Is the Market Going Generic?

November 1, 2007
Angie Drakulich
ePT--the Electronic Newsletter of Pharmaceutical Technology

The pharmaceutical market is undergoing a major transformation with companies moving more and more toward the generics business, according to a new report.

London (Oct 25.)-The pharmaceutical market is undergoing a major transformation with companies moving more and more toward the generics business, according to a new report, “Consolidation in the Generic Pharmaceutical Industry: An Evolving Landscape,” published by Urch Publishing, a UK-based business information provider that focuses on the pharmaceutical industry. Generics revenue has become a high growth segment, earning $77 billion in 2006 worldwide.

“For many years, generic companies were the poor relations of the pharmaceutical industry, with modest growth rates and little or no transnational business operations,” summarizes the report, which is authored by Peter Norman, PhD, a pharmaceutical consultant. Now, these companies have become an “international business.”

Teva Pharmaceutical Industries and Novartis’ Sandoz unit lead the generics market in terms of revenue, but with a decreasing number of therapeutic companies entering the market, there are fewer opportunities to launch new generic products, according to the report.  The massive regulatory rules placed on biosimilars also constrain generic companies, but that isn’t stopping the growth. Instead, companies are pursuing mergers and acquisitions to spread their global reach and increase their market share. As a result, states the report, the generics market is experiencing a “rush of takeovers.”

According to Drug Industry Daily, Novartis acquired German generic drugmaker Hexal and Hexal’s US sister company, Eon Labs, in 2005 for $8.3 billion. The same year, Teva acquired Ivax for $7.4 billion and Actavis announced plans to purchase Alpharma for $810 million. More recently, Barr Pharmaceuticals purchased Pliva for $2.5 billion.

Norman proposes that Ratiopharm, Stada, and Actavis are next on the list in terms of pursuing acquisitions. As a major source of active pharmaceutical ingredients, Indian generics companies might be viewed as top choices for potential acquisitions.

To read about other companies and trends, click here for

the full Urch Publishing report

.