Generic Drugs (Small Molecule)

RECENT NEWS
New York Times  6 hrs ago  Comment 
Executives said the company was dealing with lower reimbursement for prescriptions as well as rising prices for generic drugs.
Reuters  Sep 29  Comment 
Strides Arcolab Ltd has agreed to buy smaller rival Shasun Pharmaceuticals Ltd in an all-stock deal, valued at about $200 million, to bolster its generic medicine and drug ingredient businesses.
FiercePharma  Sep 26  Comment 
AbbVie may be under fire from the Federal Trade Commission for delaying AndroGel generics, but it won't have to face racketeering claims over its generics-fighting sales tactics.
Jutia Group  Sep 25  Comment 
[PR Newswire] - DUBLIN, Sept. 25, 2014 /PRNewswire/ -- Actavis plc (NYSE: ACT) today confirmed that it has filed an Abbreviated New Drug Application (ANDA) with the U.S. Food and Drug Administration (FDA) seeking approval ... Read more on this. ...
FiercePharma  Sep 25  Comment 
Talk about selling off old products. AstraZeneca has unloaded 18 drugs it no longer sells to specialty generics maker IGI Laboratories. Apparently, IGI thinks it can profit from reintroducing meds that weren't worth the trouble for a drug giant.
FiercePharma  Sep 25  Comment 
We've seen what happens when a big drug goes generic. Plants close, sales reps lose their jobs. As the impending shutdown of a Teva Pharmaceutical Industries unit shows, the same is true for an on-patent drug flop.
Reuters  Sep 25  Comment 
Thousands of tiny shops in India's biggest auto components market do brisk business selling a bewildering array of spare parts for about a third of the official price charged by the likes of Toyota Motor Co or Volkswagen AG .
Reuters  Sep 24  Comment 
Thousands of tiny shops in India's biggest auto components market do brisk business selling a bewildering array of spare parts for about a third of the official price charged by the likes of Toyota Motor Co or Volkswagen AG.
StreetInsider.com  Sep 24  Comment 
Visit StreetInsider.com at http://www.streetinsider.com/Corporate+News/BioMarin+Pharma+%28BMRN%29+Announces+Paragraph+IV+Submission+to+FDA+Covering+Generic+KUVAN/9859003.html for the full story.
Wall Street Journal  Sep 23  Comment 
P&G won a victory in its fight to protect its Crest Whitestrips from generic competition, potentially driving one of its few remaining rivals out of the market.




 
TOP CONTRIBUTORS

For information on generic biologics, see Generic Drugs (Biogenerics and Biosimilars).

Generic drugs are drugs manufactured and marketed without a brand name. In practice, generics are often marketed as equivalents to branded drugs. Generic drugs are generally much cheaper than their branded counterparts for a number of reasons. First, drug development is extremely time consuming and costly. On average, brand-name drug companies spend about $800 million to discover, develop, and produce a new drug. They then have to charge fairly high prices to recoup their investment and actually make a profit. Generic manufacturers, however, don't have to spend nearly as much on drug development. To gain FDA approval, all a company has to do is prove that its version of a drug is chemically equivalent to the original. If the chemical makeup is the same, it's assumed that the research and clinical trials are as applicable to the generic version as they were to the original. Also, generics manufacturers benefit from advertising for branded drugs, lowering their own marketing expenses.

In the U.S., pharmaceutical patents last for 17 years, during which time only the original developer can legally produce the drug covered by the patent. After the expiration of the patent, other drug companies can produce and sell generic versions of the drug. This often leads to price competition, which decreases profits for the manufacturers of branded drugs. Even before patent expiration, generic drug companies can challenge the patent's validity or argue that their version doesn't infringe on the existing drug's patent. The first company to apply for FDA approval for a generic, in spite of an existing patent, receives a 180-day period of exclusivity to produce and sell the generic version. Though a legal battle usually ensues, resulting in significant litigation expenses, the profits from selling the generic version are generally far more than enough to cover any legal costs.

Generic drugs are often brought up in debates about the U.S. health care system as a whole. Many claim that pharmaceutical companies overcharge for their prescription drugs, making quality healthcare too expensive for some to afford. Drug companies cite the high costs of drug development as the reason for high end-user prices. They also often decry the length of patent protection, saying that they have to recoup all the money spent on development within a relatively limited period of time, forcing them to charge higher prices. Nonetheless, there is growing political pressure to lower prescription drug prices and relax the restrictions on generic drug production, despite pharmaceutical companies' warnings that this could slow or hinder the development of life-saving drugs.

Who benefits from generic drugs?

Generic drug companies

Insurance companies

Pharmacies

  • Walgreen Company (WAG), CVS (CVS), Rite Aid (RAD), and Longs Drug Stores (LDG) are four of the largest pharmacy chains in the U.S. Generic drugs are much cheaper than their branded counterparts, so pharmacies are able to purchase their drugs at lower wholesale prices. While some of the cost savings is passed on to customers, the pharmacies are able to still make much higher profit margins on generic drugs. As the chart below demonstrates, the price difference between branded and generic drugs is often not as large as would be expected, considering the much lower costs involved with producing and developing generic drugs.
Brand name and generic drug prices, by retailer
Drug name, dosage, and quantity Costco Walgreens CVS
Zoloft 25mg (30) $85.99 $93.99 $90.59
Sertraline 25mg (30) $6.93 $69.99 $57.99
Prozac 20 mg (30) $147.62 $163.99 $163.99
Fluoxetine 20mg (30) $5.00 $21.99 $16.39
Zocor 20 mg (30) $141.48 $149.99 $154.99
Simvastatin 20mg (30) $5.00 $89.99 $61.59
Pravachol 40mg (30) $152.05 $160.99 $154.99
Pravastatin 40mg (30) $16.19 $71.99 unavailable

Source: Costco.com, Walgreens.com, and CVS.com.

Pharmaceutical Benefit Management Companies

PMBs, like Express Scripts, generally benefit from their clients switching from branded to generic drugs because they make higher profit margins on the sale of generic drugs.

Distributors

Who's hurt by generic drugs?

The companies most negatively impacted by generic drugs are the pharmaceutical companies who originally develop new drugs. When their patents expire, these companies are usually forced to lower their prices in order to compete with the cheaper generic versions of their products. Major pharmaceutical companies generally charge relatively high prices for their drugs while the patents are in effect, which allows them to recoup their R&D costs and make a profit before generics become available. Nonetheless, generics eventually lead to either lower profit margins or a loss of market share, both of which are less than ideal for drug companies.

Some major pharmaceutical companies and approaching patent expirations include:

Wikinvest © 2006, 2007, 2008, 2009, 2010, 2011, 2012. Use of this site is subject to express Terms of Service, Privacy Policy, and Disclaimer. By continuing past this page, you agree to abide by these terms. Any information provided by Wikinvest, including but not limited to company data, competitors, business analysis, market share, sales revenues and other operating metrics, earnings call analysis, conference call transcripts, industry information, or price targets should not be construed as research, trading tips or recommendations, or investment advice and is provided with no warrants as to its accuracy. Stock market data, including US and International equity symbols, stock quotes, share prices, earnings ratios, and other fundamental data is provided by data partners. Stock market quotes delayed at least 15 minutes for NASDAQ, 20 mins for NYSE and AMEX. Market data by Xignite. See data providers for more details. Company names, products, services and branding cited herein may be trademarks or registered trademarks of their respective owners. The use of trademarks or service marks of another is not a representation that the other is affiliated with, sponsors, is sponsored by, endorses, or is endorsed by Wikinvest.
Powered by MediaWiki