Overview

In 2010, generic pharmaceuticals represented approximately 20% ($65 billion) of total pharmaceutical prescription dollar purchases of $320 billion.

To demonstrate and understand the differences among pure brand products and generics, a pricing comparison is helpful. Specifically, in 2010, an average prescription was priced as follows:

Industry Average $70 Brand $205 Unbranded Generic $15

There are numerous factors and issues influencing the growth of the generic pharmaceutical business. Differing combinations of these factors will positively or negatively influence the generic industry, which is expected to exceed $80 billion by 2015. Amongst these factors are the following:

• Authorized Generics from brand companies — often due to patent settlements
• Aging US population that consumes more medicines on less income
• Bio-Generics/Bio-Similars are getting closer to being available
• Brand price increases create wider gaps in pricing — and generic profit opportunities
• Brand industry growth has slowed from previous double-digits
• Chemical and therapeutic substitution rates increasing, both before and after patent expiration/generic introductions
• Co-pays and high deductibles resulting in fewer brand, but more generic prescriptions 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 with 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 by adding more patients into the system
• Patent/exclusivity expirations by 2015 of brand products that have projected future sales of >$120 billion
• Physician visits are declining
• P IV filings by generic companies — and resulting 180 days' exclusivity
• Rapid generic conversion after brand patent expirations