Generic Series: Benchmarking Patent Expiries - Key Factors Affecting Brand Erosion at Patent Expiry

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Publication Date: 2007-04-09

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With declining returns from drug development pipelines, preservation of branded revenues is key for manufacturers. Inevitably though, once the core product patent of a pharmaceutical drug expires, generic companies will launch their own, cheaper versions of the drug, encouraging product switching and eroding the revenues of branded pharmaceuticals.

Scope

Analysis of brand drug and franchise erosion following generic incursion across the US and five major European markets

Examination of number and frequency of generic competitors entering individual markets

Assessment of brand and generic pricing strategies following generic entry

In depth case study analysis, utilizing IMS data to examine individual formulation specific brand erosion

Report Highlights
Branded pharmaceuticals face varying levels of generic competition and experience different speeds and severity of erosion depending on the country the drug is marketed in. Manufacturers need to be aware of country specific incentives and barriers to generic prescribing in order to formulate their specific brand defense strategies

Branded pharmaceuticals also experience different levels of brand erosion depending upon their formulation. Lifecycle management strategies such as producing a range of different formulations can offer protection to branded revenues once the core product patent expires

Competition within the generics market is becoming increasingly fierce with ever more companies entering the market. Generics manufacturers need to be aware of which branded products and formulations to target in order to receive the greatest return on investment

Reasons to Purchase

Predict the impact of patent expiry on a brand, assisting with brand business planning or generic target identification

Assess country specific trends, and how governmental regulations and healthcare provider actions influence brand and generic pricing and prescribing

Explore how lifecycle management strategies can protect brand franchises, limiting the impact of generic competition

CHAPTER 1 EXECUTIVE SUMMARY - page 4
- Scope of the report - page 4
  - Methodology - page 5
- Key findings - page 7
  - Number of generic entrants increased over time with more successful brands experiencing greater levels of competition - page 7
  - Branded drugs faced revenue erosion of up to 45% after two years of generic competition - page 8
  - Generic prices declined rapidly in the free pricing markets of the US and UK as well as in Germany - page 9
  - Summary key trends - page 12
CHAPTER 2 INFLUENCE OF PRODUCT AND MARKET SPECIFIC CHARACTERISTICS AT PATENT EXPIRY - page 20
- Overview of the impact of generic drugs on branded drug franchises - page 21
  - Branded manufacturers faced competition from on average nine generic entrants, after two years of generic competition - page 21
  - Branded drugs in the UK and Germany experienced the highest levels brand value erosion - page 26
    - Brand erosion - volume versus value - page 27
    - Brand erosion across the US and 5EU - page 30
  - While brand prices remained flat following generic entry, generic prices in the US, Germany and UK gradually declined - page 31
    - Branded drug price following generic entry - page 33
    - Generic drug price following generic entry - page 33
CHAPTER 3 FORMULATION SPECIFIC BRAND EROSION - page 36
- Introduction - page 37
  - Number of generic entrants per formulation type - page 38
    - Standard oral drugs faced competition from nine generic entrants after two years of generic competition - page 38
    - The level of generic competition for branded injectable drugs varies by country - page 39
    - The level of generic competition for branded topical drugs in the US remained flat following generic entry - page 40
    - The majority of generic entrants target standard oral formulations due to their ease of production, low cost and high usage - page 41
  - Level of brand value and volume erosion per formulation type - page 42
    - Branded standard oral drugs experience the greatest level of erosion in the US - page 42
    - Branded injectable drugs experienced the greatest level of erosion in Germany - page 45
    - Branded oral long-lasting drugs did not experience erosion by generic standard oral formulations - page 48
    - Branded topical drug revenues declined by 40% after two years of generic competition - page 49
    - Standard oral tablets experienced a greater level of brand erosion than alternative formulations in the US - page 51
  - Price of generic drugs per formulation type - page 54
    - Price of standard oral generics declined by 12% after two years of generic competition - page 54
    - Price of generic injectables declined by nearly one-third after two years of generic competition - page 55
    - Price of topical generics declined by 21% after two years of generic competition - page 57
    - Price of standard oral generics declined more rapidly in the US and Germany than in the other EU markets - page 58
  - Price of branded drugs per formulation type following generic entry - page 60
    - Brand prices of standard oral drugs declined by 30% after generic entry in Italy, while brand prices in other markets remained flat - page 60
    - Brand prices of injectable drugs declined by 8% after two years of generic competition - page 61
    - Brand prices of topical drugs continued to grow following generic entry if reformulation strategies are employed - page 62
    - Oral brand prices increased the least compared to other formulations following generic entry - page 63
CHAPTER 4 IMPACT OF GENERIC EROSION BY BRAND VALUE - page 64
- Introduction - page 65
  - Brand erosion by revenue size in the US market - page 65
    - Brands with higher revenues faced a greater number of generic competitors in the US market - page 65
    - Branded drugs that are not protected by an effective LCM strategy experienced a severe decline in revenues following patent expiry - page 66
    - Relative generic prices were comparable across each brand value group, and declined to a similar extent over time - page 68
    - US summary trends - page 70
  - Brand erosion by revenue size in the French market - page 71
    - Brands faced greater generic competition over time in the French market - page 71
    - Relative generic prices remained flat in France due to the high mandatory discount on market entry - page 72
    - French summary trends - page 74
  - Brand erosion by revenue size in the German market - page 75
    - Brands with higher revenues faced a greater number of generic competitors in the German market - page 75
    - Brands with higher revenues face greater generic erosion in the German market - page 76
    - The higher the brand value of the drug, the greater the level and speed of generic price reductions - page 77
    - German summary trends - page 79
  - Brand erosion by revenue size in the Italian market - page 80
    - Brands in the $10-50m value group faced the greatest number of generic entrants in Italy - page 80
    - Branded drugs with technologically advanced delivery systems are more difficult for generics manufacturers to replicate, providing secure brand protection - page 81
    - Relative generic prices remained flat due to the high mandatory discount on market entry, limiting generic drug profit margins - page 82
    - Italian summary trends - page 84
  - Brand erosion by revenue size in the Spanish market - page 85
    - Brands with higher revenues faced a greater number of generic competitors in the Spanish market - page 85
    - Level of brand erosion following generic entry was equivalent for all brand value groups in the Spanish market - page 86
    - Relative generic prices remained flat due to the high mandatory discount on market entry, limiting generic drug profit margins - page 86
    - Spanish summary trends - page 89
  - Brand erosion by revenue size in the UK market - page 90
    - Brands with higher revenues faced a greater number of generic competitors in the UK market - page 90
    - Level of brand erosion following generic entry was equivalent for all brand value groups in the UK market - page 90
    - Relative generic prices were comparable across each brand value group, and decline to a similar extent over time - page 92
    - UK summary trends - page 93
CHAPTER 5 BIBLIOGRAPHY - page 95
- Publications and online articles - page 95
- Datamonitor reports - page 95
- Suggested reading - page 95
- Glossary of terms - page 96
APPENDIX - page 97

List of Tables
Table 1: Overview of the impact of generics on branded drug franchises across the US and 5EU markets (2003-06) with eight quarters of IMS data - page 8
Table 2: Level of brand franchise volume erosion compared to revenue erosion (2003-06) - page 27
Table 3: Relative price of branded franchise drug versus generic ($) - page 28
Table 4: Pharmaceutical products analyzed for this report - US - page 97
Table 5: Pharmaceutical products analyzed for this report - France - page 97
Table 6: Pharmaceutical products analyzed for this report - Germany - page 98
Table 7: Pharmaceutical products analyzed for this report - Italy - page 98
Table 8: Pharmaceutical products analyzed for this report - Spain - page 99
Table 9: Pharmaceutical products analyzed for this report - UK - page 99

List of Figures
Figure 1: There is a strong correlation between declining generic drug prices and the level of brand erosion after two years of generic incursion - page 10
Figure 2: Prices of generics by formulation during the first two years following patent expiry compared to branded drug price one quarter prior to patent expiry in the US and 5EU - page 11
Figure 3: Key summary trends across the US and 5EU markets (2003-06) - page 12
Figure 4: Average number of generic companies entering the market following a drug patent expiry - page 22
Figure 5: Incentives for generic prescription in Germany - page 23
Figure 6: Number of generic companies entering the US and German market following a drug patent expiry - page 24
Figure 7: Branded drug franchise volume (SU) and value ($) following generic entry (%) - page 26
Figure 8: Price of brand and generic drugs in Spain and Italy following generic entry - page 29
Figure 9: Price of brand and generic drugs in France, Germany, the UK and US following generic entry - page 30
Figure 10: Disincentives for generic prescription in Italy and Spain - page 31
Figure 11: Average branded and generic drug price following generic entry compared to branded drug price one quarter prior to patent expiry - page 32
Figure 12: Incentives for generic prescription in the UK - page 34
Figure 13: Incentives for generic prescription in France - page 35
Figure 14: Average number of standard oral generic drugs entering the market following a drug patent expiry - page 38
Figure 15: Average number of injectable generic drugs entering the market following a drug patent expiry - page 39
Figure 16: Average number of topical generic drugs entering the market following a drug patent expiry - page 40
Figure 17: Average number of injectable, oral and topical generic drugs entering the market following a drug patent expiry across the US and 5EU markets - page 41
Figure 18: Revenue shares of leading generics companies by drug formulation in 2006 - page 42
Figure 19: Branded standard oral drug volume (SU) and value ($) following generic entry (%) - page 43
Figure 20: Incentives for generic prescription in the US - page 44
Figure 21: Total branded injectable drug volume (SU) and value ($) following generic entry of any formulation (%) - page 45
Figure 22: Branded injectable drug volume (SU) and value ($) facing direct competition by generic injectables (%) - page 47
Figure 23: Branded topical drug volume (SU) and value ($) following generic entry (%) - page 49
Figure 24: Branded drug value ($) erosion by formulation following generic entry (%) in the 5EU and US - page 51
Figure 25: Branded drug formulation and volume (SU) following generic entry (%) in the 5EU and US - page 52
Figure 26: Average generic drug price of standard oral drugs following generic entry compared to branded drug price one quarter prior to patent expiry - page 54
Figure 27: Average generic drug price of injectable drugs following generic entry compared to branded drug price one quarter prior to patent expiry - page 55
Figure 28: Volume and relative price of brand and generic version of mitoxantrone (injectable) in Italy - page 56
Figure 29: Average generic drug price of topical drugs following generic entry compared to branded drug price one quarter prior to patent expiry in the US - page 57
Figure 30: Prices of generics by formulation during the first two years following patent expiry compared to branded drug price one quarter prior to patent expiry in the US and 5EU - page 59
Figure 31: Average branded standard oral drug price following generic entry compared to branded drug price one quarter prior to patent expiry - page 60
Figure 32: Average branded injectable drug price following generic entry compared to branded drug price one quarter prior to patent expiry - page 61
Figure 33: Average branded topical drug price following generic entry compared to branded drug price one quarter prior to patent expiry - page 62
Figure 34: Average branded standard oral drug price following generic entry compared to branded drug price one quarter prior to patent expiry - page 63
Figure 35: Average number of generic drugs entering the market following a drug patent expiry in the US, by brand value - page 65
Figure 36: Branded drug volume (SU) and value ($) following generic entry (%) in the US, by brand value - page 66
Figure 37: Generic erosion of blockbuster drugs following patent expiry: Merck's Zocor (simvastatin) and Forest's Celexa (citalopram). - page 68
Figure 38: Average branded and generic drug price following generic entry compared to branded drug price one quarter prior to patent expiry in the US, by brand value - page 69
Figure 39: US summary trends - page 70
Figure 40: Average number of generic drugs entering the market following a drug patent expiry in France, by brand value - page 71
Figure 41: Branded drug volume (SU) and value ($) following generic entry (%) in France, by brand value - page 72
Figure 42: Average branded and generic drug price following generic entry compared to branded drug price one quarter prior to patent expiry in France, by brand value - page 73
Figure 43: French summary trends - page 74
Figure 44: Average number of generic drugs entering the market following drug patent expiry in Germany, by brand value - page 75
Figure 45: Vytorin re-energizes Zocor's declining German franchise - page 76
Figure 46: Branded drug volume (SU) and value ($) following generic entry (%) in Germany, by brand value - page 77
Figure 47: Average branded and generic drug price following generic entry compared to branded drug price one quarter prior to patent expiry in Germany, by brand value - page 78
Figure 48: German summary trends - page 79
Figure 49: Average number of generic drugs entering the market following a drug patent expiry in Italy, by brand value - page 80
Figure 50: Branded drug volume (SU) and value ($) following generic entry (%) in Italy, by brand value - page 81
Figure 51: Average branded and generic drug price following generic entry compared to branded drug price one quarter prior to patent expiry in Italy, by brand value - page 83
Figure 52: Italian summary trends - page 84
Figure 53: Average number of generic drugs entering the market following a drug patent expiry in Spain, by brand value - page 85
Figure 54: Branded drug volume (SU) and value ($) following generic entry (%) in Spain, by brand value - page 86
Figure 55: Average branded and generic drug price following generic entry compared to branded drug price one quarter prior to patent expiry in Spain, by brand value - page 88
Figure 56: Spanish summary trends - page 89
Figure 57: Average number of generic drugs entering the market following a drug patent expiry in the UK, by brand value - page 90
Figure 58: Branded drug volume (SU) and value ($) following generic entry (%) in the UK, by brand value - page 91
Figure 59: Average branded and generic drug price following generic entry compared to branded drug price one quarter prior to patent expiry in the UK, by brand value - page 92
Figure 60: UK summary trends - page 93

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Generic Series: Benchmarking Patent Expiries - Key Factors Affecting Brand Erosion at Patent Expiry

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