Generics Drug Industry in the Usa

Generics Drug Industry in the U.S.

According to a recent Bank of America report, pharmaceuticals are the fastest-growing component of health care costs. The U.S. currently spends approximately $150 billion on prescription drugs and some industry sources project this number will reach $300 billion by 2010, equivalent to annual growth of approximately 9%. Due to this increase in cost, managed care and other insurance providers are seeking to control pharmaceutical expenses through generic substitution. With continued pressure on cost, the aging demographics of the U.S. and the continuing rise in co-pay hurdles, the generic drug industry is expected to grow in coming years.

chemical name, not a trade name. A generic drug should possess the same active ingredients in the same dosage form and strength as the original brand drug. For generic drugs to be marketed and sold, it needs to demonstrate similar bioequivale

Developing and Marketing Generic Drugs

In developing generic drugs, the manufacturer only needs to demonstrate the bioequivalence of its drug to the branded product, and that the manufacturing process produces acceptable purity and consistency. The development does not involve lengthy and costly clinical trials because generic manufacturers only need to prove nce which means that there is a similar absorption rate as the main benefit of generic drugs is the cost savings. According to Janney Montgomery research, U.S. retail sales of generic prescription drugs totaled $11.1 billion in 2001 versus brand name prescription drug sales of $121 billion. However, the generic drugs were dispensed in 47% of all prescriptions. These figures indicate that generic drugs represented 47% of prescriptions but only 8.4% of the cost.

approximately 16%. IMS predicts this growth will continue, estimating that the generic drug industry will show approximately 15% compounded annual growth through 2005.

* Patent Expiration: A huge pipeline of patents will expire between 2003 and 2006 for some of the major drug companies. Enormous opportunity exists for the generic drug companies to capture the increasing demand originally filled by branded drugs.

* Competitive Environment: There is an increase of competition in the generic drug market due to the appearance and growth of Indian, Chinese, and Eastern European players. The long term sustainability for current pricing is in question.

* Acceleration in Industry Consolidation and Partnering: Industry analysts predict that there will be increased consolidation in the near future and that the top 5 generic players will control more of the industry. They suspect that acquisitions and partnering will focus more on increasing strategic cost advantages, production