Global generics: time for consolidation and expansion

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The global generic drug industry has witnessed an almost decade-long sales euphoria. Volumes and sales growth of prescription generic drugs continued to increase in 2009. At the same time, large companies are consolidating their operations in established markets and/or expanding into emerging ones through local acquisitions or partnerships.


As pointed out by Ms Doris de Guzman on ICIS website of 10 February 2010, Sandoz, Inc acquired the specialty generics business of Austria-based Ebewe Pharma in May 2009, Teva Pharmaceutical Industries Ltd closed its acquisition of US-based Barr Pharmaceuticals in December 2008 and Teva's Japanese joint venture, Teva-Kowa Pharma, acquired a 66% stake in generics firm Taisho Pharmaceutical Industries. In Teva's 2010-2015 growth strategy announced in early January 2010, the company says it will continue to acquire companies that will boost its market share in attractive geographies as well as enhance its branded business with niche specialty products. "Only those who are agile and strong will survive in this business," said Teva President and CEO Mr Shlomo Yanai during the company's investor meeting in January 2010 in Jerusalem. "About 15% of our business will come from acquisitions. We are taking the necessary steps and building our infrastructure by getting assets and know-how either internally, through acquisition or partnerships". Teva estimates its 2009 global sales at US$13.9 billion, of which 70% are from generic products. Mr Yanai is targeting US$31 billion in sales by 2015, of which 70% will still come from generics. "There is still room to grow in generics," said Mr Yanai. "Almost US$150 billion of branded drugs are going to be off patent in the next five years. This does not include the expiration of biologics, which is an additional US$50 billion potential." Teva expects that the global generics market will reach between US$135 billion and US$150 billion by 2015.

BCC estimates the global market to reach US$129.3 billion by 2014, representing a 9% annual growth rate. While generics firms are eagerly awaiting the ticking patent expiration of several branded blockbuster drugs, manufacturers are also monitoring the increasing emergence of government healthcare reforms worldwide. "In almost any given country in the world, you may see different kinds of initiatives or reforms on their own healthcare systems or even regulating their own pharmaceutical industry. This will increase the pace of generic drug penetration, especially in countries that are asking for better health care," said Mr Yanai.

International markets are especially ripe for generics, BCC Analyst Mr Paul Evers told Ms De Guzman. “In the US$59 billion global generics market in developed countries, Japan only accounts for 6%, while the US holds 42%, and five major European national markets account for 23%. India, Eastern European countries and Brazil are raising centres of generics activity in emerging markets,” Mr Evers added.

“Big Pharma companies are even buying generics firms to get into these emerging markets” said Mr Doug Long, Vice-President, Industry Relations at IMS Health. He mentioned France-based Sanofi Aventis's acquisitions of Brazil's Medley in 2009 and Mexico's Kendrick’s of Czech Republic-based Zentiva in 2008. UK-based GlaxoSmithKline (GSK) acquired Aspen Pharma of South Africa in July 2008, while at the same time, Japan's Daiichi Sankyo acquired India's Ranbaxy Pharmaceuticals Inc. (see also After generics slow down in 2013: into biosimilars and IMS Health, BCC: Generics sales continue to climb)


Tracy Staton. Fast-growing generics ripe for consolidation. FiercePharma. 2010 February 10.

Generic drugs sales continue to climb. Pharmagossip. 2010 February 10.

Doris de Guzman. Nonbranded drugs are expected to continue their strong growth. But could the dearth of their new branded rivals cause the sector to hit a wall? ICIS. 2010 February 10.

Source: FiercePharma; Pharmagossip; ICIS

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