Generics firms and branded drugmakers are playing a sort of prince-and-the-pauper game. Copycat drugmakers are increasingly turning to branded meds as a way to supplement sales. Meanwhile, Big Pharma is doing the opposite: Diversifying into generics as a hedge against their loss of exclusivity on key drugs.
The poster child on the generics-to-branded side, of course, is Teva Pharmaceutical Industries and its multiple sclerosis drug Copaxone--not to mention its impending acquisition of the branded drugmaker Cephalon ($CEPH). But there's also India's Lupin, which has been expanding its branded offerings, particularly in the U.S. And Dr Reddy's Laboratories, which is plotting a move into branded meds, recognizing that, after the surge of generics growth from blockbuster drugs falling off patent, it will have to find a way to continue expanding.
In Big Pharma's corner, Novartis ($NVS) has long relied on its generics unit Sandoz to deliver strong sales. But other companies such as Sanofi ($SNY), GlaxoSmithKline ($GSK), and Pfizer ($PFE) have been beefing up their generics operations as well.
As the Wall Street Journal Health Blog points out, however, it's a dangerous endeavor for both sides. Some generics makers could find themselves in the same fix as Big Pharma, selling easy-to-knock-off brands such as contraceptives, in a market where payers are pushing patients to use generics rather than marginally better branded drugs. And branded drugmakers in the generics business may not be able to compete on a cost basis with seasoned--and often ruthless--copycat experts.
- read the Health Blog piece