Generics steal a march

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: The American healthcare reforms might surprise us by the year-end. Many Indian pharmaceutical companies and healthcare analysts believe that although generics have for long been a forte of Indian drug companies—having made their mark globally as a supplier of high quality and low-cost drugs—real growth opportunity from the $30 billion US generics market is around the corner. They’re dead right and their reason for optimism: favourable US government support, significant blockbuster drugs going off-patent and an increasing number of consumers seeking affordable drugs for cancer, diabetes, metabolic and cardiovascular disorders, neurodegenerative diseases etc.

Recent developments in the US healthcare market have strengthened the belief of Indian pharmaceutical companies that generics are in high demand as a means to control drug spending. The US government is taking decisive measures to encourage doctors to prescribe generic medicines, pharmacists to distribute generics, and consumers to recognise their value and accept them. In many cases, competitive pricing structures are also being established to promote generics. The US government has introduced various policies that encourage faster generics entry into the market once a product goes off-patent. It will provide inducements to companies that enter the market early, encourage patient co-payments that will facilitate selection of cheaper (generics) products, thereby strengthening the demand for generics.

The Obama administration seems to be strongly pro-generic and indications are that state and federal insurance programmes such as Medicare and Medicaid are likely to be altered to nudge an increase in the use of generics. Additionally, the government aims to bring an additional 47 million Americans under medical insurance coverage.

The demand for low-cost drugs is likely to increase further, thereby giving a further impetus to generics. Even otherwise, the fragility of the current US economy will ensure that healthcare costs will be kept under check by increasing the percentage of generic prescriptions.