Key trends in the generic drug market

As patents on branded drugs expire, the global market for generic drugs is growing rapidly. The growth is facilitated by favorable policies in several countries that aim to reduce the overall cost of healthcare and prevent the spread of chronic diseases. To capitalize on these growth opportunities, it’s important to understand the ongoing global generic drug market trends and plan market strategies accordingly.

The amount spent on medicines is projected to reach nearly 1.8 trillion by 2026. As a result, governments are looking for ways to reduce drug prices to make healthcare more affordable to patients.

Governments in developed countries are making efforts to reduce healthcare costs by promoting the manufacturing of generic drugs. On the other hand, healthcare industries in developing countries, are affected by issues like affordability and accessibility. To rectify these problems, governments and regulatory bodies are encouraging generics drug production, supported by initiatives undertaken by local hospitals and healthcare facilities worldwide. 

Here are some of the key trends impacting the generics drug market. 

Price erosion 

The generic drug industry continues to face stiff competition and pricing pressures as it deals with an overcrowded market, and the FDA is speeding up approval procedures to bring in more generic drugs. Despite some signs of stabilization in the pricing environment over the last two years, several players have continued to suffer sales losses. 

Market players might have to contend with further pricing pressures and rising costs as larger players announce upcoming financial results. The major players are launching new generic/biosimilar products amid the pandemic that will strengthen their portfolios. With several biosimilars set for launch in 2022, the top line of the industry players is likely to improve greatly due to the potential of attracting higher prices.

In order to fully compete, smaller players resort to lowering prices and continue operating on thinning margins or deal with certain suppliers, products being pushed out of the markets that reduces competition. One can see this pattern in the US generics market which is controlled by a smaller number of buyers. Companies have to work through intense periods of receding and rising pricing issues.

All data now indicates that the generics industry is undergoing rising pricing pressures with the subsequent competition responses. Only this time, it is occurring against a backdrop of increasing costs in various business aspects and in a larger context that sees healthcare systems enduring their own financial pressures as they recover from the COVID-19 pandemic.

Product recalls 

The downside of extreme price competition is relaxed manufacturing standards and lower quality products, which explains the high number of generic medicine recalls. While pharmaceutical recall events have been lower in 2021 compared to previous years, the number of impacted units exceeded the 10-year annual average of 144.1M, according to data by Sedgwick, a risk management firm.

Recent product recalls include one lot of Hospira’s propofol injectable emulsion over contamination concerns. Leading generic drug makers Glenmark, Sun Pharma, Dr Reddy’s and Jubilant Cadista have also announced recalls for multiple products in the US market, due to manufacturing issues.

New market expansion in Africa

In a time when the developed markets are stagnating, multinational pharmaceutical companies are identifying growth opportunities in emerging markets, with their sights set on Africa. The reason is simple: Africa is one of the few pharmaceuticals markets where high growth is still possible. By 2030, the African pharma market is expected to reach USD 56 billion to USD 70 billion, a sharp increase from the USD 5.5 billion valuation a decade ago.

There are many factors aiding its growth: extensive urbanization, logistics infrastructure improvements, investment in healthcare capabilities, and demand from consumers who are eager to embrace new medicines. 

In the next five years, high-growth economies like Nigeria, Ghana, and South Africa will likely generate compound annual growth rates of 10% each in generics consumption, according to recent research. A jump in demand is expected due to increased geopolitical stability, regulatory changes, and increased generics consumption in those regions.

 

Related reading: [Case Study] Conducting a Market Expansion Study for Business Growth

 

Increasing popularity of injectable generics

In part, because they are faster-acting, the medical community and pharmaceutical researchers are quickly developing novel formulations in oncology and other specialty therapeutic areas.

Governments are supporting their manufacture due to the advantages offered by generic injectables in terms of quality, dosage, strength, and cheaper R&D cycle. A growing number of drug shortages, especially in the US, along with patent expirations for many blockbuster drugs, an aging population, and a rise in chronic and lifestyle diseases, are other factors contributing to the market’s growth.

A needle-free injector is one of the latest advancements in this segment; Bespak Europe Limited worked with biopharmaceutical partners in November 2021 to develop a device that was tailored to the requirements of a specific patient group. 

Generic intravenous drugs are launching more frequently, and Sandoz launched Generic Ferumoxytol in July 2021 to treat iron deficiency anemia, furthering activity in this segment. Other key players picking up on this industry trend include Novartis, Baxter, Endo, Hikma, Lupin, Pfizer, and Fresenius. 

Marketing strategies in focus:

As competition in the global generics market intensifies here are some of the ways that incumbent companies are sustaining  their success in this industry.

Marketing a diverse portfolio 

Pharmaceutical giants are using a variety of portfolio marketing methods to strengthen brand equity. This is mainly done in emerging markets by leveraging field sales, promotions, market research, and medical services capabilities.

In 2021, Sun Pharma’s revenue grew by 3%, from $4.52 billion in 2020 to $4.64 billion in 2021, illustrating the importance of marketing a diverse portfolio. Promoting existing generics, planning portfolio life cycles in advance, and focusing on current segment needs will enhance that equity. Utilizing digital channels to reach target audiences can deliver core brand messaging and build trust and recognition.

Expansion of portfolio to include a wider range of medicines

Several North American and Asia-Pacific countries are experiencing an increase in geriatric populations and resulting healthcare expenditures, thus increasing the demand for drugs. In order to address more patient issues, pharmaceutical companies are discovering new molecules and improving existing technologies.

Cipla Biotec announced plans to invest about $90 million in a biosimilars facility in Durban, South Africa. Over a thousand antiretrovirals are available from Cipla, one of the world’s largest suppliers of antiretrovirals. 

In the third quarter of 2018, Cipla completed the development of its biologics facility. Biosimilars produced here are for the private and state sectors and hold potential for export to foreign markets – Asia, the US and the EU. 

Continuous investments in capacity upgrades and capability tweaks

The merger between Pfizer’s Upjohn division and Mylan that resulted in Viatris, the world’s largest generics manufacturer, is the best example. Consolidations like these can aid manufacturers as they negotiate with wholesalers or pharmacy benefit managers and address oversupply issues seen with some products.

As smaller biopharmaceutical companies develop complex molecules, there may be opportunities to work with larger generic drug manufacturers to lower manufacturing costs by utilizing existing capacity, shortening time to market, and accessing global distribution networks.

Off-patent drugs can benefit from relatively low R&D costs, allowing manufacturers to modify the strength, indication, or route of administration, resulting in a shorter approval path than specialty generics while boosting profits.

Leading companies in the generics industry turn to Netscribes to obtain key market and competitive insights. Get in touch with us to know more about how we can help your identify growth opportunities in the generics market.