14 Feb Pharmas will be forced into generic-drug strategy
In past columns, I have written about the important impact that generic pharmaceutical drugs are having on the pharmaceutical industry around the world. Their rise and growth spurs Big Pharma to invest heavily in new patented drugs.
With 45 million Americans not having any kind of medical health insurance in the United States and the doors to cheaper medicines from Canada being rapidly shut by U.S. pharmaceutical companies, the need for cheaper medicines is becoming more and more apparent in the wealthiest society of the world.
In those less-fortunate countries around the world, it is imperative. Monday’s Wall Street Journal chronicles on its front page the rise of a chain of pharmacies in Latin America that are focused on promoting generic drugs. According to the article, generic drugs are a worldwide trend to be reckoned with:
Though the U.S. generic trend seems to be on the low side of market penetration, this figure represents only the dollar value sales of the market. If you were to look at actual unit sales of generics, the penetration in the U.S. would most likely be at least 50 percent and obviously higher in other parts of the world.
In India (the other extreme) where intellectual property law is just being initiated for the first time, there is likely to be a decrease in generic market growth as more and more Indian companies succumb to filing patents as part of the globalization of Indian pharmaceutical companies (particularly if they want to play in the U.S. market).
The key challenge is not in the existing type of generic products based on traditional small-molecule drugs (which are easily retro-engineered by brilliant Indian chemists) but the potential approval and commercialization of “biogenerics” (the large-molecule biotech drugs represented by classes of drugs known as “proteins and peptides,” which are more difficult to copy).
The approval process for such biotech drugs (which are the costliest in the market) in the U.S. is the target of FDA deliberations. The FDA, by the way, is currently trying to render more drugs accessible to American consumers and patients. These are heavily opposed by U.S. pharmaceutical and biotech industry associations. Sooner or later, biogenerics will be approved.
Only one major pharmaceutical company – the Swiss giant Novartis – has positioned itself strongly in the worldwide generic market and the development of new drugs. Most American pharmaceutical companies have sold off their generic businesses or given them short shrift. The growth of generics is an economic imperative to the millions of people (if not billions) who can’t afford costly medicines.
A patient tradeoff with generics is absolute product quality (in medical terms, this is known as “bioequivalency” and “bioavailability”). Though it’s not always the same as the original drug, this gap is closing as generic companies are investing more in improving these features of their products and as the FDA mandates more testing.
The Wall Street Journal article features the growth of a Mexican chain of pharmacies that are focusing on generic drugs and have expanded beyond the borders into nearby Central America and as far away as Argentina. Mexico’s generic drug market is the ninth largest in the world.
With the large Mexican population in the U.S., it is conceivable that the U.S. itself could be the target of this chain of pharmacies in the near future (this is my conjecture).
As generics are here to stay, more and more pharmaceutical and biotech companies will be forced to either incorporate a generic strategy into their commercialization plans or develop and launch more patented and innovative drugs quickly. The latter activity is difficult given the uncertainties of drug development, the length of development time and the FDA approval process.
As mentioned in prior columns, Midwest companies such as American Pharmaceutical Partners and Morton Grove Pharmaceuticals are aggressively and successfully pursuing generic niches that include the use of drug delivery. See you next week!
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