1. Generics growth predicted to decelerate
Revenues generated by the generics industry have continued to grow strongly, as
illustrated by a 2005–09 compound annual growth rate (CAGR) of 10.3%, with Datamonitor
estimating the global generics market to be worth nearly $80 billion last year.
The global generics industry has evolved significantly over the past decade; it has become an
increasingly integral element of the prescription pharmaceutical sector and, helped by aggressive
M&A strategies, its two leading players—Teva and Sandoz—sit just below the Big Pharma peer
set in terms of scale.
Simon King, pharmaceutical analyst at Datamonitor, comments: “Sales growth has been driven by
two key factors; growing demand for cheaper pharmaceuticals as a means to contain healthcare
expenditure and a succession of patent expirations on heavily prescribed branded ‘blockbuster’
products, which the generics industry has capitalized on.
“As a result, a robust period of growth for the generics industry has run concurrent to an
‘indifferent’ performance for the much of the branded pharmaceutical sector.”
However, Datamonitor forecasts that sales growth for the generics industry will begin to slow, with
a CAGR of 5.0% forecast for the period 2009–15. Closer analysis reveals that a deceleration in
sales growth will take hold from 2012 onwards as demonstrated by a global CAGR of 3.7% for the
period 2012–15 versus a 6.3% CAGR for the period 2009–12.
This pattern maps to the widely perceived end of Big Pharma’s ‘patent cliff’, with 2012 often
viewed as a nadir given the anticipated loss of exclusivity for the branded industry’s biggest
selling product—Pfizer’s $12 billion-a-year Lipitor (atorvastatin) franchise—in late 2011.
Simon concludes: “In short, the level of branded revenues associated with blockbuster products
that have become exposed to the generics industry via patent expiration will begin to decrease
sharply from 2012 onwards.
“This sharp decline—driven partly by a fall in Big Pharma’s blockbuster productivity over the past
decade—will deprive the generic industry of significant revenue injections. The end of this ‘golden
era’ of patent expiries will fundamentally shift the generics landscape as sections of the wider
pharmaceutical market become more commoditized.”
Ends
Find out more with Datamonitor's Generic Market Outlook: 2015!
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