Generic Update: Brand-Name Companies Vs. Independents
After a year of disappointments, many brand-name companies are retreating from generics businesses. Generic companies, for their part, still struggle with managed care.
You may also be interested in...
In the past two years, some Big Pharma companies have revitalized their long-dormant generics activities and launched generic copies of their own drugs. They're doing this to capture business they would otherwise lose completely and to tie up generics competitors in court. While similar strategies failed in the past, a number of changes may make it more feasible. Innovators are behaving more rationally about pricing. And they are going after the most lucrative part of the generics business.
Sandoz, the generics unit of Novartis, is buying Sabex, a Canadian maker of injectable generics for $565 million cash, marking its entree into an attractive sector of generics and also the Canadian generics market. The 6X sales multiple aimed to dissuade Sabex owners from shopping for another buyer. Novartis is the only big pharma company to succeed in generics. Its play is opportunistic, but a secondary effect is a free-market response to pressure on big pharma to make drugs more affordable.
The new Medicare Act, while aimed at expanding health insurance coverage to include drug benefits, also includes some changes that wiill impact the intricate and highly evolved way generic companies go about challenging patents on brand-name drugs. Specifically, it strengthens an incentive companies have to be first to file a patent challenge, known as 180-day marketing exclusivity. Second, it limits the number of times a brand name company can get a delay on launch of a newly approved generic.