Patent Expiry of Blockbuster Drugs and Push for Lower Healthcare Costs Drive Generic Pharmaceuticals Market

Business Wire, August 15, 2007

PALO ALTO, Calif. -- With several major blockbuster drugs reaching patent expiry, the market for generic pharmaceuticals in the United States is booming and is set to witness significant growth over the next few years. Demand for lower healthcare costs and pressure from payers to increase the use of generics are also major drivers for this market as these drugs are considerably less expensive than the blockbuster drugs developed by branded pharmaceutical companies.

New analysis from Frost & Sullivan (http://www.pharmaceuticals.frost.com), U.S. Generic Pharmaceuticals Market Outlook, reveals that this market earned revenues of $24.71 billion in 2006 and estimates this to reach $49.49 billion in 2013.

If you are interested in a virtual brochure, which provides manufacturers, end users, and other industry participants an overview of the latest analysis of the U.S. Generic Pharmaceuticals Market Outlook, then send an e-mail to Melina Trevino - Corporate Communications at melina.trevino@frost.com with the following information: your full name, company name, title, telephone number, e-mail address, city, state, and country. We will send you the information via email upon receipt of the above information.

"Patent expiries of blockbuster drugs and the availability of multiple low-cost versions of these drugs have had a significant impact on generic prescription volumes, which rose from 48 to 57.3 percent during the same period and is likely to increase further to 77.6 percent by 2013," notes Frost & Sullivan Research Analyst Barath Shankar S.

Generic prescription volumes have consistently exceeded those of branded prescriptions and this trend is likely to continue during and beyond the forecast period (2007-2013). A rapidly aging population in the United States is another key reason for the growth of generic prescriptions.

With the demand for generic drugs, increasing, competition in the generic pharmaceuticals market has intensified and sparked off a wave of consolidation. It has also resulted in significant pricing pressures, forcing several generic pharmaceutical companies to sell products at a loss to maintain a broad portfolio of products to improve marketability.

Companies are also looking to diversify their portfolios by manufacturing 'branded' generics, which are branded prescription products typically manufactured by small- and medium-sized enterprises. Essentially, 'branded' generics are generics in branded packaging, as distinct from 'authorized generics' that are branded products with generics packaging. Several generic pharmaceutical companies are using the strategy of diversifying into the branded drug business to ensure greater stability through a steady revenue stream.

Some of the larger companies are considering other strategies such as backward vertical integration into active pharmaceutical ingredients (API) manufacturing from low-cost manufacturing locations. Having a strong API backbone not only ensures steady supply of raw materials for captive consumption, but could also develop into a successful business unit by itself and contribute significantly to the growth of the company.

Given that low-cost manufacturing locations account for the bulk of API supply, companies that implement this strategy will gain an advantage in the competitive and price-driven generic pharmaceuticals market. However, this may not be a feasible strategy for smaller companies due to the high costs involved in acquiring manufacturing plants.

U.S. Generic Pharmaceuticals Market Outlook is part of the Pharmaceutical Growth Partnership Service, which also includes research in the following markets: U.S. opioid and non-opioid pain management pharmaceuticals, analysis of top 10 specialty pharmaceutical companies, and U.S. drug discovery contract research organizations. All research included in subscriptions provide detailed market opportunities and industry trends that have been evaluated following extensive interviews with market participants. Interviews with the press are available.

Frost & Sullivan, a global growth consulting company, has been partnering with clients to support the development of innovative strategies for more than 40 years. The company's industry expertise integrates growth consulting, growth partnership services, and corporate management training to identify and develop opportunities. Frost & Sullivan serves an extensive clientele that includes Global 1000 companies, emerging companies, and the investment community by providing comprehensive industry coverage that reflects a unique global perspective, and combines ongoing analysis of markets, technologies, econometrics, and demographics. For more information, visit www.frost.com.

U.S. Generic Pharmaceuticals Market Outlook

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