Table of Contents
- CHAPTER 1 EXECUTIVE SUMMARY
- Scope of the report
- Key findings
- CHAPTER 2 GENERICS MARKET DYNAMICS
- Key findings:
- The global generics market is worth an estimated $60 billion
- The seven major markets account for over two thirds of the value of
the total generics market
- Teva and Sandoz dominate the generics market but consolidation and
globalization are changing the competitive landscape
- Increasing healthcare expenditure in each of the seven major markets has
led to a variety of measures being implemented to increase generic use
- The changing healthcare environment in the US will drive future
generic use
- Healthcare expenditure is a concern for many Americans
- There are a variety of generic substitution policies in place
- Pharmacists are incentivized to dispense generics
- Cost savings could be significant if generics were used more widely
- Healthcare providers are implementing a range of incentives to boost
generic use
- Medicare Part D is expected to lead to greater generic use
- The growing role of patients in their own healthcare choices will
drive generic use
- Cost-containment measures in Germany have led to a healthy generics
market
- Healthcare services are provided for free in Germany
- There is a wide range of policies in place to promote generic
prescribing
- The AVWG is expected to drive further generic use
- Jumbo reference pricing could be a double-edged sword for generics
- Pricing issues may negatively affect profitability for generics
companies
- The UK is one of the most developed generics markets in Europe
- The National Health System (NHS) is extremely cost-constrained
- The UK's pharmaceutical pricing structure lends itself to higher
generic penetration
- There are several drivers and resistors to generic dispensing
- Generic consumption in France is particularly low
- Most of the population are covered by National Health Insurance
- Significant advances have been made in the use of generics in France
- Measures to increase generic prescribing by physicians have been
implemented
- French prices have been a major deterrent of generic use
- Changes to reimbursement rules may drive generic growth
- Pharmacists are being mandated to drive generic dispensing
- Spanish generic use is among the lowest in the EU
- Healthcare in Spain is decentralized but provided for free for the
population
- Pharmaceutical prices in Spain are much lower than in other European
markets
- Generic substitution is permitted - to a degree
- Generic awareness is not especially high among physicians or the
public
- Pharmacists and physicians do not drive generic use
- The Italian generics market looks unlikely to grow in the short-term
- The decentralized approach to healthcare provision in Italy means
there is a wide variety in policies
- Pricing policies have been reformed to promote generic use
- Pharmacists and physicians are not encouraged to prescribe generics
- The Japanese generics market is currently underdeveloped
- There has been a lack of incentives for the promotion of generic use
- Generic substitution has only recently been allowed in Japan
- Generic drugs are regarded with suspicion by prescribers
- There are several issues which will affect future growth within the
generics market
- Patent expiries, an aging population and cost constraints should drive
generic market growth
- The wave of patent expiries expected over the next ten years will
generate major opportunities for generic companies
- The aging population will drive future uptake of generic drugs
- Most countries are becoming increasingly cost-constrained
- Therapeutic substitution becomes a reality
- The key growth resister is increasing competition within the market
- Low-cost manufacturers are creating increased competition
- Increasing cooperation among generics companies is a double-edged
sword
- Some branded companies have generic subsidiaries
- CHAPTER 3 STRATEGIES FOR SUCCESS: GROWTH THROUGH CO-OPERATION
- Key findings
- M&A activity has gained momentum over the last two years
- There has been increasing consolidation in the generics market
- 2005 was a major year for M&A activity
- Two key deals have been announced in 2006
- M&A multiples depend on the portfolio of the target company
- Authorized generics are becoming increasingly important
- There can be several advantages for branded Pharma
- Authorized generics can be a cost-effective method of settling
patent litigation
- Branded Pharma can gain financially
- Other advantages include acting as a deterrent against patent
challenges and utilization of manufacturing capacity
- Case study - cooperative authorized generic: Shire settles Adderall
XR patent litigation
- Case study - competitive authorized generic: Sanofi-Aventis's
Allegra authorized generic foils Teva and Barr
- The generics industry is split on the issue of authorized generics
- Authorized generics can provide a boost for companies with a weaker
pipeline
- The pursuit of authorized generics is a key part of many generics
companies' strategy
- The FTC is investigating the anti-competitiveness of authorized
generics
- CHAPTER 4 STRATEGIES FOR SUCCESS: PATENT CHALLENGES
- Key findings:
- Patent challenges offer the possibility of significant sales for
generics companies
- Barr obtained 180-days exclusivity after successfully challenging
Lilly's Prozac patent
- Schwarz Pharma's omeprazole generic generated significant sales for
the company
- Teva's strength lies in its patent challenge strategy
- There have been some important patent challenges taking place in the
last two to three years
- Ranbaxy's Lipitor patent challenge causes concern for Pfizer
- Key decisions go in Pfizer's favor
- Ranbaxy has suffered a setback with the loss of the Lipitor challenge
- Fosamax comes under several patent challenges
- Merck's outlook takes a turn for the worse
- Early Toprol generic competition is likely
- The patent challenge against Plavix is settled but attracts scrutiny
- BMS/Sanofi-Aventis reach a settlement with Apotex but the move is
criticized
- CHAPTER 5 FUTURE OUTLOOK
- Key findings
- Several therapy areas are expected to experience their first major
patent expiries
- Although there are generic statins, the US patent expiries of Zocor
and Pravachol will significantly change the shape of this market
- The patent expiry of Zocor is expected to have the greatest impact
- The impact on Zocor - branded share is expected to be considerably
eroded
- The impact on Lipitor - will its brand loyalty be enough to maintain
market share?
- The impact on the statins market - dynamics will swing in favor of
generics
- Could the statins be a case study for future therapeutic
substitution?
- The patent expiries of Cozaar and Diovan are expected to lead to price
reductions throughout the ARB class
- Could the statins' substitution paradigm established in the US be
repeated for the ARBs?
- Germany readies itself for the first ARB patent expiry
- The genericization of the ARBs could lead to switching from other
classes
- The patent expiry of Norvasc could lead to new CV combinations
- The first antiretroviral patent expiries could herald a return to
older treatment paradigms
- Key first-line therapies will be exposed to generic competition
- The convenience of fixed-dose combinations is not expected to
protect them from generic competition
- Will there be generic asthma combinations?
- Advair's combination deemed not novel and, therefore, not patent
protected
- Other asthma combinations may be at risk of genericization
- Biosimilars are now a reality
- The first biosimilar was approved in Europe in 2006
- The US has lagged behind Europe in developing a biosimilar
regulatory pathway
- The Japanese market will experience a significant increase in generic
usage
- Considerable savings could be realized through the greater use of
generics
- The next five years will see the Japanese generics market grow
- The competitive landscape in Japan is expected to change considerably
- Sawai and Towa are well-positioned to take advantage of the expected
increase in generic use
- Several companies have entered the Japanese generics market
- APPENDIX A: ADDITIONAL INFORMATION
- Limitations of data
- Standard units
- Japanese market data
- Exhange rates
- APPENDIX B: BIBLIOGRAPHY
- Journal articles
- Newspaper articles
- Company sources
- Presentations
- Annual Reports
- Miscellaneous sources
- List of Tables
- Table 1: Five generics companies are among the top 10 in terms of
prescriptions filled under Medicare Part D
- Table 2: The actual generic fill rate varies among the therapeutic
classes
- Table 3: Several branded Pharma companies have generics subsidiaries
- Table 4: M&A activity was rife in the generics market in 2005
- Table 5: The sales multiples for generic M&A transactions have varied
- Table 6: Diovan and Cozaar dominate the ARB class
- Table 7: There are considerable savings to be realized by using
generic drugs
- Table 8: Significant annual savings can be generated through the use
of generics
- Table 9: Exchange rates*, 2005
- List of Figures
- Figure 1: The generic market share as a percentage of total
pharmaceutical sales varies across the seven major markets
- Figure 2: The US dominates the global generics market, generating $24
billion in sales in 2005
- Figure 3: Generic usage is highest in the US, Germany and the UK
- Figure 4: Teva and Sandoz were the clear generics market leaders in
terms of sales value in 2005
- Figure 5: More than half of all prescriptions dispensed in the US are
generics
- Figure 6: Generics companies dominate the US pharmaceutical market in
numbers of prescriptions
- Figure 7: Generic use in the US is promoted - a resisted - through a
number of channels
- Figure 8: The generic fill rates in the US for 2003 varied
considerably by state
- Figure 9: The tiered co-payment system will lead to greater use of
generics
- Figure 10: Use of generics is encouraged - and resisted - in Germany
through several different mechanisms
- Figure 11: A fall in reference prices is likely to lead to greater use
of generics
- Figure 12: The UK generics market has experienced strong sales growth
since 2001
- Figure 13: Despite a number of resistors, the generics market in the
UK is well-developed
- Figure 14: The French generics market is much smaller than those in
other major European markets
- Figure 15: Despite measures to promote generic use in France there are
several resisters still in place
- Figure 16: Although generic sales and volume use have increased over
the last ten years, the generics market only accounts for a small
proportion of the Spanish pharmaceutical market
- Figure 17: There are few drivers of generic growth in Spain
- Figure 18: The Italian market has experienced limited growth since 1994
- Figure 19: Measures to promote generic use in Italy have been
implemented
- Figure 20: The Japanese generic market is underdeveloped because of a
number of factors
- Figure 21: Physicians receive a percentage of the price of a
prescribed drug
- Figure 22: Several key products are expected to lose patent protection
in 2006, exposing billions of dollars of brand sales to generic competition
- Figure 23: 2008 and 2011 are expected to be the next bumper years for
generics companies
- Figure 24: Most big Pharma companies are expected to lose significant
sales as patents expire over the next 10 years
- Figure 25: The age distribution of the world's population is expected
to change considerably over the next 50 years
- Figure 26: As the population ages and birth rates decline, population
pyramids for more developed regions are expected to become increasingly
top-heavy
- Figure 27: Pharmaceutical expenditure accounts for, on average,
between 12% and 22% of total healthcare spend
- Figure 28: In Germany, generic statins are significantly cheaper than
the branded products
- Figure 29: Pfizer retained a third of gabapentin volume sales after
launching a generic through Greenstone
- Figure 30: Authorized generics agreements can serve several purposes
- Figure 31: Branded Pharma can gain from authorized generic agreements
- Figure 32: Apotex's generic paroxetine sales were considerably reduced
by the launch of Par's authorized generic
- Figure 33: In addition to obtaining a share of generic sales,
Sanofi-Aventis also reduced Teva's fexofenadine sales through its
authorized generic agreement with Prasco
- Figure 34: There are positive and negative aspects to authorized
generics for companies involved in the generics market
- Figure 35: The authorized generics settlements made in FY 2005
included both cooperative and competitive agreements
- Figure 36: Barr's Prozac patent challenge delivered high returns for
the company
- Figure 37: Schwarz Pharma generated significant sales after its
exclusivity agreement with Andrx and Genpharm
- Figure 38: Generics account for a relatively small share of the
statins market in the US
- Figure 39: Pravachol only accounts for 10% of US statin sales value
($m) and 7% of sales volume (SUm)
- Figure 40: Generic simvastatin sales, assuming a relatively high level
of switching from Zocor
- Figure 41: Generic simvastatin sales, assuming a medium level of
switching from Zocor
- Figure 42: Generic simvastatin sales, assuming a low level of
switching from Zocor
- Figure 43: Depending on the level of switching, Lipitor sales could
range between $418m and $3.8 billion in the first six months of generic
simvastatin's availablity
- Figure 44: Generics will account for a growing percentage of statins
sales volume after 2006
- Figure 45: Generic zidovudine has made an inroad into the branded
products sales despite being available since September 2005
- Figure 46: Japanese generic sales are expected to reach Ұ500
billion by 2008
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