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Global Generic Pharmaceuticals Market

The Generics Industry:
The generics industry is facing a period of unprecedented growth, with $ 250 billion worth of global blockbusters set to face US patent expiry uptil 2015. 

The changing dynamics of the generics market are driving strategic evolution of leading players, with portfolio management, geographic expansion and alliance networks determining success and failure. With cost-containment a focus for all healthcare players, the growth of the generics market is outpacing the branded sector by a considerable margin.

The operating environment for generics is becoming increasingly competitive pushing existing players further up the pharmaceutical value chain. Brand and generics companies alike must be prepared for this new competition.The growth opportunities in the generics sector are significant. However, understanding how different country dynamics shape the competitive landscape is critical to evaluating risk and return.

In the US, the generic Injectables sector retains high barriers to entry, but in Europe, competitive analysis suggests that the market place is more crowded. As such, injectable products may represent a less valuable proposition to European generics players than US analysis would suggest.

The US, UK and Germany are mature generics markets experiencing substantial price competition. This is reflected by the fact that, while generics make up 55% of all global prescriptions, generic market sales equate to only 18% of total sales. However, less mature markets also exist, including France, Spain, Italy and Portugal. These markets offer better growth opportunities as generics' current market share is comparatively small.

Commodity generics have low barriers of entry and low margins of profits due to competitive pricing, while specialty and supergeneric drugs are reformulations of off-patent drugs and have higher margins. 

Crucial to generics companies' strategies in the US is the use of Paragraph IV patent challenges to gain lucrative market exclusivity periods. Being the first to market a new generic drug makes for exceptionally attractive market share and profit margins. However, these profits are short-lived, thanks to rival launches coming at the end of the exclusivity period. This means generic companies must continually launch new products to maintain their margins.




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