In order to deliver the full benefits of generic medicines, greater importance must be placed on increasing volume rather than focusing simply on price. Reducing the price of generic medicines in low volume markets can affect the sector’s sustainability. In these countries the cost of maintaining the essential infrastructure related to registration costs, pharmacovigilance and other legal requirements will not be covered by the revenues generated.

Although generic medicines now fulfil over 50% of the demand for medicines in Europe, they still only represent 18% of the total medicines bill. Indeed, significant price decreases on many molecules, arising from competition or enforced pricing policy changes, has worked against growth in the generics sector.

A further benefit of generic medicines arises from continual provision of products many years after patent expiry. Whereas originators often exit the market invariably due to low volume demand, it is often the generic medicine that remains, meeting the needs of patients for whom there may be no other suitable alternative for their condition.

The generic medicines industry in Europe consists of more than 700 companies directly employing around 150,000 people and indirectly many more. The sector therefore represents significant economic value within the community.

Encouraging both competition between generic manufacturers, and the generic sector as a whole, will not only ensure lower costs for patients but also drive product improvements, distribution efficiencies and improved access to medicines.

(see also The rising cost of health care in Europe, Challenges facing generic manufacturers in Europe and Opportunities arising from increased use of generics)

Reference:

Alan Sheppard. Generic Medicines: Essential contributors to the long-term health of society. IMS Health Sector Sustainability Challenges in Europe. March 2010.