with changes in the geographic and therapeutic make-up of the sector, this has triggered a period of rapid restructuring within the generics industry. Teva and Sandoz have consolidated their positions at the head of the generic company sales rankings; national and regional businesses have emerged as major forces in emerging generic markets; while new players – including multinationals – have begun to pursue footholds in the generics sector.

Demand for generics will continue to increase rapidly during the next five years. Major patent expiries will present generic manufacturers with substantial new targets – including the world's best-selling pharmaceutical brand, Lipitor. Sales of branded copies will rise at double-digit rates in many developing countries, while unbranded, bioequivalent follow-on products will be prescribed, dispensed and consumed more widely in some of the world's biggest markets. Governments and third-party payers will adopt more robust pro-generic policies in a bid to limit pharmaceutical spending. These will include measures designed to encourage the use of biosimilars, which will help to rein in costs associated with the reimbursement of expensive biotech drugs.

While demand for generics will remain strong, pressure on prices in the sector will intensify as competition heats up, and as payers step up their efforts to limit reimbursement spending. Generic manufacturers will also have to overcome barriers to market entry posed by intellectual property laws, regulatory frameworks and defensive strategies employed by originator companies. Levels of brand affinity that persist among physicians, pharmacists and patients will also act as a constraint on rates at which generics are prescribed, dispensed and consumed.

With volume-based growth set to outweigh constraints on price, the generics market will continue to increase rapidly in value during the next five years. The operating environment in the sector will become increasingly difficult for many small and mid-sized players, however. Problems faced by these companies, the expansion of established market leaders and the entry of more new players will combine to drive further significant restructuring in the generics sector.

Key Features of this report

  • Analysis of the size, structure and recent growth of the global generics market, and of the industry it supports.
  • Case studies focusing on individual generic businesses and key generic markets.
  • Identification and detailed discussion of key generic industry drivers and constraints.
  • Appraisal of the impact individual drivers and constraints will have on the market to 2015.
  • Forecasts outlining the anticipated size and structure of the generics market in 2015, assessing future prospects for individual generic businesses and identifying potential major new entrants in the sector.

Key Benefits of this report

  • Quantify the size and structure of current opportunities in the generics market and the positions held by key players in the sector.
  • Identify the main factors acting as drivers and constraints on generic market growth, and gauge their likely impact on the structure of the industry.
  • Assess the timing and extent of new opportunities that patent expiries will present for generic manufacturers during the next five years.
  • Track the development of pro-generic healthcare policies implemented in key markets, and their likely impact on the industry.
  • Understand the strategies being employed by originator companies to block or delay the arrival of generic competition, and how future regulatory intervention might affect their ability to defend patent-expired brands.
  • Learn how Teva and Sandoz intend to build on their leadership positions in the generics industry; why second-tier generic businesses are so exposed as acquisition targets; and which pharmaceutical majors are most likely to emerge as major players in the generics sector.

Key findings of this report

Having risen at or close to double-digit rates for the best part of a decade, global sales of generics are now worth some US$140bn – equivalent to approximately 17% of total pharmaceutical market value. With patents on brands that generate combined annual revenues of US$200bn set to expire by 2015, further rapid growth of the generics market is assured.

While the generic industry remains fragmented overall, growing shares of the market have been concentrated in the hands of leading players. Between them, the world's five biggest generic businesses have spent approximately US$50bn on acquisitions since 2001, with Teva alone committing US$24bn to M&A deals in that period. Teva's existing business generates around US$3.5bn in net cash per annum, and will provide the funds required to support further M&A-fuelled expansion.

Regulators have been slow to establish explicit pathways for the approval of biosimilars, while approval routes for small-molecule generics are struggling to cope with demand. The backlog of generic submissions faced by regulators in the US has reached 2,000, and median ANDA review times are currently in excess of 26 months.

Originators have perfected the use of intellectual property protection laws and defensive strategies designed to delay the arrival of generic competition. By the time Lipitor faces its first generic competitor in the US, 44% of the brand's lifetime revenues in that market will have been achieved since the date on which Pfizer's basic product patent on atorvastatin was originally due to expire. Pfizer is one of several multinationals expected to pursue more substantial interests in the generics market in the near future. Sanofi-Aventis has been the most aggressive new 'big pharma' entrant to date, however, spending close to US$4bn on acquisitions in the sector since the beginning of 2009.

The global market for generics will be worth in excess of US$250bn by 2015. Teva and Sandoz will have consolidated their leadership positions by then, but several prominent second-tier generic players will have changed hands.

Key questions answered by this report

  • Why has the generics market enjoyed such strong growth in recent years, and what are the main factors that will determine its development through the next five years and beyond?
  • What makes markets like Japan and Brazil such attractive targets for generic manufacturers, and why have foreign players struggled to make an impact in these countries?
  • Which major original brands face patent expiry during the next five years, and when will they lose exclusivity in the all-important US market?
  • Why might some supposedly 'pro-generic' healthcare policies pose a potentially significant threat to the sector?
  • How are policy-makers attempting to break down opposition to generics among physicians, pharmacists and patients?
  • What steps have regulators taken to curb defensive strategies employed by originators, and how might big pharma's ability to delay generic competition be compromised in future?
  • How will growth strategies pursued by the two leading players in the global generics industry differ over the next five years?
  • Why is Teva's dominant position in the US generics market so assured?
  • Which second-tier generic players represent the most vulnerable acquisition targets, and why?
  • Which leading pharmaceutical majors are most likely to pursue assets in the generics market, and which segments will they target?

The Future of the Generics Industry: Opportunities,

threats and key trends

Executive Summary 8

The generics industry 8

Generic industry opportunities 9

Generic industry challenges 10

The future of the generics industry 11

Chapter 1 The generics industry 14

Summary 14

Introduction 15

The global market for generics 15

The generics industry 16

Emergence of the generic giants 18

The impact of acquisitions on Teva's recent expansion 20

Growth of regional and national players 22

Case study: Stada's generic growth engine grinds to a halt 24

Multinationals join the generic fray 27

Big pharma generic deals 28

Biosimilars – new players for a new market 33

Early biosimilar acquisitions and alliances 34

New players 35

Chapter 2 Generic industry opportunities 38

Summary 38

Introduction 39

Patent expiries 39

Impact of patent expiries 40

Recent generic targets 41

Amlodipine 41

Simvastatin 43

Future generic targets 44

Generic activity in 2010 45

Atorvastatin 47

Emerging generic markets 48

Developed markets 49

Case study: The Japanese generics market 50

Developing markets 55

Case study: the Brazilian generics market 57

Pro-generic healthcare policies 61

Pricing and reimbursement policies 63

Generic price caps 63

Reference pricing 65

Price approvals and reimbursement listings 68

Prescribing policy 68

Dispensing policy 71

Drug purchasing 72

Regulatory policies 73

Financial assistance for generic manufacturers 74

Biosimilars 75

Early development of the biosimilars market 76

Regulatory pathways 76

Early headway made by biosimilars 79

Biosimilar pricing and reimbursement issues 81

Biosimilar market prospects 82

Biosimilar targets 83

Biosimilar players 85

Chapter 3 Generic industry challenges 88

Summary 88

Introduction 89

Regulatory barriers 89

Patent exclusivity 90

Patent-term extensions 92

Challenging patents 93

Non-patent exclusivity 95

Orphan drug and pediatric exclusivity 96

Quality standards 97

Bioequivalence 98

Good Manufacturing Practice 99

Regulatory pathways 100

Issues surrounding generic approval and market entry 101

Regulatory pathways for biosimilars 104

Cost-containment policies 105

Public sector procurement 105

Tendering procedures 105

Sole supplier and preferred provider agreements 106

Pricing and reimbursement policy 111

Discount-based price cuts 112

Lower generic price ceilings and post-patent price cuts 113

More aggressive approaches to reference pricing 116

Originator strategies 118

Strategic use of intellectual property and regulatory frameworks 120

'Pay for delay' agreements 120

Citizen petitions 122

Patent layering or 'evergreening' 124

Development of original brands or franchises 126

Product hopping 126

Authorized generics 128

Pricing and promotional strategies 129

Pricing tactics 130

Promotional tactics 131

Negative promotional activity 132

Physician, pharmacist and patient attitudes 133

Physicians 134

Shaping physician behavior 135

Pharmacists 136

Shaping pharmacist behavior 138

Patients 139

Shaping patient behavior 140

Chapter 4 The future of the generics

industry 144

Summary 144

Introduction 145

Generic market prospects 146

The 'core' generics market 146

Emerging markets for branded copies 147

The biosimilars market 148

Generic industry prospects 149

Leading players 149

Teva 149

Sandoz 151

Other leading players 152

National players 155

New market entrants 157

The generics industry in 2015 159

Appendix 160

Primary research methodology 160

List of Figures

Figure 1.1: Top-ranked pharma and generic company sales, 2001 and 2009 17

Figure 1.2: Impact of acquisitions on Teva's global generic revenues 22

Figure 1.3: Development of Stada's German generic sales, 2002-2009 25

Figure 2.4: Impact of US patent expiry on Norvasc's revenues, 2006-2009 42

Figure 3.5: Impact of extended exclusivity on Lipitor's US revenues 119

List of Tables

Table 1.1: Top 6 players in the 'core' generics market, 2009 19

Table 1.2: Teva's major generic acquisitions, 2000-2010 21

Table 1.3: Stada's performance in key markets, 2009 26

Table 1.4: Sanofi-Aventis deals targeting the generics sector 31

Table 2.5: Post-patent decline in US sales of Zocor 44

Table 2.6: Major brands facing US patent expiry, 2010-2014 45

Table 2.7: Generic shares of major developed markets, 2009 50

Table 2.8: Leading Japanese generic company financials, 2009 53

Table 2.9: Generic shares of the Brazilian market, 2004-2009 59

Table 2.10: Generic price caps in major pharmaceutical markets 64

Table 2.11: Reference pricing in major pharmaceutical markets 67

Table 2.12: EU biosimilar approvals 77

Table 2.13: Revenues and patent expiry dates for leading biotech brands 84

Table 3.14: Patent-term extensions granted to major brands in the US 93

Table 3.15: The US generic approval backlog, 2005-2009 102

Table 3.16: Comparison of prices in New Zealand with three other markets 107

Table 3.17: Impact of preferred supplier policy on Dutch generic prices 109

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Generic Drug Industry: The Future of the Generics Industry: Opportunities, threats and key trends

Generic Drug Business News

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Nicolas Bombourg


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