The generic drugs market consists of pharmaceutical drugs that are equivalent to brand name pharmaceutical products in dosage, strength, route of administration, quality, and intended use. Generic drugs offer significant cost savings in comparison to their branded counterparts, with prices generally 70-85% lower than the reference brand drug. This has increased their adoption globally. The generic drugs market is estimated to be valued at US$ 439.37 billion in 2024 and is expected to exhibit a CAGR of 5.4% over the forecast period from 2023 to 2030.
Key Takeaways
Key players operating in the generic drugs market
Key players operating in the generic drugs market are Mylan N.V., Novartis International AG, Pfizer, Inc., Allergan Plc, Sun Pharmaceuticals, Fresenius Kabi, Sanofi, Endo International, Lupin Ltd., Abbott Healthcare, AstraZeneca Plc, and Novo Nordisk. These players are focusing on strengthening their generic drugs portfolio through mergers and acquisitions.
Growing demand is driving the market
The growing demand for low-cost drugs and increasing incidences of chronic diseases are fueling the growth of the generic drugs market. Generic drugs help in significant cost savings for both public and private healthcare systems. Their growing adoption is helping expand access to healthcare.
Global expansion presents market opportunities
Growing healthcare expenditure in emerging economies and increasing focus on research and development of complex generic drugs are expected to offer lucrative opportunities for players. Additionally, as patents of major drugs expire, their sales are shifting to lower-cost generics, benefitting generics manufacturers. Companies are focusing on geographic expansion and product line extensions to capitalize on the opportunities.
Market key trends
One of the key trends in the generic drugs market is the increasing number of patent expiries. As patents expire, it opens opportunities for generic competition which drives the usage and adoption of generic drugs. Between 2014-2018, an estimated USD 91 billion worth of drug sales were impacted in the U.S. alone due to patent expiries. This is expected to significantly benefit generic drug makers. Additionally, companies are engaging in collaborations for developing generic versions of specialty and complex drugs to capitalize on patent cliffs.
Porter's Analysis
The threat of new entrants: New players face high initial costs to set up manufacturing facilities and get regulatory approvals. This makes entry difficult.
Bargaining power of buyers: Buyers have moderate bargaining power due to the availability of substitutes from different manufacturers. However, generic drugs provide cost savings to buyers.
Bargaining power of suppliers: Suppliers of raw materials have low to moderate bargaining power due to alternative supply sources available to drug makers.
Threat of new substitutes: The threat from new substitutes is low after patent expiration due to regulation and switching costs for patients and pharmacists. However, new patent expirations pose a threat.
Competitive rivalry: The generic drugs industry is highly competitive with several companies launching generic versions after patents expire on branded drugs. This intensifies competition.
Geographical Regions
In terms of value, the Americas contribute the largest share to the generic drugs market. This is led by the increasing adoption of generics in the US - with around 90% of all prescriptions there being generics. Europe followed by Asia Pacific are next large markets. However, growth in developing countries such as India, China and parts of South America, Asia and Africa means that these regions are also becoming important contributors fueled by rising incomes and demand for quality healthcare at low costs.
Another fast growing region for the generic drugs market is Asia Pacific led by China and India. Industry estimates suggest that India will remain among the top three global locations for generic drugs production in value terms over the next decade. This is supported by India's cost leadership through a large pool of trained professionals and established manufacturers. Further regulatory easing to minimize approval timelines has boosted confidence in the Indian generics industry.
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