“The global generics market has posted double-digit gains in recent years. But in 2008, despite robust volume increases, we are seeing the first significant decline in sales growth as manufacturers increasingly compete in fierce price battles within most of the world’s major markets,” said IMS’s Murray Aitken.
The generics market has consolidated in recent years and several large manufacturers, including Barr, are being acquired. The largest generics drug companies by market share are Teva with 11% share, Novartis (Sandoz) with 9% and Mylan with 8% marketshare.
The IMS 2008 Global Generics Perspective report highlights the following trends:
- Consolidation: Larger companies are consolidating and acquiring smaller, less profitable generics companies.
- Long-term Prospects are Poor: Through the Lipitor patent expiration, prospects for generics growth are good. However, in the long term, the big pharma draught will begin to have a significant on the generic manufacturers.
- Continuing Vertical Integration and New Distribution in Europe: Wholesalers in Europe have been shifting strategies for years, but IMS Health is anticipating vertical integration will accelerate. Among the opportunities is for manufacturers to cut wholesalers out of the mix completely.
- Centralized Contracting: Generic manufacturers will have even greater margin problems as buying power becomes even more centralized.
- Imitation Biologics: Biologic drugs could begin to have competition as generic companies push to begin making imitation versions of biotech products.
Not mentioned in the IMS report is another reason generics are down – concerns over the safety and efficacy of generic drugs. Consumers are starting to realize that generic drugs are not the same as brand name drugs, they are just “similar enough.” Even media heavy-hitter Oprah has an article in her magazine warning consumers on the potential problems of generic drugs.