Generic drugs reach tipping point in battle against big pharma

Generic drugs will possibly rake in more sales globally than brand medicines in the long-term because of expiring patents and a shift in consumer preference to low-cost treatment, research firm IMS Institute for Healthcare Informatics reported today.

Because of cheaper options, IMS said that overall global drug sales growth will be stunted by more than 50 percent in the next five years. But emerging markets' purchase of generic drugs will be the major drivers of growth in the industry.

"Past patterns of spending offer few clues about the level of expected growth through 2015," said IMS health executive Murray Aitken. "These are unprecedented dynamics at play, which are driving rapid shifts in the mix of spending by patients and payers between branded products and generics."

Some $98 million will be saved by government and commercial health insurance providers in the next five years because of expiring drug patents. Branded medicines are expected to lose market share from 64 percent to 53 percent within the period as more generic drugs are sold.

Expiring patents are not the only reason for the decline in sales of branded drugs. The global economic downturn and price control measures in Japan, Italy and China are also major contributors to the slide.

Ironically, increasing research and development funding by big pharmaceuticals have not yielded enough new branded drugs. Just 21 drugs have been approved by U.S. regulators last year, the fewest number since 2007. Meanwhile, manufacturers of generic drugs are taking advantage by pushing more affordable treatments.

Established drug makers are under increasing pressure to churn out new medicine in the face of competition from generic drugs.