Favorable Outlook for Generic APIs - Pharmaceutical Technology

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Favorable Outlook for Generic APIs
A spate of drugs are scheduled to come off patent, offering vast potential and competition.


Pharmaceutical Technology


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%.


Figure 1
"Last year, we saw two of the most successful and largest brands, Zoloft and Zocor, lose patent protection," said Diana Conmy, corporate director of IMS Market Insights, in a March 2007 IMS press release. "Although the impact to the market was moderate, competitive pricing in generics is expected to intensify. We expect to see the full effect of these patent expirations, as well as that of additional branded blockbuster drugs such as 'Norvasc' and 'Ambien' impact the market in 2007."


Figure 2
Several top-selling drugs either lost US patent protection in 2006 or will in 2007 (see Figures 1 and 2). Merck & Co. Inc.'s (Whitehouse Station, NJ) "Zocor" (simvastatin) lost US patent protection in 2006, and the patent for Sanofi-Aventis's and Bristol-Myers Squibb's (New York) "Plavix"(clopidogel) was challenged. In 2007, Pfizer's (New York) "Norvasc" (amlodipine) and "Risperdal" (risperidone) by Johnson & Johnson's New Brunswick, NJ) subsidiary Janssen LP will lose patent protection (1).

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).


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