Market Report Source

Overview

Introduction

With declining returns from drug development pipelines, preservation of branded revenues is key for manufacturers. Inevitably though, once the core product patent of a pharmaceutical drug expires, generic companies will launch their own, cheaper versions of the drug, encouraging product switching and eroding the revenues of branded pharmaceuticals.

Scope

• Analysis of brand drug and franchise erosion following generic incursion across the US and five major European markets
• Examination of number and frequency of generic competitors entering individual markets
• Assessment of brand and generic pricing strategies following generic entry In depth case study analysis, utilizing IMS data to examine individual formulation specific brand erosion

Highlights

Branded pharmaceuticals face varying levels of generic competition and experience different speeds and severity of erosion depending on the country the drug is marketed in. Manufacturers need to be aware of country specific incentives and barriers to generic prescribing in order to formulate their specific brand defense strategies Branded pharmaceuticals also experience different levels of brand erosion depending upon their formulation. Lifecycle management strategies such as producing a range of different formulations can offer protection to branded revenues once the core product patent expires Competition within the generics market is becoming increasingly fierce with ever more companies entering the market. Generics manufacturers need to be aware of which branded products and formulations to target in order to receive the greatest return on investment

Reasons to Purchase

• Predict the impact of patent expiry on a brand, assisting with brand business planning or generic target identification
• Assess country specific trends, and how governmental regulations and healthcare provider actions influence brand and generic pricing and prescribing
• Explore how lifecycle management strategies can protect brand franchises, limiting the impact of generic competition

Table of Contents

CHAPTER 1 EXECUTIVE SUMMARY

Scope of the report

Methodology

Key findings

Number of generic entrants increased over time with more successful brands experiencing greater levels of competition

Branded drugs faced revenue erosion of up to 45% after two years of generic competition

Generic prices declined rapidly in the free pricing markets of the US and UK as well as in Germany

Summary key trends

CHAPTER 2 INFLUENCE OF PRODUCT AND MARKET SPECIFIC CHARACTERISTICS AT PATENT EXPIRY

Overview of the impact of generic drugs on branded drug franchises

Branded manufacturers faced competition from on average nine generic entrants, after two years of generic competition

Branded drugs in the UK and Germany experienced the highest levels brand value erosion

Brand erosion – volume versus value

Brand erosion across the US and 5EU

While brand prices remained flat following generic entry, generic prices in the US, Germany and UK gradually declined

Branded drug price following generic entry

Generic drug price following generic entry

CHAPTER 3 FORMULATION SPECIFIC BRAND EROSION

Introduction

Number of generic entrants per formulation type

Standard oral drugs faced competition from nine generic entrants after two years of generic competition

The level of generic competition for branded injectable drugs varies by country

The level of generic competition for branded topical drugs in the US remained flat following generic entry

The majority of generic entrants target standard oral formulations due to their ease of production, low cost and high usage

Level of brand value and volume erosion per formulation type

Branded standard oral drugs experience the greatest level of erosion in the US

Branded injectable drugs experienced the greatest level of erosion in Germany

Branded oral long-lasting drugs did not experience erosion by generic standard oral formulations

Branded topical drug revenues declined by 40% after two years of generic competition

Standard oral tablets experienced a greater level of brand erosion than alternative formulations in the US

Price of generic drugs per formulation type

Price of standard oral generics declined by 12% after two years of generic competition

Price of generic injectables declined by nearly one-third after two years of generic competition

Price of topical generics declined by 21% after two years of generic competition

Price of standard oral generics declined more rapidly in the US and Germany than in the other EU markets

Price of branded drugs per formulation type following generic entry

Brand prices of standard oral drugs declined by 30% after generic entry in Italy, while brand prices in other markets remained flat

Brand prices of injectable drugs declined by 8% after two years of generic competition

Brand prices of topical drugs continued to grow following generic entry if reformulation strategies are employed

Oral brand prices increased the least compared to other formulations following generic entry

CHAPTER 4 IMPACT OF GENERIC EROSION BY BRAND VALUE

Introduction

Brand erosion by revenue size in the US market

Brands with higher revenues faced a greater number of generic competitors in the US market

Branded drugs that are not protected by an effective LCM strategy experienced a severe decline in revenues following patent expiry

Relative generic prices were comparable across each brand value group, and declined to a similar extent over time

US summary trends

Brand erosion by revenue size in the French market

Brands faced greater generic competition over time in the French market

Relative generic prices remained flat in France due to the high mandatory discount on market entry

French summary trends

Brand erosion by revenue size in the German market

Brands with higher revenues faced a greater number of generic competitors in the German market

Brands with higher revenues face greater generic erosion in the German market

The higher the brand value of the drug, the greater the level and speed of generic price reductions

German summary trends

Brand erosion by revenue size in the Italian market

Brands in the $10-50m value group faced the greatest number of generic entrants in Italy

Branded drugs with technologically advanced delivery systems are more difficult for generics manufacturers to replicate, providing secure brand protection

Relative generic prices remained flat due to the high mandatory discount on market entry, limiting generic drug profit margins

Italian summary trends

Brand erosion by revenue size in the Spanish market

Brands with higher revenues faced a greater number of generic competitors in the Spanish market

Level of brand erosion following generic entry was equivalent for all brand value groups in the Spanish market

Relative generic prices remained flat due to the high mandatory discount on market entry, limiting generic drug profit margins

Spanish summary trends

Brand erosion by revenue size in the UK market

Brands with higher revenues faced a greater number of generic competitors in the UK market

Level of brand erosion following generic entry was equivalent for all brand value groups in the UK market

Relative generic prices were comparable across each brand value group, and decline to a similar extent over time

UK summary trends

CHAPTER 5 BIBLIOGRAPHY

Publications and online articles

Datamonitor reports

Suggested reading

Glossary of terms

APPENDIX

List of Tables

Table 1: Overview of the impact of generics on branded drug franchises across the US and 5EU markets (2003-06) with eight quarters of IMS data

Table 2: Level of brand franchise volume erosion compared to revenue erosion (2003-06)

Table 3: Relative price of branded franchise drug versus generic ($)

Table 4: Pharmaceutical products analyzed for this report – US

Table 5: Pharmaceutical products analyzed for this report – France

Table 6: Pharmaceutical products analyzed for this report – Germany

Table 7: Pharmaceutical products analyzed for this report – Italy

Table 8: Pharmaceutical products analyzed for this report – Spain

Table 9: Pharmaceutical products analyzed for this report – UK

List of Figures

Figure 1: There is a strong correlation between declining generic drug prices and the level of brand erosion after two years of generic incursion

Figure 2: Prices of generics by formulation during the first two years following patent expiry compared to branded drug price one quarter prior to patent expiry in the US and 5EU

Figure 3: Key summary trends across the US and 5EU markets (2003-06)

Figure 4: Average number of generic companies entering the market following a drug patent expiry

Figure 5: Incentives for generic prescription in Germany

Figure 6: Number of generic companies entering the US and German market following a drug patent expiry

Figure 7: Branded drug franchise volume (SU) and value ($) following generic entry (%)

Figure 8: Price of brand and generic drugs in Spain and Italy following generic entry

Figure 9: Price of brand and generic drugs in France, Germany, the UK and US following generic entry

Figure 10: Disincentives for generic prescription in Italy and Spain

Figure 11: Average branded and generic drug price following generic entry compared to branded drug price one quarter prior to patent expiry

Figure 12: Incentives for generic prescription in the UK

Figure 13: Incentives for generic prescription in France

Figure 14: Average number of standard oral generic drugs entering the market following a drug patent expiry

Figure 15: Average number of injectable generic drugs entering the market following a drug patent expiry

Figure 16: Average number of topical generic drugs entering the market following a drug patent expiry

Figure 17: Average number of injectable, oral and topical generic drugs entering the market following a drug patent expiry across the US and 5EU markets

Figure 18: Revenue shares of leading generics companies by drug formulation in 2006

Figure 19: Branded standard oral drug volume (SU) and value ($) following generic entry (%)

Figure 20: Incentives for generic prescription in the US

Figure 21: Total branded injectable drug volume (SU) and value ($) following generic entry of any formulation (%)

Figure 22: Branded injectable drug volume (SU) and value ($) facing direct competition by generic injectables (%)

Figure 23: Branded topical drug volume (SU) and value ($) following generic entry (%)

Figure 24: Branded drug value ($) erosion by formulation following generic entry (%) in the 5EU and US

Figure 25: Branded drug formulation and volume (SU) following generic entry (%) in the 5EU and US

Figure 26: Average generic drug price of standard oral drugs following generic entry compared to branded drug price one quarter prior to patent expiry

Figure 27: Average generic drug price of injectable drugs following generic entry compared to branded drug price one quarter prior to patent expiry

Figure 28: Volume and relative price of brand and generic version of mitoxantrone (injectable) in Italy

Figure 29: Average generic drug price of topical drugs following generic entry compared to branded drug price one quarter prior to patent expiry in the US

Figure 30: Prices of generics by formulation during the first two years following patent expiry compared to branded drug price one quarter prior to patent expiry in the US and 5EU

Figure 31: Average branded standard oral drug price following generic entry compared to branded drug price one quarter prior to patent expiry

Figure 32: Average branded injectable drug price following generic entry compared to branded drug price one quarter prior to patent expiry

Figure 33: Average branded topical drug price following generic entry compared to branded drug price one quarter prior to patent expiry

Figure 34: Average branded standard oral drug price following generic entry compared to branded drug price one quarter prior to patent expiry

Figure 35: Average number of generic drugs entering the market following a drug patent expiry in the US, by brand value

Figure 36: Branded drug volume (SU) and value ($) following generic entry (%) in the US, by brand value

Figure 37: Generic erosion of blockbuster drugs following patent expiry: Merck’s Zocor (simvastatin) and Forest’s Celexa (citalopram).

Figure 38: Average branded and generic drug price following generic entry compared to branded drug price one quarter prior to patent expiry in the US, by brand value

Figure 39: US summary trends

Figure 40: Average number of generic drugs entering the market following a drug patent expiry in France, by brand value

Figure 41: Branded drug volume (SU) and value ($) following generic entry (%) in France, by brand value

Figure 42: Average branded and generic drug price following generic entry compared to branded drug price one quarter prior to patent expiry in France, by brand value

Figure 43: French summary trends

Figure 44: Average number of generic drugs entering the market following drug patent expiry in Germany, by brand value

Figure 45: Vytorin re-energizes Zocor’s declining German franchise

Figure 46: Branded drug volume (SU) and value ($) following generic entry (%) in Germany, by brand value

Figure 47: Average branded and generic drug price following generic entry compared to branded drug price one quarter prior to patent expiry in Germany, by brand value

Figure 48: German summary trends

Figure 49: Average number of generic drugs entering the market following a drug patent expiry in Italy, by brand value

Figure 50: Branded drug volume (SU) and value ($) following generic entry (%) in Italy, by brand value

Figure 51: Average branded and generic drug price following generic entry compared to branded drug price one quarter prior to patent expiry in Italy, by brand value

Figure 52: Italian summary trends

Figure 53: Average number of generic drugs entering the market following a drug patent expiry in Spain, by brand value

Figure 54: Branded drug volume (SU) and value ($) following generic entry (%) in Spain, by brand value

Figure 55: Average branded and generic drug price following generic entry compared to branded drug price one quarter prior to patent expiry in Spain, by brand value

Figure 56: Spanish summary trends

Figure 57: Average number of generic drugs entering the market following a drug patent expiry in the UK, by brand value

Figure 58: Branded drug volume (SU) and value ($) following generic entry (%) in the UK, by brand value

Figure 59: Average branded and generic drug price following generic entry compared to branded drug price one quarter prior to patent expiry in the UK, by brand value

Figure 60: UK summary trends