Multinational pharmaceutical firms such as Novartis, Sanofi, Pfizer, GlaxoSmithKline, etc, are on the brink of a decline in revenues due to patent expiry dates as many are losing the exclusive rights to produce some of their blockbuster drugs. This situation, industry experts believe, could lead to new research and product innovation, with generic drug producers set to benefit hugely from the patent cliff.
While pharma companies are set to lose more than $267 billion once a raft of patents have expired by 2016, the ongoing patent expiration is expected to force generic manufacturers to replenish product pipelines with new generic versions to expand markets globally, including the African pharmaceutical market.
As more drugs head towards their expiry dates, their original makers are likely to see their profits drop significantly, face stiff competition from other producers which who could begin to make cheaper, generic versions of their drugs. Drugs whose patent are expired or are heading towards expiry include drugs for ailments such as hypertension, osteoporosis, rheumatism, lung infections, glaucoma, cholesterol, leukaemia, etc.
A report by the IMS Institute for Healthcare Informatics titled ‘The Global Use of Medicines: Outlook through 2016’, reveals that patent expiries and the introduction of low-cost generics will reduce spending through the forecast period (2012-2016).
The report noted that patent protected brand volume growth is expected to slow in advance of key patent expiries.
“Patent expiries will reduce brand spending by $127bn through 2016. Overall, exclusivity expiries in one or more of the developed markets will impact 13 of the top 20 products, or 7 of the top 10 current leading medicines, including Lipitor, Plavix, Advair Diskus, Crestor and Nexium,” the IMS report stated.
Industry experts believe the patent cliff will lead to a focus on developing targeted treatments, which require companies to invent and bring more products into the pharmaceutical space to fill the pipeline and generate comparable revenue levels.
For a long time, pharmaceutical companies have relied on profits from their popular medicines to enable them to invest in developing newer drugs. Interestingly, the effort that goes into researching, clinical trials and marketing a new drug run into millions of dollars.
With further patents on commonly used drugs expiring, or heading towards expiry, their original makers are likely to see their profits drop massively. They will face greater competition from other producers, who could begin to make cheaper, generic versions of their drugs.
As tropical diseases are popular research areas, pharmaceutical institutes look set to tap into this area and research on tropical diseases such as lymphatic filariasis, Onchocerciasis, malaria, and Schistosomiasis.
Africa’s pharmaceutical industry is growing as most multinationals look toward the continent for their expanding global footprint.
Tinotenda Sachikonye, an analyst at Frost and Sullivan, said that Africa’s focus is shifting from over-the-counter (OTC) medicines like painkillers (aspirin or ibuprofen) to treatments for diseases, like diabetes and cancer.
“The local manufacturers in Nigeria contribute to about 30 percent of all manufacturing revenues in the country, so they’ve got quite a strong local manufacturing base. There is barely any research into new drugs in Africa as generics represent as much as 70 percent of all the drugs produced,” Sachikonye noted.
A peep into the global generic drug market show that the market will be worth under $169 billion in 2014, according to a report from BCC Research.
The generic drug industry covers the marketing and sale of medication containing the same active ingredients and dosages as brand-name drugs manufactured by the pharmaceutical industry. Drugs can be prescribed under their chemical name without specifying a particular pharmaceutical brand or company.
When brand-name drugs come off patent, the market is opened up to generic versions. Patent protection generally protects a drug’s intellectual property rights for about 20 years, but as the patent is effective from the clinical trial stage, the actual time the drug is on the market can be far less, often between 10 and 14 years. After a patent expires, pharmaceutical companies come under fierce pricing pressure due to competition from their less-expensive generic counterparts.
By: Alexander Chiejina
