Dallas, TX -- (SBWire) -- 09/24/2010 -- Driven by rising demand, patent expiries and pharmaceutical cost-containment policies, generic sales have risen consistently at rates in excess of the pharmaceutical industry average over the past decade. Coupled with changes in the geographic and therapeutic make-up of the sector, this has triggered a period of rapid restructuring within the generics industry. Teva and Sandoz have consolidated their positions at the head of the generic company sales rankings; national and regional businesses have emerged as major forces in emerging generic markets; while new players – including multinationals – have begun to pursue footholds in the generics sector.

Demand for generics will continue to increase rapidly during the next five years. Major patent expiries will present generic manufacturers with substantial new targets – including the world’s best-selling pharmaceutical brand, Lipitor. Sales of branded copies will rise at double-digit rates in many developing countries, while unbranded, bioequivalent follow-on products will be prescribed, dispensed and consumed more widely in some of the world’s biggest markets. Governments and third-party payers will adopt more robust pro-generic policies in a bid to limit pharmaceutical spending. These will include measures designed to encourage the use of biosimilars, which will help to rein in costs associated with the reimbursement of expensive biotech drugs.

While demand for generics will remain strong, pressure on prices in the sector will intensify as competition heats up, and as payers step up their efforts to limit reimbursement spending. Generic manufacturers will also have to overcome barriers to market entry posed by intellectual property laws, regulatory frameworks and defensive strategies employed by originator companies. Levels of brand affinity that persist among physicians, pharmacists and patients will also act as a constraint on rates at which generics are prescribed, dispensed and consumed.

With volume-based growth set to outweigh constraints on price, the generics market will continue to increase rapidly in value during the next five years. The operating environment in the sector will become increasingly difficult for many small and mid-sized players, however. Problems faced by these companies, the expansion of established market leaders and the entry of more new players will combine to drive further significant restructuring in the generics sector.

Key Features of this report

Analysis of the size, structure and recent growth of the global generics market, and of the industry it supports.
Case studies focusing on individual generic businesses and key generic markets.
Identification and detailed discussion of key generic industry drivers and constraints.
Appraisal of the impact individual drivers and constraints will have on the market to 2015.
Forecasts outlining the anticipated size and structure of the generics market in 2015, assessing future prospects for individual generic businesses and identifying potential major new entrants in the sector.
Key Benefits of this report

Quantify the size and structure of current opportunities in the generics market and the positions held by key players in the sector.

Identify the main factors acting as drivers and constraints on generic market growth, and gauge their likely impact on the structure of the industry.

Assess the timing and extent of new opportunities that patent expiries will present for generic manufacturers during the next five years.

Track the development of pro-generic healthcare policies implemented in key markets, and their likely impact on the industry.

Understand the strategies being employed by originator companies to block or delay the arrival of generic competition, and how future regulatory intervention might affect their ability to defend patent-expired brands.

Learn how Teva and Sandoz intend to build on their leadership positions in the generics industry; why second-tier generic businesses are so exposed as acquisition targets; and which pharmaceutical majors are most likely to emerge as major players in the generics sector.

Key Findings of this report

Having risen at or close to double-digit rates for the best part of a decade, global sales of generics are now worth some US$140bn – equivalent to approximately 17% of total pharmaceutical market value. With patents on brands that generate combined annual revenues of US$200bn set to expire by 2015, further rapid growth of the generics market is assured.

While the generic industry remains fragmented overall, growing shares of the market have been concentrated in the hands of leading players. Between them, the world’s five biggest generic businesses have spent approximately US$50bn on acquisitions since 2001, with Teva alone committing US$24bn to M&A deals in that period. Teva’s existing business generates around US$3.5bn in net cash per annum, and will provide the funds required to support further M&A-fuelled expansion.

Regulators have been slow to establish explicit pathways for the approval of biosimilars, while approval routes for small-molecule generics are struggling to cope with demand. The backlog of generic submissions faced by regulators in the US has reached 2,000, and median ANDA review times are currently in excess of 26 months.
Originators have perfected the use of intellectual property protection laws and defensive strategies designed to delay the arrival of generic competition. By the time Lipitor faces its first generic competitor in the US, 44% of the brand’s lifetime revenues in that market will have been achieved since the date on which

Pfizer’s basic product patent on atorvastatin was originally due to expire. Pfizer is one of several multinationals expected to pursue more substantial interests in the generics market in the near future. Sanofi-Aventis has been the most aggressive new ‘big pharma’ entrant to date, however, spending close to US$4bn on acquisitions in the sector since the beginning of 2009.

The global market for generics will be worth in excess of US$250bn by 2015. Teva and Sandoz will have consolidated their leadership positions by then, but several prominent second-tier generic players will have changed hands.

Key questions answered by this report

Why has the generics market enjoyed such strong growth in recent years, and what are the main factors that will determine its development through the next five years and beyond?

What makes markets like Japan and Brazil such attractive targets for generic manufacturers, and why have foreign players struggled to make an impact in these countries?

Which major original brands face patent expiry during the next five years, and when will they lose exclusivity in the all-important US market?

Why might some supposedly ‘pro-generic’ healthcare policies pose a potentially significant threat to the sector?

How are policy-makers attempting to break down opposition to generics among physicians, pharmacists and patients?

What steps have regulators taken to curb defensive strategies employed by originators, and how might big pharma’s ability to delay generic competition be compromised in future?

How will growth strategies pursued by the two leading players in the global generics industry differ over the next five years?

Why is Teva’s dominant position in the US generics market so assured?

Which second-tier generic players represent the most vulnerable acquisition targets, and why?

Which leading pharmaceutical majors are most likely to pursue assets in the generics market, and which segments will they target?

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