Fewer generics approved in 2012 but still a banner year

Given all the lousy earnings reports and patent cliff talk, one might have expected last year to be the biggest ever for getting new generic drugs into the U.S. market. One would be wrong.

At least in terms of numbers of generic drugs approved in the U.S., 2012 was a down year, reports Thomson Reuters in its just-released quarterly report on the U.S. generics industry. There were 506 approvals from 92 "corporate entities" in 16 countries. That was down 7.5% from the 547 approved the year before. Not surprisingly, India's generic makers led the way, with 205 approvals, while U.S. drugmakers nailed 171 last year. Thomson Reuters reports that in the final quarter of the year, Indian companies received 44 approvals and U.S. companies were granted 45.

That is not to say that 2012 was not a very wrenching year for branded drugmakers. Megablockbusters like Plavix from Sanofi ($SNY) and Bristol-Myers Squibb ($BMY) and Merck's ($MRK) Singulair fell to generic competition.

Generic drugs now hold a very special place in the U.S. and world markets. Generic drugs account for about 85% of the 4 billion prescriptions written in the U.S. each year. The FDA has even elevated its Office of Generic Drugs (OGD) to "super office" status, partly recognizing that generic drugmakers are now kicking in a significant part of the agency's budget through user fees. The make-up of the generic industry also is changing. In the final quarter, Watson Pharmaceuticals closed its $5.5 billion deal to buy Actavis ($ACT) and assumed the Actavis name. It was just one of the deals that reflect that generic drugmakers feel the need to muscle up and become more efficient in the face of strong competition.

This year promises to be a big one in the generic industry as well. This month the U.S. Supreme Court is set to consider whether so-called pay-to-delay agreements are constitutional. And generic drugmakers show no signs of easing up in their pursuit of their very large piece of the market. There were more than 40 patent infringement lawsuits filed over 24 drugs in the final three months of 2012, Thomson Reuters reports. Teva Pharmaceutical Industries ($TEVA) is the most aggressive with ties to challenges for 160 compounds or combinations. 

- read the report (PDF)

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