Over 100 pharmaceutical patents are set to expire by end-2009, including those for 13 major products, and the Big Pharma firms which will be most affected are GlaxoSmithKline and Pfizer, followed by Novartis and Takeda. However, only a few of the newly off-patent products will show sufficient viability and market potential for generic drugmakers to pursue, according to new forecasts from Global Insight.

2008 saw some high-value drugs go off-patent - including Merck & Co's Fosamax (alendronate), Pfizer's Camptosar (irinotecan) and Wyeth's Effexor XR (venlafaxine) - widening the market presence of generics drug makers and creating an unexpected dent in the revenue structure of several Big Pharma players, says the report.

Moreover, a number of distinctive trends began to emerge last year in the patent challenge arena. First was the relative confidence among generics makers to challenge much earlier in the patent lifecycle than was previously the case. Second was their focus on niche therapeutic areas with restricted high-margin product markets - generics giants including Teva Pharma, Ranbaxy, Stada and Mylan were actively pursuing this trend. And third was Big Pharma’s willingness to accept settlements with generis makers again much earlier in the patent lawsuit period.

The global market for generics will undoubtedly increase as the number of patent expiries grows and pro-generics legislation is enforced in key markets, says the report, noting that IMS Health has estimated that sales of generics will reach US$75 billion over the next five-year period, with a compound annual market growth rate of 14-17%, and that the main market driver here will continue to be the increasing encouragement provided by governments.

For example, in Germany, the legal obligation for public health insurers to seek out supply contracts with generics companies for medicines at discounted prices has provided them with some support. However, an investigation into the largest insurer’s supply contracts has caused them to be frozen until further notice, putting yet more pressure on generics companies to find new ways to ensure future growth, in Germany and other markets, it says.

Turning to how the sector will look in 2009, the report forecasts that generics players acquired by brand-name drugmakers will likely be run as independent entities for logistical reasons, while the buyout of one generic maker by another will more probably result in full consolidation. A takeover of Taro by Sun Pharma in 2009 remains likely, but will be delayed by Taro's ongoing resistance, while the confirmation of Ratiopharm (Germany) being put up for sale will have a host of pharma and generic companies poised for a potentially lucrative investment on the European market, it says.