The near and long-term outlook for generic drugs is robust, creating both opportunities and challenges for generic drug manufacturers and suppliers of active pharmaceutical ingredients (APIs) to the generic drug industry. While industry fundamentals are strong, so is competition following a recent round of consolidation among generic drug manufacturers and their continued positioning in offshore production and development facilities.
Growth projections are sound
Industry estimates point to strong growth for generic drugs. In 2006, products with sales in excess of $18 billion lost their patent protection in seven key markets, including the United States, which represents more than $14 billion of those sales, according to IMS Health (Norwalk, CT). In 2006, prescription volume of unbranded generics grew by 13%, and sales of unbranded generics grew by 22%.
In addition to Zocor, Norvasc, and Risperdal, other key drugs recently came off patent or are slated to come off patent. In 2006, key drugs that came off patent included Pfizer's "Zoloft" (sertraline), Boehringer Ingelheim's (Ingelheim, Germany) "Mobic" (meloxicam), Bristol-Myers Squibb's "Pravachol" (pravastatin), and GlaxoSmithKline's (GSK, London) "Zofran" (ondansetron) and "Flonase" (fluticasone).
In 2007, key drugs coming off patent are Pfizer's "Zyrtec" (cetirizine), Sanofi-Aventis's "Ambien" (zolpidem), and GSK's "Coreg" (carvedilol). (1).
Overall, during 2006–2010, drugs with a value of roughly $62 billion are expected to come off patent, according to estimates from Lehman Brothers (2). This level represents sizeable increases from recent four-year periods when approximately $35 billion of drugs came off patent during 2001–2005 and approximately $15 billion during 1996–2000 (2). And growth in the generics market is expected to continue as drugs worth nearly $140 billion in sales (based on 2005 sales estimates) are coming off patent by 2016, according to Datamonitor PLC (London).