ImageIncreased use of generic drugs helped the US healthcare system save billions of dollars over the last decade.

Increased use of generic drugs helped the US healthcare system save billions of dollars over the last decade.
Read more: A recent report by the Generic Pharmaceutical Association in the US (GPhA) says that generic drugs saved the healthcare system more than $734 billion in the last decade, a trend that could be good news for Indian pharma players with a strong presence in the US.

"In 1984, it was predicted that the Hatch-Waxman Act would save the US $1 billion in the first decade. Now, generic medicines save more than that every three days," GPhA president and CEO Kathleen Jaeger informed in an emailed response. "These savings are truly remarkable and demonstrate the real value of generic medicines for consumers and the entire health care system."

According to GPhA's analysis, high growth rates were driven by factors such as increase in the overall percentage of generic utilisation (from 61% in 2006 to 69% by 2008) and loss of patent protection by several brand-name blockbusters such as Pravachol, Ambien, Fosamax, Zoloft and Zocor.

This is good news for Indian pharma players like Lupin, Sun Pharma and Ranbaxy, who have a major presence in the US. According to IMS' annual ‘Global Pharmaceutical and Therapy Forecast’, the US pharmaceuticals market will be worth about $300 billion in 2009. Exports have become an important growth driver for this industry in recent years with more than 50% revenues coming from overseas markets, particularly the US. According to Indusview Advisors, in February 2009 alone, large and mid-sized Indian companies secured approvals for 15 abbreviated new drug applications (ANDAs).

Lupin MD Kamal Sharma said: "The change in policy coupled with numerous drugs going off patent in the next few years is a huge opportunity for Indian industry to address between 2009-2013. Though there is stiff competition from the likes of Teva, Mylan and Sandoz , we expect to grow this market through additional product launches. The US has always been a major focus area for us and we expect to maintain our growth momentum."

Industry analysts also estimate that brand products with approximately $90 billion in annual sales globally will lose market protection between 2009 and 2012, including mega-sellers as Lipitor, Plavix, Singulair and Viagra, increasing the opportunity for Indian companies. "With increased spending year on healthcare year on year, governments are pushing for generic substitution to reduce healthcare costs. The generic companies, such as Ranbaxy, have played a significant role to support such government programs and the potential is still huge," an industry expert said.
However, Big Pharma companies like Pfizer are also looking at this lucrative segment and intend to push more branded generic products, providing increased competition to Indian companies. Bill Kennally, Pfizer's regional president of established products in the US said: "While the overall US market is expected to show modest growth, Pfizer will stay competitive in the generic sector by launching 39 off-patent products which are licensed from Aurobindo Pharma."

Pfizer plans on introducing generic products in various categories; its generic subsidiary Greenstone, is exploring opportunities to expand the US generic presence through acquisitions or partnerships.