The industry will experience a growth of 5.4% in the coming years, according to a report prepared by the consulting firm KPMG.
The global demand for generic medicines continues to grow. A trend that responds to administrations’ policies to reduce pharmaceutical spending. This continued increase in demand will be reflected in the sales of those drugs, in 2025 they will exceed 409,000 million euros ($497 billion).
In a report prepared by KPMG, the consultant explains that from 2014 to 2019 generic sales grew by 5.7%. An increment similar to what the sector will register until 2025 (+5.4%), helped by the expiration of the patents of the original medicines.
Generics are placed on the market once the patent on the brand name drug has expired. It should be remembered that these drugs have the same qualitative and quantitative composition of active ingredients and the same pharmaceutical form as an original and, in addition, have demonstrated bioequivalence.
The price of generics is at least 40% lower than the original, since the investments made in the development of a new drug do not have an impact. In Spain, due to the reference price system, savings reach an average of 60%.
Thus, the expiration of the exclusivity opens up important opportunities for generic manufacturers. As detailed by the consultant in its report, by 2026 patent expiration will be more than double that of 2020 (190). Specifically, there will be 383 drugs based on small molecules that will lose their exclusivity within five years.
Although generic sales will increase by more than 5% in the coming years, the truth is that the sector faces challenges such as ever lower prices. The stagnation of market shares, together with structural costs, implies an increasing reduction in the economic margin, denounces the Spanish employers of this industry (Aeseg).
To remain profitable, many companies outsource manufacturing to cheaper markets, warns KPMG. This raises a new problem: the quality of medicines. In fact, both the regulatory agency of the United States (FDA) and that of Europe (EMA) have warned of infractions in this regard.
The companies also compete with manufacturers from China or India, which further erode prices of generics worldwide, which reduces incentives to launch new products. This implies, in turn, the possibility of more shortages.
“In fact, it is increasingly common to see manufacturers postpone and even cancel plans to market products even after they have been approved,” explains the consultancy. For example, in July 2019, “Teva discontinued production of the pediatric oncology drug vincristine due to poor profitability, leading to a shortage in the US.”
Generics in Spain
The generic medicine sector invested 540 million euros in Spain between 2016 and 2019, according to the latest data published by the Spanish Association of Generic Medicines (Aeseg).
In our country, the market share of these drugs is 40%, having remained stable over the last five years and far from the 65% achieved on average in the countries of the European Union. A stagnation for which the employers of the sector ask for solutions.
Likewise, regarding prices, Aeseg believes it is necessary to ensure minimum profitability thresholds that guarantee that pharmaceutical companies continue betting on the development and placing on the market of generic medicines.
Therefore, they insist that “it is urgent to develop regulations that effectively promote the use of generic drugs, such as establish a price difference between generic and brand drugs, or create certain dispensing conditions for these two groups of drugs”.