Overview

In 2009, generic pharmaceuticals, both "branded" and "unbranded," represented approximately 23% (or $69 billion) of total pharmaceutical prescription dollar purchases of $300 billion. But, since some of the "branded" generics are sold under a "brand label," this statistic can prove misleading. A more realistic picture of the generic industry is represented by "unbranded" generics, which accounted for nearly 11% of the total dollar market, or $32 billion. However, because of the significant pricing differences between "unbranded" generics and their "brand" counterparts, the unit share of the "unbranded" market showed a very different picture. In 2009, approximately 66% of all prescription pharmaceutical products dispensed were "unbranded" generics.

Another way to demonstrate and understand the differences among pure brands, branded generics, and unbranded generics is by using a pricing comparison. Specifically, in 2009, an average prescription was priced as follows:

Industry Average Product = $75
Pure Brand Product = $190
Branded Generic Product = $70
Unbranded Generic Product = $15

There are numerous significant factors continually influencing the growth of the generic pharmaceutical business. Differing combinations of these factors will positively or negatively influence the unbranded generic industry, which will more than double - to over $65 billion - by 2014. Amongst these factors are the following:

• Authorized Generics from brand companies
• Aging US population that consumes more medicines on less income
• Bio-Generics/Bio-Similars are getting closer to being available
• Black Box warnings and other safety concerns for marketed products
• Brand price increases create wider gaps in pricing - and generic profit opportunities
• Brand industry growth has slowed from previous double-digit growth
• Brands pruning costs - promotions, samples, gifts, and detailing
• Chemical and therapeutic substitution rates increasing, both before and after patent expiration/generic introductions
• Co-pays resulting in fewer scripts being filled
• Consolidation within the generic industry - and among providers and suppliers
• Cost-containment efforts throughout the broad healthcare economy
• FDA/OGD approvals slowing down; and fewer approvals and longer approval times
• Fewer novel drugs being approved by FDA
• Fewer primary-care blockbuster drugs being approved
• Foreign-based generic companies growing in numbers and market shares
• Generic companies moving into more stable brand products
• Generics have greater profits than brands to providers
• Generic price cutting slowing; and price increases on older products
• Managed healthcare growth
• Medicare Part D
• ObamaCare will help the entire Rx industry
• Patent/exclusivity expirations by 2014 of brand products that have projected future sales of >$85 billion
• Physician visits are declining
• P IV filings by generic companies - and resulting 180 days’ exclusivity
• Rapid generic conversion after brand patent expirations