Pharmas to lose $100bn to generics
by Anna Lewcock
22-Feb-2007 - A report to be published next week predicts that US and EU pharmas will lose up to $100bn in revenues over the next five years as generic products take advantage of major branded products losing patent protection.
The greatest impact will seen be between 2010 and 2012 as the patents covering Pfizer's blockbuster drug Lipitor (astorvastatin calcium) expire, according to the new report "Generic Competition 2007 to 2011 - The impact of patent expiries on sales of major drugs." The drug achieved worldwide sales of almost $13bn (€9.9bn) in 2006, representing the biggest opportunity ever for the generics industry, according to the report.
Patent expiration can cause revenues for the supplier to drop 10-fold over a period of just two years, said report author, Dr Peter Norman. Eli Lilly experienced this first hand on expiration of Prozac's (fluoxetine) patent, and Bristol-Myers Squibb saw revenues for Plavix (clopidogrel bisulfate) drop 90 per cent within a quarter as generic clopidogrel hit the market following the branded product's patent expiry.
However, successful identification and exploitation of potential opportunities provided by patent expiration of branded products can offer a significant growth driver for pharmas who focus their business on generic therapeutics.
The opportunities offered as major drugs such as Lipitor and Plavix come off patent will sustain the revenue growth for generics suppliers over the next five years, and will ensure that revenue growth of the generics sector will continue to outstrip that of innovative pharmaceutical companies, says the report.
In 2005, generic drugs captured 15 per cent of the global healthcare market, with combined revenues of $65bn. 74 major drugs are due to come off patent in the period 2007-2011.
According to the report, the five-year period 2007-2011 could see $20bn of additional revenues per year generated by generics companies such as Sandoz and Teva. Big pharmas likely to be hit hardest by the imminent generics flood include Bristol-Myers Squibb, Takeda, AstraZeneca and Eli Lilly, with over 40 per cent of their revenues under threat, while Merck and Pfizer risk losing 50 per cent of their 2005 revenues, says the report.
"There is a considerable difference between the top 20 pharmaceutical companies in both the number of products and the amount of revenues under threat from potential introduction of generics," says Dr Norman.
"Neither Amgen, which currently markets only biological products, nor Merck KgaA, whose portfolio is primarily mature products, face any threat from generic competition, while Roche, Bayer-Schering, Abbott and Schering-Plough face limited threats to their revenues."
Fourteen major drugs are due to lose patent expiry in the US during 2007, including blockbusters Norvasc (amlodipine) from Pfizer, AstraZeneca's Nexium (esomeprazole magnesium) and Janssen's Risperdal (risperidone), while in Europe Risperdal is the only significant drug losing protection this year according to Dr Norman.
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