Generic Growth Strategies
Market Driven by Impending Patent Cliff, Declining R&D Productivity and
Government Initiatives to Reduce Healthcare Costs
GBI Research Report Guidance
GBI Research Report Guidance
· Chapter three gives an overview of the generic pharmaceutical market. It includes a list of leading
generic pharmaceutical companies, the generic market share of select countries, and drivers and
restraints of the generic pharmaceutical market.
· Chapter four describes the regulatory landscape of the generic drugs industry in the US, major
European countries such as the UK, Germany, France, Italy and Spain, and Japan. This section details
the current and upcoming regulations that are expected to have an impact on the growth of the
generics market.
· Chapter five gives details of the major growth strategies adopted in the generics drugs industry. Case
studies accompany the strategies to show their real market impact.
· Chapter six is focused on competitive profiling. This section includes detailed profiles of the top
companies operating in the generics market, along with their generic growth strategies.
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Executive Summary
Executive Summary
Leading Generic Companies Resort to Multiple Strategies for Growth
Most of the leading generic giants such as Teva, Sandoz, Mylan and Watson use multiple options to ensure
a high market share and future growth. The strategies used include applying for generic approvals with the
Food and Drug Administration (FDA) and European Medicines Agency (EMA), Mergers and Acquisitions
(M&As), developing a strong and innovative generic drug pipeline, improving infrastructure to enhance
manufacturing and Research and Development (R&D) capabilities, new product launches, and geographic
expansion.
Generic and innovative pharmaceutical companies are exploring all of the ways available to increase their
presence in the generic pharmaceutical market, given the current scenario where governments are
encouraging the increased use of generics to bring down healthcare costs. For instance, Hospira is reaching
out to cover new geographies in order to develop their presence in generics across the world, and also
increasing their product coverage by offering generics that are available in the market but not included in
their product portfolio.
The advantage of being the first to launch a generic in the market has been capitalized on by companies
such as Hospira, by challenging the intellectual property of proprietary pharmaceutical companies. The
strategy has resulted in generating generic blockbusters, such as in the case of Sandoz’s generic enoxaparin.
With the regulatory landscape in biosimilars taking shape, many pharmaceutical companies are developing
biosimilars of potential reference biologics that are soon going off-patent.
Difficult-to-Reproduce Generics Being Developed to Beat Competition
Some of the generic companies are focusing on a new trend by offering generics that have high barriers to
entry and are as a result available at higher prices. These are called super generics, and are developed as
value-added reformulations of off-patent drugs that require New Drug Application (NDA) submissions.
Super generics offer a means of differentiation in the industry. For the development of super generics,
these companies have to invest in R&D to launch reformulated versions of off-patent drugs, or apply a
complex manufacturing process. Significant potential for super generics lies in specific therapeutic areas.
Super generics producers focus on areas of unmet medical needs that are not satisfied by the current
therapies, in high sales potential areas such as Central Nervous System (CNS) and cancer. Areas where
innovators have already patented extensively and developed several line extensions in easy-to-formulate
markets, such as cardiovascular drugs, have less attractiveness to super generics manufacturers.
There are several types of reformulation strategy that are adopted to make super generics out of off-patent
drugs, such as new dose forms (injection to oral forms, extended release), new combinations and new salts.
For instance, Dr. Reddy’s Laboratories (DRL) sells fondaparinux, which is the generic version of
GlaxoSmithKline’s (GSK) Arixtra, in the US. Alchemia develops the product with the help of a novel, cost-
effective synthesis for the manufacture of fondaparinux at commercial scale. The process is patent
protected until 2021 (fondaparinux product website, 2012). There is no risk of raw material contamination
with fondaparinux since it is a purely synthetic compound. Generic fondaparinux has a superior efficacy and
safety profile when compared to other heparin drugs. The bulk manufacturer, DRL, produces fondaparinux
at a reasonably competitive price in the US market.
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Executive Summary
Opportunities Worth More than $100 billion in Generics and Biosimilars
By 2015, branded products
with sales of up to $135 The looming drug patent expiration loss the industry is presently facing is unprecedented, in terms of both
billion will go off-patent, the number of drugs and the magnitude of the total hit. However, this same situation presents a huge
giving generic opportunity for the generic drug makers.
pharmaceutical companies The figure below is an illustration of the global revenues of the top 10 drugs that are set to lose their patent
immense opportunities to protection between 2013 and 2020.
capitalize on the market
Generic Growth Strategies, Global, Revenues of the Top 10 Drugs Due for Patent Expiry ($m), 2013-
2020
9,000
8,000
7,000
6,000
Revenues ($m)
5,000
4,000
3,000
2,000
1,000
0
Crestor
Abilify
Rituxan/mabThera
Enbrel
Lantus
Januvia/Janumet
Remicade
Avastin
Herceptin
Humira
Source: GBI Research; GBI Research’s Proprietary Products Database [accessed on: September 20, 2012]
Note: The patent of blockbuster drug Enbrel has been extended to 2028
The pharmaceutical industry will experience major patent expiries during 2013-2020, of which 2014 to 2017
are expected to be peak years, with the loss of patents for drugs whose sales were worth more than $76
billion during 2011. By 2015, branded products with sales of up to $135 billion will go off-patent, giving
generic pharmaceutical companies immense opportunities to capitalize on the market (Teva, 2011). Along
with generic drugs, pharmaceutical companies will also have the opportunity to develop biosimilars, as
biologics with 2011 sales of approximately $64 billion will go off-patent over the next five years (Novartis,
2012).
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Executive Summary
Significant Increase in ANDA Applications and Approvals
In 2012, there were more
first-time generic drug The number of Abbreviated New Drug Applications (ANDAs) filed by generic companies has significantly
approvals when compared increased between 2006 and 2011, indicating upcoming generic competition.
to the corresponding months The figure below displays the number of generic ANDA approvals and filings between 2006 and 2011.
of 2011
Generic Growth Strategies, Number of Generic ANDA Filed and Approvals, 2006-2011
1,000
946
900 882 854
828
835 794
800
700
600
500
400
300
200
99 112
100 91 93
100 93
0
2006 2007 2008 2009 2010 2011
Generic ANDA filed Generic ANDA approvals
Source: GBI Research; FDA, 2012a
Available data from the FDA shows that the number of ANDAs submitted for generic drugs has increased
significantly during the past two years.
In 2012, there were more first-time generic drug approvals when compared to the corresponding months of
2011. For instance, there were 23 ANDA approvals in March 2012, which is significantly higher when
compared to two ANDA approvals in March 2011. Similarly, May 2012 saw 32 approvals in comparison to
only nine approvals in May 2011. If the trend continues, 2012 may witness higher approvals than 2011, as
the total number of approvals has already reached 76 for 2012 (as of July 26, 2012), which is only marginally
lower than the total of 93 approvals in 2011 (FDA, 2012c).
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Executive Summary
Government Initiatives for Generics Strengthen as Healthcare Costs Increase
The 2012 budget of the US proposes to ban the controversial ‘pay-for-delay’ type of agreements between
innovator and generic drug makers. The Federal Trade Commission (FTC) estimates that a pay-for-delay ban
would cut deficits by $2.7 billion over 10 years (PharmaTimes, press release, October 26, 2011). The budget
has also proposed to reduce patent protection on brand-name biologics from the current 12 years to seven
years, with a view to benefiting consumers by hastening the introduction of biosimilars and increasing
healthcare savings (Barlas, 2011).
According to the Affordable Care Act (ACA), the generic drug costs paid by non-Low Income Subsidy (LIS)
beneficiaries in the Medicare Part D (MPD) coverage gap will gradually reduce from 86% in 2012 to 25% in
2020. The majority of cost sharing will be undertaken by the MPD plan as it will pay 75% of the generic drug
costs by 2020 (Medicare, 2012).
On February 15, 2012, the FDA issued three guidance documents that are intended to provide a roadmap
for biosimilar development. In June 2012, the EMA laid out guidelines regarding requirements for
developing biosimilar monoclonal antibodies (mAb).
The Italian government set out a series of measures as part of its major austerity package to save €24 billion
($31.8 billion) by cutting expenditure on medicines by approximately €1.3 billion ($1.7 billion) from 2010 to
2012 (RIA Novosti, press release, December 5, 2011). In Spain, a Royal Law Decree was introduced in August
2011 that mandates prescription by molecule rather than by brand. The decree may enhance generic
penetration in the Spanish market. The decree will help the state and the autonomous regions save a total
of €2.4 billion ($3.1 billion) per year in medicines (Bloomberg, press release, July 2, 2012). The Japanese
government has started promoting generic name prescribing, and has established a financial incentive
scheme that encourages pharmacies to substitute generic drugs for branded ones, to increase generic
penetration to 30% by 2012 or March 2013 (Ministry of Health, Labor and Welfare, 2012).
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Table of Contents
1 Table of Contents
1 Table of Contents ........................................................................................................................................ 7
1.1 List of Tables .................................................................................................................................. 10
1.2 List of Figures................................................................................................................................. 10
2 Generic Growth Strategies - Introduction ................................................................................................. 11
3 Generic Growth Strategies - Market Overview ......................................................................................... 12
3.1 Overview of the Generics Market ................................................................................................. 12
3.1.1 Leading Generics Companies................................................................................................. 12
3.1.2 Generics Market Share .......................................................................................................... 14
3.2 Drivers and Restraints ................................................................................................................... 15
3.2.1 Drivers ................................................................................................................................... 16
3.2.2 Restraints .............................................................................................................................. 21
4 Generic Growth Strategies - Regulatory Landscape .................................................................................. 23
4.1 The US ........................................................................................................................................... 23
4.1.1 Hatch-Waxman Act and ANDA .............................................................................................. 23
4.1.2 Shortening Market Exclusivity of Biopharmaceuticals and Impact on Generics .................... 25
4.1.3 ‘Pay-For-Delay’ Ban to be Detrimental to Innovators as Well as Generics ............................ 25
4.1.4 Cost-sharing of Generic Drugs ............................................................................................... 25
4.1.5 Impact of Supplemental Examination Provision of Patent Reform Act on Generics .............. 26
4.1.6 Biologics Price Competition and Innovation Act Falls Short .................................................. 26
4.2 Europe ........................................................................................................................................... 28
4.2.1 Generic Penetration .............................................................................................................. 28
4.2.2 Generic Substitution .............................................................................................................. 29
4.2.3 Pricing and Reimbursement .................................................................................................. 29
4.2.4 Marketing Authorization for Generics ................................................................................... 29
4.2.5 Generic Landscape in Leading European Markets ................................................................. 29
4.2.6 Common European Union Patent System.............................................................................. 31
4.2.7 Tendering .............................................................................................................................. 32
4.2.8 Regulatory Landscape for Biosimilars ................................................................................... 32
4.2.9 The Future of Biosimilars is Advancing Along a Path Smoothened by European Groundwork
.............................................................................................................................................. 32
4.3 Japan ............................................................................................................................................. 33
4.3.1 Generics................................................................................................................................. 33
4.3.2 Biosimilar............................................................................................................................... 34
5 Generic Growth Strategies - Major Strategies .......................................................................................... 35
5.1 Authorized Generics ...................................................................................................................... 35
5.1.1 Case Study ............................................................................................................................. 37
5.2 Mergers and Acquisitions .............................................................................................................. 37
5.2.1 Vertical Integration ............................................................................................................... 39
5.2.2 Therapeutic Expansion - Biosimilars ...................................................................................... 39
5.3 Outsourcing ................................................................................................................................... 40
5.3.1 Outsourcing Opportunities in Biosimilars .............................................................................. 40
5.3.2 Outsourcing is Also a Source of Income for Generics Companies .......................................... 40
5.4 Marketing Partnership .................................................................................................................. 41
5.4.1 Case Studies .......................................................................................................................... 41
5.5 Paragraph IV Certifications ............................................................................................................ 42
5.5.1 Case Studies .......................................................................................................................... 42
5.5.2 Example of a Paragraph IV Challenge That Did Not Work Out for a Generic ........................ 42
5.6 R&D Strategies Employed by Key Players in the Generics Market ................................................ 43
5.6.1 Super Generics....................................................................................................................... 43
5.6.2 Biosimilars ............................................................................................................................. 44
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Table of Contents
5.7 Increasing Awareness and Acceptance ......................................................................................... 46
6 Generic Growth Strategies - Competitive Landscape................................................................................ 47
6.1 Teva Pharmaceutical Industries Limited ........................................................................................ 47
6.1.1 Overview ............................................................................................................................... 47
6.1.2 Revenue Analysis ................................................................................................................... 47
6.1.3 Therapeutic Focus ................................................................................................................. 48
6.1.4 Geographic Focus .................................................................................................................. 48
6.1.5 Generic Growth Strategies .................................................................................................... 48
6.1.6 SWOT..................................................................................................................................... 51
6.2 Sandoz ........................................................................................................................................... 52
6.2.1 Overview ............................................................................................................................... 52
6.2.2 Revenue Analysis ................................................................................................................... 52
6.2.3 Therapeutic Focus ................................................................................................................. 52
6.2.4 Geographic Focus .................................................................................................................. 52
6.2.5 Generic Growth Strategies .................................................................................................... 53
6.2.6 SWOT..................................................................................................................................... 54
6.3 Mylan............................................................................................................................................. 55
6.3.1 Overview ............................................................................................................................... 55
6.3.2 Revenue Analysis ................................................................................................................... 55
6.3.3 Therapeutic Focus ................................................................................................................. 55
6.3.4 Geographic Focus .................................................................................................................. 55
6.3.5 Generic Growth Strategies .................................................................................................... 57
6.3.6 SWOT..................................................................................................................................... 58
6.4 Watson .......................................................................................................................................... 59
6.4.1 Overview ............................................................................................................................... 59
6.4.2 Revenue Analysis ................................................................................................................... 59
6.4.3 Therapeutic Focus ................................................................................................................. 59
6.4.4 Geographic Focus .................................................................................................................. 59
6.4.5 Generic Growth Strategies .................................................................................................... 60
6.4.6 SWOT..................................................................................................................................... 61
6.5 Actavis ........................................................................................................................................... 62
6.5.1 Overview ............................................................................................................................... 62
6.5.2 Revenue Analysis ................................................................................................................... 62
6.5.3 Therapeutic Focus ................................................................................................................. 62
6.5.4 Geographic Focus .................................................................................................................. 62
6.5.5 Generic Growth Strategies .................................................................................................... 62
6.5.6 SWOT..................................................................................................................................... 63
6.6 Hospira .......................................................................................................................................... 64
6.6.1 Overview ............................................................................................................................... 64
6.6.2 Revenue Analysis ................................................................................................................... 64
6.6.3 Therapeutic Focus ................................................................................................................. 64
6.6.4 Geographic Focus .................................................................................................................. 64
6.6.5 Generic Growth Strategies .................................................................................................... 65
6.6.6 SWOT..................................................................................................................................... 66
6.7 Sanofi............................................................................................................................................. 67
6.7.1 Overview ............................................................................................................................... 67
6.7.2 Revenue Analysis ................................................................................................................... 67
6.7.3 Geographic Focus .................................................................................................................. 67
6.7.4 Generic Growth Strategies .................................................................................................... 67
6.7.5 SWOT..................................................................................................................................... 68
6.8 Daiichi Sankyo ............................................................................................................................... 68
6.8.1 Overview ............................................................................................................................... 68
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Table of Contents
6.8.2 Revenue Analysis ................................................................................................................... 68
6.8.3 Geographic Focus .................................................................................................................. 68
6.8.4 Generic Growth Strategies .................................................................................................... 68
6.8.5 SWOT..................................................................................................................................... 69
6.9 Aspen ............................................................................................................................................. 69
6.9.1 Overview ............................................................................................................................... 69
6.9.2 Revenue Analysis ................................................................................................................... 69
6.9.3 Geographic Focus .................................................................................................................. 69
6.9.4 Generic Growth Strategies .................................................................................................... 70
6.9.5 SWOT..................................................................................................................................... 70
6.10 STADA ............................................................................................................................................ 71
6.10.1 Overview ............................................................................................................................... 71
6.10.2 Revenue Analysis ................................................................................................................... 71
6.10.3 Therapeutic Focus ................................................................................................................. 71
6.10.4 Geographic Focus .................................................................................................................. 71
6.10.5 Generic Growth Strategies .................................................................................................... 72
6.10.6 SWOT..................................................................................................................................... 72
7 Generic Growth Strategies - Conclusion ................................................................................................... 73
8 Generic Growth Strategies - Appendix ...................................................................................................... 74
8.1 Market Definitions......................................................................................................................... 74
8.2 Abbreviations ................................................................................................................................ 74
8.3 Bibliography .................................................................................................................................. 75
8.4 Research Methodology ................................................................................................................. 77
8.4.1 Coverage ............................................................................................................................... 77
8.4.2 Secondary Research .............................................................................................................. 77
8.4.3 Primary Research .................................................................................................................. 78
8.4.4 Expert Panel Validation ......................................................................................................... 78
8.5 Contact Us ..................................................................................................................................... 78
8.6 Disclaimer ...................................................................................................................................... 78
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Table of Contents
1.1 List of Tables
Table 1: Generic Growth Strategies, Global, Revenues of Leading Generic Companies ($bn), 2010-2011 13
Table 2: Generic Growth Strategies, Global, Revenues of Major Drugs Due for Patent Expiry ($m), 2013-
2020.............................................................................................................................................. 17
Table 3: Generic Growth Strategies, Number of Generic ANDA Filed and Approvals, 2006-2011 ............. 18
Table 4: Generic Growth Strategies, ANDA Approvals by Month, The US, 2011-2012 .............................. 19
Table 5: Generic Growth Strategies, Number of EMA Authorized Generics, Europe, 2007-2012.............. 20
Table 6: Generic Growth Strategies, Number of Biosimilars Authorized by the EMA, Europe, 2006-2012 22
Table 7: Generic Growth Strategies, The US, Generic Drug Cost-Sharing (%), 2011-2020 ......................... 26
Table 8: Generic Growth Strategies, Notable Authorized Generics Entry, The US, 2010-2012.................. 35
Table 9: Generic Growth Strategies, Generic Products Launched, Teva, The US, 2011 ............................. 49
Table 10: Generic Growth Strategies, Top Five Generic Active Ingredients, STADA Group, Revenue ($m),
2011.............................................................................................................................................. 71
1.2 List of Figures
Figure 1: Generic Growth Strategies, Global, Revenues of Leading Generic Companies ($bn), 2010-2011 13
Figure 2: Generic Growth Strategies, Generic Market Share in Selected Countries, 2010 .......................... 14
Figure 3: Generic Growth Strategies, Drivers and Restraints, 2012 ............................................................ 15
Figure 4: Generic Growth Strategies, Global, Revenues of Top 10 Drugs Due for Patent Expiry ($m), 2013-
2020.............................................................................................................................................. 16
Figure 5: Generic Growth Strategies, Number of Generic ANDA Filed and Approvals, 2006-2011 ............. 18
Figure 6: Generic Growth Strategies, ANDA Approvals by Month, The US, 2011-2012 .............................. 19
Figure 7: Generic Growth Strategies, Number of EMA Authorized Generics, Europe, 2007-2012.............. 20
Figure 8: Generic Growth Strategies, Number of Biosimilars Authorized by the EMA, Europe, 2006-2012 22
Figure 9: Generic Growth Strategies, The US, Generic Drug Cost-Sharing (%), 2011-2020 ......................... 25
Figure 10: Generic Growth Strategies, SWOT Analysis, Teva, 2012 .............................................................. 51
Figure 11: Generic Growth Strategies, SWOT Analysis, Sandoz, 2012 .......................................................... 54
Figure 12: Generic Growth Strategies, SWOT Analysis, Mylan, 2012 ............................................................ 58
Figure 13: Generic Growth Strategies, SWOT Analysis, Watson, 2012.......................................................... 61
Figure 14: Generic Growth Strategies, SWOT Analysis, Actavis, 2012........................................................... 63
Figure 15: Generic Growth Strategies, SWOT Analysis, Hospira, 2012 .......................................................... 66
Figure 16: Generic Growth Strategies, SWOT Analysis, Sanofi, 2012 ............................................................ 68
Figure 17: Generic Growth Strategies, SWOT Analysis, Daiichi Sankyo, 2012 ............................................... 69
Figure 18: Generic Growth Strategies, SWOT Analysis, Aspen, 2012 ............................................................ 70
Figure 19: Generic Growth Strategies, SWOT Analysis, STADA Arzneimittel AG, 2012 ................................. 72
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Generic Growth Strategies: Introduction
2 Generic Growth Strategies - Introduction
Generic drugs have the same active ingredient as their corresponding innovative drugs, and are therefore
an equivalent but cheaper therapeutic option compared to innovative drugs, due to less cost and time being
required in their development process.
Generic drugs need to meet similar governmental regulatory requirements as those for innovative drugs,
and should be approved by regulatory authorities to be sold in particular countries. The demand for generic
drugs is growing continuously due to the need to control rising healthcare expenditure, particularly with
regard to the increasing elderly population.
In the US, generic drugs can cost up to 90% less than branded drugs (Federal Trade Commission, 2010).
Generics bring relief to payers by lowering healthcare costs. Meanwhile, demand for high-quality generics is
expected to increase in the future, with a number of branded drugs going off-patent. The use of generics
has saved the US healthcare system over $1 trillion from 2000 through 2010 (Generic Pharmaceutical
Association (GPhA), press release, August 2, 2012).
In ‘pure generic’ markets such as the US, the UK, the Netherlands and Israel, generic pharmaceuticals are
substituted by the pharmacist for their brand name equivalent. In these markets, physicians or patients
have little control over the choice of generic manufacturer. Moreover, generic drugs are not actively
promoted to physicians, and the relationship between the generic manufacturer, pharmacy chains,
distributors, health funds, and other health insurers is important.
In ‘branded generic’ markets such as Poland,