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Patent cliff and the generics industry Posted 01/07/2011

An estimated US$186 billion in sales revenues of patent-protected medicines is likely to be exposed to generic competition between now and 2016 [1].

The majority of losses will occur in 2012 when many originator medicines will reach the so-called ‘patent cliff’ and where it is expected that more than US$42 billion in sales revenue will be lost by originator companies, see Figure 1.

Figure 1: Loss in global sales due to patent expiries

Almost all of the major pharmaceutical classes face significant generic competition in the next five years. Those set to be most affected–and at risk of losing 80% or more of their market share–include anti-ulcerants, anti-depressants, anti-coagulants, Alzheimer’s medications, osteoporosis medications and narcotic analgesics.

In terms of sales, lipid regulators (anti-cholesterol medication), respiratory agents, e.g. asthma treatments, angiotensin inhibitors, anti-psychotics and anti-ulcerants are all pharmaceutical classes at risk of losing sales worth more than US$10 billion or more for each class, see Figure 2.

The only pharmaceutical classes which will be immune to generic erosion are autoimmune disease therapies, erythropoietins and immunostimulants.

Figure 2: Pharmaceutical sales in 2009

This is good news for the generics industry, with many blockbuster medicines coming off patent there are huge opportunities for generics to gain market share, but it is not such good news for the originator companies.

On average, 44% of top 20 company sales are at risk of generic competition between 2009–2014. Nine of these top 20 companies, including Pfizer, AstraZeneca, sanofi-aventis, GSK, Merck, Eli-Lilly, Takeda and Bristol-Myers Squibb, will have 50% or more of their sales share exposed to patent expiry before 2014. Surprisingly Teva–a major generic manufacturer–is also among those at risk of losing 50% or more of its sales.

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Reference

1. Sheppard A. Generics; opportunities for some, threats for others: strategy shifts and new business models as a consequence. 5th Annual Generics Asia Summit 2010; 2010 Oct 25–26; Singapore.

Source: IMS Health

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