The Hatch-Waxman Act shook up the generic drugs business in 1984, and almost 30 years later, it’s safe to say the law had its desired effect. About 84% of the 4 billion prescriptions written each year are for generic drugs, saving patients and government programs billions of dollars a year. In other words, generic drugs are big business. And with a slew of blockbuster brands now off patent, it’s a big business with growing pains.
As companies bulked up to take on copies of the world’s best-selling drugs, a wave of mergers has swept the industry. Many credit Actavis ($ACT) CEO Paul Bisaro with starting that trend; then the Watson CEO, his 2012 takeover of Actavis sent a clear message of “go big or go home” reverberating throughout the generics business. Actavis hasn’t stopped scouting for deals, and many of its peers have followed suit.
Companies are joining forces to take on new markets, too. Like branded drugmakers, generics companies are looking toward emerging markets now that some of the biggest blockbusters have already fallen to generic competition and Western markets are stagnating. Many generics makers have teamed up with or bought local companies that can help with manufacturing, marketing and distribution. Big Pharma companies add their names–and lend their prestige–to domestically made products to differentiate them from the masses of competition. And joining forces with the locals can sometimes be a requirement. To sell one of 70-plus essential drugs in South Africa, companies have to make those drugs in South Africa. Russia requires foreign drugmakers to partner with local companies and share technology to get in on the action in that market.
It’s not only emerging markets that are promising growth opportunities for generics makers. Japan, with its aging population and eye on increasing generics usage, has become a prime target for out-of-town generics makers. The Japanese newspaper Nikkei expects the country’s market for generics to expand by 8% per year, hitting $13.2 billion in 2017. Others, like Spain, are looking to bring healthcare costs under control. The country has introduced mandatory generics prescribing where available, a measure that some expect could save it €2 billion a year. Not all countries are quite so eager to attract foreign investment, however. India is one. It boasts a strong generics industry of its own, and its companies led the way worldwide in terms of approvals last year, with 205.
So go ahead and peruse the Top 10 to find out how these trends and market forces are shaping the industry’s biggest players–and vice versa. By and large, revenue numbers for the rankings came from companies’ sales reports. The 2012 generics sales figure for Hospira ($HSP), which doesn’t report generics numbers separately, came from EvaluatePharma’s 2013 World Preview. We converted currencies into dollars where necessary, using exchange rates from the days companies closed out their financial years (March 31, 2013, for Sun and Daiichi Sankyo; June 30, 2013, for Aspen; December 31, 2012, for Sanofi, $SNY). Feel free to reach out with questions or comments, or start a dialogue on our LinkedIn page. We look forward to hearing from you. — Carly Helfand (email | Twitter)