With the US market proving increasingly difficult to penetrate, generics firms are looking elsewhere to make an impact, and France, Spain, Italy and Japan could provide attractive alternatives, says a new report from Datamonitor.

The study notes that the USA is by far the world’s largest generic market, and its free pricing rules “and pro-generic environment make it an extremely attractive prospect for foreign investors, despite the intensity of the competition”. However, that level of competition is leading to diminishing growth opportunities for domestic players and makes “the relatively less penetrated markets of Europe an attractive prospect,” Datamonitor analyst Pam Narang says.

However that may not necessarily be in the mature markets of Germany and the UK where generics use is already high but is slowing. In the latter, a government-led push towards increasing substitution for certain drug types in the UK, where generic use is already high, provides further room for growth, Datamonitor says, but it believes that “a wholesale shift in prescription behaviour is unlikely due to the nature of the drugs in question – chronic use statins among them – that makes patients unlikely to accept a change in drugs taken for many years”.

Generic use in France is currently patchy, the report argues, but once the set of targeted drugs is widened, this is likely to change dramatically. Ms Narang says that “brand loyalty is a significant factor in the French pharmaceutical market” and may be responsible for the historically low levels of generic uptake, but a change will “undoubtedly occur as a result of rising healthcare costs”. The story is similar in Spain and Italy, which also show low levels of generic use due mainly to general distrust of copycat versions.

Generic penetration in Japan is also very low, due in part to the mistrust with which such drugs have traditionally been viewed. However, Ms Narang notes that generic substitution in Japan has become mandatory, “with physicians now required to explicitly state on the prescription if a branded drug is to be dispensed.”

Additionally, generics may now be listed for reimbursement twice annually rather than once, and Ms Narang says that “Japan therefore provides the prospect of immense growth potential for those companies that are correctly positioned”.