The future of the pharmaceutical industry depends on three key trends, says a recent editorial in the Harvard Business Review. First on the list? Generic drugs. The market for off-brand versions of popular medications is set to expand over the next few years as consumers look to cut healthcare costs and the patents expire on major brand-name drugs.
Generic drugs will likely play an important role in the move to reduce medical costs. According to the U.S. Food and Drug Administration, generics typically cost 30 to 80 percent less than their brand-name counterparts. Generic drugs may contain slight variations that cause them to be less effective for certain patients, cautions a recent WCBSTV.com article, but many patients do just as well on generics as they do on brand-name drugs. A report by research firm IMS Health estimates that the move to generics in major therapeutic areas will save $80 to $100 billion worldwide through 2014.
The generics market is expected to benefit as numerous brand name medications lose patent protection in the next two years. Drugs going off patent this year include Flomax, Levaquin, Aricept and Effexor. Next year will see the expiration of patents on Actos, Zyprexa and the cholesterol drug Lipitor, the bestselling drug on the market (which was originally set to expire in 2010, until it won a reprieve). Lexapro, Avandia, Advair, Diovan, Zometa, Viagra and Plavix will lose patent protection in 2012. The Harvard Business Review notes that several pharmaceutical giants are now getting into “branded generics,” or branded versions of their original drugs. The New York Times reported on this trend not too long ago. In emerging markets where consumers are leery of low-quality or counterfeit drugs, brand names are seen as a sign of quality.
Companies that manufacture generic drugs include Actavis, Teva Pharmaceutical Industries (NYSE:TEVA), Sandoz (NYSE:NVS) and Global Pharmaceuticals. Indian companies Ranbaxy Pharmaceuticals (OTC:RBXLF) and Dr. Reddy’s Laboratories (NYSE:RDY) combine the generic market with another trend listed by the Review: emerging markets such as India and China.
The Review selected personalized medicine as the third trend to watch. We recently covered personalized medicine and its role in clinical decision support; that post can be read here.
It’s your turn to voice your opinion. Do you think the Review article is correct in its assessments, or are there other trends that will have a greater impact?