Generic Growth Set to Slow

Generics growth set to slow as the age of the blockbuster ends

As of 2012, the number of branded blockbuster products losing patent exclusivity will begin to shrink. Consequently, sales growth in the generics market will begin to slow, forcing leading generics players to explore new paths of growth, such as biosimilars. However, the generics industry appears set to enter a period of transition, shaped by increased competition from key industry players.

The global generics industry has evolved significantly over the past decade. Revenues have continued to grow strongly, as illustrated by a 2005-09 compound annual growth rate (CAGR) of 10.3%, with analysts estimating the global generics market to be worth nearly $80 billion in 2009. Sales growth has been driven by two key factors: growing demand for cheaper pharmaceuticals as a means to contain healthcare expenditure; and a series of patent expirations on heavily prescribed branded 'blockbuster' products, which the generics industry has capitalized on.

However, leading analysts expect that sales growth for the generics industry will begin to slow out to 2015, at a forecasted CAGR of just 5.0%. Closer analysis reveals that a deceleration in sales growth will take hold from 2012 onwards, as demonstrated by a global CAGR of 3.7% over 2012-15 compared to a 6.3% CAGR for 2009-12. In short, the level of revenue associated with blockbuster products that have become exposed to the generics industry via patent expiration will begin to decrease sharply from 2012 onwards. This sharp decline, driven partly by a fall in the production of blockbuster drugs over the past decade, will deprive the generics industry of significant revenue injections. The end of this 'golden era' of patent expiries will fundamentally shift the generics landscape, as sections of the wider pharmaceutical market become more commoditized.

The ability of the generics industry to 'piggyback' on the blockbuster boom has been facilitated in particular by...