Super Generics ? When Intelligence goes Downstream

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By: Hariharan B -- Senior Research Analyst

25 June, 2013

Super Generics ? When Intelligence goes Downstream
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Patent expiry of blockbuster drugs has impacted the pharmaceutical market growth. The global prescription market has declined from 3.2% (2008-11) to 2.6% (2012-15). This in turn has driven the generic market which is expected to grow at a CAGR of 6-7%. However, all is not well for generic companies in US as they face rising competition from Indian generic players. Hence to achieve cost advantage, generic players like Teva and Mylan have adopted an emerging market strategy. Teva has outsourced its drugs to Indian CMOs such as Piramal, Emcure, Cipla, Unichem and Impax. On the other hand, Mylan manufactures the drugs in its Indian facility for US market. Teva plans to achieve USD 2 billion over the next five years through changes in manufacturing strategy and sourcing strategy. Hence they are concentrating on bigger and more efficient plants- thereby shifting their production to low cost nations. As a result, in 2013, they have sold their Irvine, CA; Mirabel, Quebec facility. In addition to it, they have also halted the expansion of Philadelphia facility. Thus generic companies are looking for various avenues to sustain their profit margins. One of the new areas of exploration is supergeneric. What is Supergenerics? A traditional generic drug is a copycat of a branded drug which is released after the patent expiry. The price of generic drug is around 80% less than the branded drug. Hence, with launch of generic drug the innovator?s drug significantly loses its revenue and market share. Super generics are small molecule drugs which offer a therapeutic advantage over the original drug. They would have improvements in delivery, dosage or manufacturing process.