India has emerged as a major market for the consumption and manufacture of generic medicines, says Frost & Sullivan
Fewer blockbusters drugs are expected to go off-patent post 2015, resulting in a scarcity of opportunities for generic companies in Asia, says Frost & Sullivan in a new report. As a result, generic drug manufacturers in the region are looking beyond the patent cliff and focusing on market expansion and improving the quality of existing drugs.
Some established generic manufacturers are restructuring and investing heavily in research and development of new molecules, although the impact of these efforts will take a minimum of five years to be clear, the report finds.
New analysis from Frost & Sullivan, Patent Cliff and the Future of Generics in Asia, expects the generics market to grow at a compound annual growth rate of 17–18% between 2014 and 2018.
India is a major market for generic drug manufacturing, followed by South Korea and Japan. Indonesia, Malaysia and Taiwan also offer immense promise, the report says.
The domestic consumption of generics in Asia is expected to rise due to government initiatives across the region. In Japan, the government aims to increase the volume of generic prescriptions from the 25% in 2012 to 60% by 2018 and in India the new government's universal health plan will roll out this year and cover the entire population by 2019. The state governments are promoting the use of generic medicines in state-run public hospitals to cut down on healthcare costs.
Pharmaceutical companies are expected to particularly invest in new chemical entities (NCE) and super generics in the next three to five years
Meanwhile, in Indonesia the universal health coverage scheme implemented in January 2014 is driving demand for medicines.
'Large drug brands have also opened their own generics division to counter the patent cliff and sustain global market shares,' said Frost & Sullivan Healthcare Industry Manager Siddharth Dutta.
'Pharmaceutical companies are expected to particularly invest in new chemical entities (NCE) and super generics in the next three to five years and generic manufacturers in countries such as Malaysia are looking for new markets like Brazil and other Latin American countries.'
But the patent cliff is creating challenges for generic manufacturers with competition driving price erosion. There is also pressure on payer reimbursement, customer consolidation, and the emergence of large buying groups. Manufacturers of generics are building strategies to address the generic threat ahead of loss of exclusivity.
Other challenges include perception issues related to quality and changing business models, such as mergers, partnerships, and generic manufacturers entering the super generics market, the report reveals.
Frost & Sullivan says manufacturers must adopt both long- and short-term strategies and simultaneously position themselves in the local and global markets to boost revenue. While big manufacturers need to focus on therapeutics and products with limited active pharmaceutical ingredients (API) availability, mid-sized manufacturers should focus on products with relatively higher profit margins.
'For instance, catering to high-margin niche product segments offered Indian generic participants an advantage in the anti-depressant market and first-mover opportunity in 2014,' explained Dutta. 'Indian generic manufacturers are likely to renew their strategy in 2015 while looking for new markets. Meanwhile, Asian generic manufacturers from Malaysia and Singapore are expected to turn their attention to Latin American markets to widen their footprint in the region.'