Generic Medicines: Essential contributors

To maximize the contribution of generic medicines to

the affordability and sustainability of the healthcare

system, the generic medicines industry must be able to

operate within a sustainable, competitive and efficient

market model. In order to derive the maximum benefit

from a generic medicine it must be available from day

one following patent expiry.This may seem obvious.

However, in certain markets, generic medicine entry is

often delayed, partly by the need to gain pricing and

reimbursement approval. Depending on the sales value of

the originator product, lost savings can amount to tens

of millions of Euros within the first year. In its final

report on the EU Pharmaceutical Sector Inquiry

(2008/9) the European Commission suggested that the

additional savings on the 219 prescription medicines

investigated could have been as much as 20% higher if

there had been no delays to entry

As noted earlier, pricing systems in each country vary

widely. Some directly link the price of the generic

medicine to the originator price whereas others have

‘dynamic freedom’ of pricing and leave it to competitive

market forces to dictate prices.Whatever the system, the

potential savings are significant; accrued benefits over the

years from generic medicines are estimated to be in

excess of €100 billion in the major EU markets.

Stimulating competition between generic manufacturers

not only means lower costs for patients but also drives

product improvements, distribution efficiencies and

improved access to all medicines.Whereas an originator

product usually comes from a single source, generic

medicines are typically multi-sourced, with several

generic medicine manufacturers producing the same

product.This generally assists continuity of supply for

particular medicines which can be important at times of

increased demand, such as unexpected requirements for

anti-infectives during an influenza epidemic.

A further benefit of generic medicines arises from the

sector’s continual provision of products many years after

the patent has expired.The originator may have exited

from the market for several reasons after loss of patent

protection but invariably because of low volume demand

leading to limited commercial opportunity. It is often the

generic medicine that remains on the market, meeting

the needs of patients for whom there may be no suitable

therapeutic alternative for their particular condition.

Investment and employment within the generic medicines

sector is vital for some member states. It is estimated that

the European generic medicines industry consists of more

than 700 companies directly employing around 150,000

people. Research from the largest generic medicines

employer in Germany has shown that although they ‘only’

employ 1,300 staff, by doing so they create a further 2,000

jobs locally and in the region of another 1,400 jobs

nationally. In economic terms, through direct spending,

they generated “value-added” benefits in 2008 of

approximately €140 million locally or about €243 million

nationwide. A careful extrapolation of this value would

indicate that the European generics industry represents

significant economic value within the community.

In some cases, it is the local generic medicines industry

that sustains employment in a country’s pharmaceutical

manufacturing sector as originator products are often

imported from a central manufacturing site.

Consolidation within the generic medicines industry is

threatening this position but countries with low-cost

manufacturing potential may benefit, as well as those

companies that are able to identify niche or local

country-specific opportunities.