The U.S. Generic Prescription Drug Industry

Report Highlights

• The U.S. prescription generic drug market is projected to grow from an estimated $11.1 billion in 2001 to more than $19 billion in 2006, representing an average annual growth rate (AAGR) of 11.4%.
• Major growth in the market is projected to derive from the respiratory, central nervous system, gastrointestinal and anticancer therapeutic categories.
• Cardiovascular drugs alone represent nearly 21% of the generic prescription drug market.
• Anti-infectives (14.4%) and antiarthritics/analgesics (14.0%) are the next largest generic drug categories.

INTRODUCTION

STUDY GOAL AND OBJECTIVES

The aim of this report is to provide a range of information-from detailed market analyses through industry trends-to quantify and qualify the market for prescription generic drugs. Forecasts of product categories and industry trends are provided for the U.S. market and, when available, for international markets. Forecasts and trends are gleaned from industry sources as well as from considered assessment of the legislative environment, healthcare policies, demographics, and other factors that directly affect the generic drug market.

The report develops forecasts for the generic drug market for major therapeutic categories through 2006 and also examines strategies employed by generics-only companies to meet the challenges of this highly competitive market. This report also analyzes strategies employed by branded product companies to forestall generic competition.

REASONS FOR DOING THE STUDY

Issues driving the international generic drug industry include patent expirations of many of the best-selling drugs within the next decade, the increasing presence of managed care and other cost-containment efforts in the U.S. and other countries, and increasing numbers of prescriptions filled with less expensive generic alternatives. By 2004 it is projected that in the U.S. generics will surpass branded products in the number of new prescriptions written.

Generics represent a lesser percent of prescriptions written in most other countries but are gaining share almost universally. In 2001, generics represented approximately 11% of the international pharmaceutical market and 9% of the U.S. drug market in dollars. The generics drug market is projected to enjoy double-digit growth throughout the forecast period, compared to 6% growth projected for branded products.

CONTRIBUTIONS OF THE STUDY AND FOR WHOM

This report provides a thorough background in the prescription generic drug market, offering information needed to understand the current market and to approach the emerging one. It is an invaluable tool for planners, acquisitions specialists, licensing strategists, product managers, market research analysts, investor consultants, and anyone interested in the prescription generic pharmaceuticals market, its products, its industry participants, and its future.

SCOPE AND FORMAT

The scope of this study is worldwide, although the focus is the U.S. market. All major therapeutic categories for prescription generic drugs in the U.S. are forecasted and discussed. Other markets discussed include Brazil, Canada, Chile, France, Germany, Japan, Mexico, Russia, Spain, and the U.K. The major emphasis of the report is the U.S. generic drug industry because of its maturity, current size, potential for market growth and leadership in generic and therapeutic drug substitution.

The overview section presents the market trends affecting generic drug industry growth and prescribing practices, a comprehensive market size and growth analysis for the U.S. prescription generic drug industry over the period 1999 to 2006. It also describes industry, healthcare, legislative, and regulatory activities that will shape the future of the industry.

Particular emphasis is given to strategies employed by branded drug manufacturers to prevent generic competition as well as strategies employed by generic manufacturers to meet this challenge. Also discussed in this section are new avenues being undertaken by generic drug manufacturers to increase profit margins. Among these strategies are mergers, development, and marketing of branded products and the development of niche or specialty products, including biologics and biopharmaceuticals.

Government Regulations

The government regulation section provides an assessment of the Food and Drug Administration (FDA) relationship with the generic drug industrygeneric drug development and regulatory approval requirements. Also. the performance and productivity of the FDA in approving prescription generic drugs, proposed changes to the Hatch-Waxman Act, and the consequences of prescription drug coverage under Medicare.

The market analysis section comprises the focus of the report and presents sales data and market size estimates for each major therapeutic category. The analysis includes biotechnology products, products within each category open to generic competition, degree of historic and future generic penetration, and forecasts of market size and estimated growth rates for each major therapeutic category over the period 1999 through 2006.

Therapeutic categories discussed in this report include:

• antiarthritic/analgesic agents
• anticancer agents
• anti-infective agents (including antibacterials, antifungals, and antivirals)
• cardiovascular agents
• central nervous system agents
• gastrointestinal agents
• hormones
• respiratory agents
• other generic drugs (including antidiabetic agents, dermatologicals, immunosuppressive agents, and ophthalmics)

Market figures are based on revenues at the manufacturers' level and are projected at 2002-dollar value-that is, inflation is not computed into the projection figures. The international generic drug industry section provides an assessment of selected major international generic drug markets and describes drug pricing policies, cost containment efforts, and political and economic trends affecting the growth of selected generic drug markets worldwide.

The industry section reviews market leaders in generic drugs and the impact of patent expirations throughout the forecast period. Profiles of selected leading and innovative generics-only companies and generic divisions of research-based pharmaceutical companies are provided.

METHODOLOGY

Information to prepare this study was derived from marketing strategists, industry executives, and others at leading companies in the generic drug industry. Data was also obtained from government agencies and regulatory bodies that monitor and/or regulate generic drugs. Surveys of physicians and pharmacists to assess prescribing practices and opinions on products were also used. Searches of company annual reports and 10Ks, journal articles, prospectus assessments, government resources, and data from healthcare institutions were also conducted.

INFORMATION SOURCES

Information to prepare this report was obtained from generic and branded drug companies, industry analysts, healthcare personnel, trade associations such as the Generic Pharmaceutical Association (GPhA), government agencies such as the Office of Generic Drugs (OGD) of the FDA, literature searches, annual reports, and 10Ks.