$36B generic drug market to keep growing

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Driven by the large number of blockbuster drugs that have come off patent, including Prozac, Cipro and Rebetol, the generic drug market grew at a compound annual rate of 12.6 percent, reaching $36.18 billion in 2007, according to a new report by Kalorama Information.

Applications for generic drugs have increased from 307 in 2002 to 973 in 2006, according to the report.

More than $60 billion worth of brand name, blockbuster drugs will lose patent protection in the next decade, which should result in continued robust sales growth for generics. However, Kalorama said that the generic market is changing, with increased consolidation, competition from Eastern Europe, India and China, as well as brand name companies seeking to protect their franchises by moving into generics.

To combat the difficulties, the report said a new breed of generic companies is emerging to threaten brand manufacturers. Using increased revenues generated from generic versions of a growing number of top-selling branded drugs, generic companies are exploring new drug targets, including specialty generics, generics with generic biologics and proprietary molecules.

“With a stronger generic threat than ever, the strategy right now seems to be ‘If you can’t beat them, join them’,” said Mary Anne Crandall, Kalorama analyst. “To defend their turf, companies such as Novartis, Pfizer and Boehringer Ingelheim are seeing the benefit of incorporating a generic unit.”

Generic drug makers are also becoming more aggressive, challenging brand patents. TEVA and Barr have been instrumental in pushing to introduce generic versions of brand name drugs long before U.S. patents expire, according to the report.