The Empire Strikes Back: Innovators Releasing Generic Drugs

A new study confirms the trend toward innovator pharmaceutical companies switching their brand names to generics as they come off patent.

The report, “Combating Generics: Pharmaceutical Brand Defense” released last week by Cutting Edge Information (Durham, NC, www.cuttingedgeinfo.com), notes that most innovator companies hold off making the move until a generic company announces its intentions to enter the market. The innovator then switches into high gear to reach the market first, taking advantage of its existing resources to fix the generic drug’s price and claim a portion of generic revenues. According to the report, generic drug prescriptions constitute 50 percent of all US drug prescriptions.

Cutting Edge reports that “in the next five years, participating companies will expose an average $541.7 million in aggregate revenue to generics competitors.”

"If a pharmaceutical company's generic subsidiary can be first-to-market, the company essentially retains devalued market share for its off-patent drug," states Jon Hess, senior analyst for Cutting Edge Information in the company’s statement. "With patents for drugs such as Prevacid and Zoloft set to expire in July and December 2005, respectively, generic drug makers stand poised to enter the market with competitive generic products. It will be interesting to see which generic defense strategies these brands utilize."