Wednesday, December 01, 2004

US generic pharmaceutical leaders We've written recently about consolidation in the generic drug industry. Here's yet another one we missed, Teva's agreement to buy Pfizer's Italian generic drug marketer Dorom S.r.l. Dorom is the #2 supplier of generic drugs in Italy, and it is an indication of Teva's. That acquisition can be added to Teva's interest in expansion in Europe. After all, it is dominant in the US, where one in every 16 prescriptions filled is a Teva product. Generics are a rapidly growing area. Apparently, over 50% of prescriptions being filled in the US are generics, up from 19% in 1984, though they are, of course, far less profitable than prescription drugs. But they are also making a big impact on the profits of the patented pharmaceutical companies. According to industry expert Carter Heild OrbiMed Advisors, a drug industry consulting firm: GlaxoSmithKline (GSK) and AstraZeneca (AZN) faced patent expiry dates for some of their biggest selling drugs and the subsequent generic competition has torn apart sales. AstraZeneca's blockbuster stomach ulcer drug Prilosec saw sales drop by 70% in 2003. The company lost $2.6 billion in sales to generic competition. Rival Glaxo is facing a difficult 2004 as the brunt of generic erosion of antidepressant Paxil bites. The company admitted 40% of Paxil sales were lost within weeks of the launch of generic competition. Heild believes that the biggest pharma companies, who are losing patents for some of their biggest drugs, are looking to what are termed "biologicals", medical solutions that are made through biotechnology rather than chemicals, like traditional drugs. They are entering into agreement with companies like Amgen, Genentech, and Genzyme. The big upside is that, according to Heild, "their products don't face generic competition because no-one's worked out how to do that with a biological." That is the next big disruption to Big Pharma, and it is coming fast. Here's a chart of the leading US generic drug suppliers: Company Home Country 2003 US prescriptions (millions) Teva Pharmaceutical Israel 202 Mylan Laboratories US 190 Watson Pharmaceutical US 141 Sandoz (div. of Novartis) Austria 121 Ivax Pharmaceuticals US 70 Mallinckrodt (div. of Tyco) US 63 Qualitest Pharmaceuticals US 58 Barr Laboratories US 56 Par Pharmaceuticals US 54 Purepac Pharmaceutical US 50 Source: Philadelphia Inquirer, IMS Heallth 8:39:59 PM

comment []