With drugs worth nearly $140 billion in sales coming off patent by 2016, brand manufacturers can expect to face a decade of “unrelenting generic competition”, according to a new report from Datamonitor, but there are ways to lessen the blow.
Indeed, Datamonitor senior pharmaceutical analyst Alistair Sinclair notes that “the severity and speed of brand erosion can vary significantly”, depending on factors such as country-specific prescription, and pricing and reimbursement, regulations, product formulation, success of the targeted brand and the implementation of lifecycle management strategies.
Usually between two and four generics enter the market during the first three months following a patent expiry, although this can be as high as 32, as observed with copycat versions of Roche’s antibiotic Rocephin (ceftriaxone), in Italy. Datamonitor’s research reveals that of the six major pharmaceutical markets (USA, France, Germany, Italy, Spain and the UK), brands in Germany experience the greatest number of generic competitors, while those in the USA and UK experience the least after two years of competition.
Brands with high revenues generally face a greater number of generic competitors than those with low sales, but as more drugs enter the market, the revenue potential for each individual non-branded company decreases accordingly, notes the report. It also states that the value of a brand, whether a blockbuster or one with revenues of less than $50 million per year, is not linked to the level of erosion it experiences after patent expiry, but the formulation of the brand. Manufacturers of standard oral tablets experience a greater level of brand erosion than those producing alternative, more complicated formulations,
Thus Mr Sinclair notes that the majority of leading generics companies have the capacity to produce standard oral formulations, while fewer can produce injectable formulations. Conversely, branded oral long-lasting drugs and other technologically advanced formulations, generally do not experience significant erosion from generics. This demonstrates the significant value of these formulations, as well as the brand-protecting ability of such life cycle management strategies, says Datamonitor, noting that “it is also a significant financial benefit to the manufacturer if it can switch patients to patent protected formulations.
However, once the formulation patent expires, or when generics companies develop their own non-infringing long-lasting formulations, which is happening more frequently, erosion will occur. Mr Sinclair concluded by saying that “while reformulation strategies may be effective at staving off generic competition in the short-term, ultimately manufacturers need to develop truly novel drugs in order to maintain franchise and portfolio revenues.”