L16 Generics - commercial, IP, Healthcare/Societal Aspects Flashcards
Generics - Market Size
see onenote
- was valued at about $225 billion in 2011
- $358 billion in 2016
Generics - Market Opportunity
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- innovators lost $100bn in sales due to “patent cliff” (expiring blockbuster drugs)
- with increasing drug costs, gov’t increase generic use to contact costs
- many leading generics companies are expanding globally
- innovator companies entering generics area
- strong focus on emerging markets which are characterised by high generics uptake and future growth potential
Emerging markets
An emerging market is a country that has some characteristics of a developed market, but does not satisfy standards to be termed a developed market. This includes countries that may become developed markets in the future or were in the past.
There are many emerging markets around the world, but the four largest are known as the BRICs (an acronym for Brazil, Russia, India, and China)
Vertical Integration
the combination in one firm of two or more stages of production normally operated by separate firms.
Vertical integration is when a company controls more than one stage of the supply chain. That’s the process businesses use to turn raw material into a product and get it to the consumer.
There are four phases of the supply chain: commodities, manufacturing, distribution, and retail. A company vertically integrates when it controls two or more of these stages.
1984 legislation
The Drug Price Competition and Patent Term Restoration Act (Public Law 98-417), informally known as the Hatch-Waxman Act, is a 1984 United States federal law which encourages the manufacture of generic drugs by the pharmaceutical industry
Generics - US Market share
- 84% of prescriptions dispensed in the US are generics, 16% are brands
- 85% of $ sales in the US are for branded products, 15% for generics
Biosimilars - market oppportunity
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Why are generics popular?
Cheap, just as good, subjected to the same quality control, more people starting to have more confidence in generics
Drug product lifecycle and generic entry
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The “Shark Fin” Curve
- launch
- market growth, innovator promotion
- generic entry
Generics - product lifecycle
see onenote
- when market opens to generics, most drugs are subject to intense competition with upwards of 10 companies entering the market
- price falls dramatically immediately and in the first year
- innovators usually stop promoting innovator product
- as a consequence, total value and volume of sales of drugs drop substantially
- a 4-5 year profitable lifecycle is expected for simple generics vs innovator drugs of 7-10 years or more of high profitability
- complex generics and biosimilars have longer lifecycles than simple generics
Pharmaceutical life cycle
see onenote diagram
- average time to develop new medicine at least 10 years
- average time on market before generic launch is 12.5 years
- may be multiple generic entrants with rapid price erosion
Generics - product lifecycle, volume of originator decreases
see onenote diagram
Generics - product lifecycle
Prices fall - more competitors enter market
see onenote
The more generic competitors, the more the price will drop
- Level of competition creates price drop
- The more generics entering the market, the more the price will drop
Generics - cost advantages
see onenote and side notes
- generics avoid expensive clinical trials
- generics avoid large marketing costs
- generics equivalent to and substitutable for innovator
- market to wholesalers, not clinicians - biosimilars require larger marketing costs
- comparable but not substitutable for innovator in US and EU
- must market to clinicians
- in AU, some biosimilars substitutable on case-by-case basis
Generics - cost pressures and globalisation
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- short lifecycle and cost sensitivity focus generic companies on time to market, profit margins, cost effectiveness of company
- trend towards vertically integrated generic companies with API (active pharmaceutical ingredient) manufacturing facilities, drug product and packaging facilities, global marketing abilities, location of facilities in cost competitive countries e.g. china
- generic companies frequently develop drugs very quickly, well before patent expiry to guarantee first to market
- patent circumvention and challenges becoming more common
Generics - IP
see onenote
- published patents
- trade secrets
- data exclusivity
- trade markets and branding
Establishment of Generics Drugs - Hatch Waxman Act
see onenote
- in 1984, Hatch an Waxman sponsored the Drug Price Competition and Patent Term Restoration Act in the US Senate
- innovator company was protected by its patent term or series of data exclusivisities designed to patented drug at least 14 years of exclusivity in the market
- at the expiry of exclusivities a generic company could have the FDA use the data in the innovators original new drug application (NDA) in the review of the generic drug
- generic company submitting an ANDA had to certify that…1,2,3,4
Data Exclusivity
see onenote
in a period of data exclusivity, a generic applicant cannot gain access to data held by regulatory authority from innovator for approval of its generic drug
Generics - IP Challenge
see onenote
Innovator IP strategies
see onenote
- switch market to “improved” drug in same class
2” evergreening” - extend patent by adding to patent on API - authorised generic
- marketed generic
- stop promotion of innovator and exit drug market
Evergreening Case Study
see onenote
Generics IP Strategies
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Commercial Selection of a Generic Drug Pipeline
see onenote diagram
- future market size for drug
- patent exclusivity
- data exclusivity
- API availability
- develop drug for approval at market formation
- add drug to pipeline
Value of generic medicines
- increased patient access
- patient-related value
- overall economic value
US has saved $1.46 trillion in the last 10 years due to availability of low cost generics
Biosimilar - US patent cliff, potential savings
see onenote diagrams
Generic competition - a virtuous cycle
see onenote diagram
Positions of generics in healthcare
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- innovator companies charge higher prices for drugs during period of patent and data exclusivity
- after patent and exclusivity expiry, competition leads to fall in cost of drugs to close to the cost of manufacture plus margin
- generic drugs make medicines more affordable to patient and other payers e.g. health management organisations and governments
- generic drug competition drives innovators to invent new drugs
Commercial, IP, Societal Aspects Summary
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