Israeli generics firm Teva Pharmaceutical Industries looks set to gain a much stronger foothold in the German market after winning a substantial chunk of the country’s largest health insurer AOK’s first tender for contracts to supply generic drugs.

Last month, AOK announced it had picked 58 suppliers for 64 different active pharmaceutical ingredients – collectively worth over 2 billion euros – awarding these companies with supply contracts for the period of March 2009 to the end of 2010.

The large majority of successful bidders are still unknown, but Teva has this week announced that, together with a partner, it has been chosen to supply 15 contracts representing around 20% of the tender value. According to IMS data, ex-factory prices of the 15 products in the year to October 2008 total about 203 million euros, but Teva noted that the tender prices are lower than ex-factory prices.

“The AOK tenders, along with other expected tenders in the coming months, have created an opportunity for Teva to penetrate the German generics market, in which we currently hold less than 1%,” commented Teva Europe president and chief executive Gerard van Odijk, and he said that the company’s broader, continuously expanding portfolio as well as its scale and “backward integrated operations” should help it become “a significant player” in the market.

Dr. Reddy’s Laboratories’ subsidiary betapharm also looks set to be awarded a substantial slice of the pie. The company says that, on signing final contracts with the insurer it will be the sole supplier for eight products in selected regions of Germany.

“The preliminary results of the AOK tender establish betapharm’s competitiveness in the tender segment of the market in Germany,” said VS Vasudevan, President of European Operations at Dr. Reddy’s, and he went on to say that for the eight products offered, the firm expects “a significant increase in volume though at relatively lesser margins.”

AOK’s landmark move could signal the beginning of a real sea change in the generics sector in Germany, with public health insurers offering tenders for bulk deals to drive down the cost of drugs for cheaper healthcare, leaving generic drugmakers with the task of completely overhauling their marketing strategies.

And, according to media reports, although the contracts are due to start in March next year, there is concern that substantial delays could result from legal challenges by those companies left out in the cold without any contracts at all.