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Generic drug industry - a boon for developing nations
Rahul Sehgal | Thursday, August 18, 2011, 08:00 Hrs  [IST]

Generic drug industry has emerged as a boon for developing countries where people of low income level cannot afford costly medication for life-threatening diseases. People throughout the globe trust these affordable medicines, and without them antiretroviral, cancer drugs, and hundreds of other basic medications would be out of reach for millions. Though the journey so far was not so smooth for the industry, it has managed to shine effectively erasing all myths propagated to tarnish its credibility.

The long-term prospects are quite bright for generic drug industry. The expiration of numerous branded drug patents in near future, prospects of generic biotechnology drugs and liberal regulatory environment are opening up huge opportunities for the industry. India tops the world in exporting generic medicines worth US$ 11 billion and currently, the Indian pharmaceutical industry is one of the world's largest and most developed. In fact, Indian health ministry has asked all the public hospitals and autonomous medical institutions to compulsorily prescribe cheaper generic versions of branded drugs.

As per the report  - “Booming Generics Drug Market in India”, generic drug industry in India has witnessed fast growth during the past few years. Factors like huge investments, low cost manufacturing capabilities and the availability of skilled manpower resulted in a US$ 20 billion generics market at the end of Financial Year  2010. Further, the market is likely to grow at a Compound Annual Growth Rate (CAGR) of around 16.3 per cent during Financial Year 2011-2012.

Since its inception, the generic drug industry is facing various challenges. Pharmaceutical companies that market generic products generally are not considered as innovators, but rather as companies that produce copies of originator products to be launched at patent expiration. A number of questions have been raised against its credibility. Given below are some common myths:

  • Generic drugs cost less because they are inferior to brand name drugs.
  • There are quality problems with generic drug manufacturing.
  • Brand name drugs are safer than generic drugs.
  • FDA allows generic drugs differ from the brand name counterpart by up to 45 per cent.
  • People who have switched to a generic drug are risking treatment failure.

Challenges facing by generic drug industry
In spite of facing various challenges, the generic pharmaceutical industry is growing at strong pace particularly in emerging economies. According to McKinsey report ‘India Pharma 2015 - Unlocking the potential of Indian pharmaceuticals market’ – Generics will continue to dominate the market while patent-protected products are likely to constitute 10 per cent of the pie till 2015.

Hence, realizing the immense potential and growth opportunities, now big pharmaceutical companies are also entering into generic drug market and are paying attention, striking deals with generics companies and even building units of their own.

It has also been noted that major players has adopted numerous ways to fend off generic competition. These large pharmaceuticals have come forward with various strategies to tighten their patent duration for a long period of time. Evergreening and authorized generic are such an attempts made by them.

‘Evergreening’ is when patent owners aim to extend the patent duration by seeking a new patent that “updates” the first one before its expiration and is done by claiming things such as an “inventive” method for administering the pharmaceutical compound covered by the base patent. For pharmaceutical products, this implies an extended monopoly that excludes generic drugs from the market.

Another strategy adopted by large pharmaceuticals producers is authorized generics. They are pharmaceuticals marketed by or on behalf of an innovator drug company but sold under a generic name. Some also try to protect their patents by taking generic drug makers to court and delay the release of cheaper version.

Indian generic drug industry supplies life saving drugs to the poor countries and other developing nations. It is a boon for people who are fighting with diseases like HIV/AID, diabetes, cancer and cannot afford to pay high prices for them.

Despite having a strong impact on pharmaceuticals industry, generic drug manufacturers are often regarded as imitators. There is an urgent need for generic drug makers to refurbish their image and earn the respect commanded by the branded drug manufacturers in the market.
 
(The author is chairman, Nestor Pharmaceuticals Ltd)

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