The generic pharmaceutical industry will look very different in 10 years due to various potential game changers. Companies will need to consider changes to their growth strategies, product selections, and business models. Ten game changers are identified that could disrupt the industry, including increased interest from big pharmaceutical companies in generics, biologic drug patent expirations, new competitors from emerging markets, and increased government protectionism favoring local drug manufacturing. To gain a competitive advantage, companies need to envision how the industry may change and develop strategies to overcome future challenges. Experts can help companies navigate this changing landscape and plot a successful path forward.

1. T
he generic industry is going to look
very different in 10 years’ time. In this
fierce marketplace, it is easy to make
the mistake of planning based on the
status quo; building strategies and forecasts that
assume the industry of today will be the industry
of tomorrow.Often there is little ready opportunity
to consider a different future that requires evolving
industry dynamics and the inclusion of emerging
trends. If you are open to seeing them, great, but
unfortunately many executives are struggling to
manage the stresses of an aggressive, fast-evolving
market. Whether it is a resistance to change, lack
of insight, fear of the unknown, complacency,
pressures of near term returns, or lack of expertise,
it is time to take the time to take an imaginative
view of a wide-ranging future. Be on the lookout
for indicators. There is information, advice and
partners available to help plot a path through this
minefield. And it is a minefield.
These 10 potential game changers will force
companies to consider their growth strategy,
product selection and fundamental business
models in a different way.
1) Big Pharma’s growing interest
in generics
Over the past five years, more than 20 significant
deals and acquisitions have been made in the
generics industry; and this is just the beginning.
There is a growing use of globally-recognised
brands in emerging markets which can help to
gain market share and a utilization of large-field
force infrastructure to drive demand for branded
generics. By building know-how of the generic
industry, companies can provide a platform for
biosimilars and further increase interest.
Challenge: Do you partner? How do you compete?
2) Biologic patent expiry
As of now, 75% of blockbuster drugs are biologics;
however, an estimated $62 billion in brand sales
are expected to be exposed to generic competition
by 2020. Development costs for biologics are 25
times that of small molecules, but often require a
fundamental learning curve for marketing.
Challenge: How do you get into biosimilars?
3) New competitors
Emerging market players are beginning to
seek export revenues. In a growing market like
China, with 7000 pharma facilities, government
directed consolidation will create manufacturing
powerhouses. Thailand, Indonesia, Pakistan,
and Ukraine should also be on companies’ radar
as new competitors. Other emerging trends
include API companies starting the process of
forward integration and contract manufacturing
organizations developing their own products, as
well as wholesalers evolving into having their own
manufacturing capabilities.
Asa Cox is the founder and CEO of Generic Pharma 2.0. He has been involved in the generic pharmaceutical industry for 15 years; his work experience covers
both technical and commercial aspects of the industry. Please contact Asa via email at Asa.Cox@genericpharma20.com
Ten Potential Industry Game Changers
GENERIC
by Asa Cox
Challenge: Do you know who might take
away your future business?
4)Preventativehealthcare
Emerging markets are eager to improve
their healthcare systens, but want to avoid
many of the problems of that the Western
populations have faced in the past.
There is a significant move towards
building healthcare systems around
exercise, diet and neutraceuticals, as well
as connecting health insurance premiums
with preventative activities or lifestyle
habits. Expect changes in this field as Big
Pharma moves into health management
services as a move to protect itself from
generic drug competition.
Challenge: Should you be planning a move
into prevention?
5) Disease-management
services
The kind of personalised medicine that
is emerging involves a patient’s total
care: prevention, diagnostics, treatment,
maintenance and palliative care. Payers
will work with partners who can offer
this complete service and a full portfolio.
For generics, this will mean serious
consideration needs to be given about
portfolio selection and non-drug offerings.
Or face being cut out.
Challenge: How do you select your pipeline?
Can IMS data predict the future?
6) Power of payers
The power of payers lies in the fact that
insurance companies control drug-supply
chains and pricing, while pharmacy chains
own drug approvals and have exclusive
supply contracts. Tighter government
controls, along with fixed margins for
commodity medicines, will change the
face of the industry, as well as the fact that
patient groups can bargain down drug
portfolios with competing suppliers.
Challenge: Are you developing the right
relationships?Canyouofferwhattheyneed?
7) New distribution models
Many different distribution models
are emerging that will certainly affect
how companies will progress. Online
pharmacies can now enable “supply
anywhere” and mobile insurance
payments, while Big Pharma is setting
up direct-to-consumer distribution
with same-day delivery. Government-
sponsored drug vending machines in
low-income neighbourhoods are also
appearing, as well as virtual doctors who
can prescribe and deliver drugs to rural
towns.
Challenge: How will you ensure your
company is part of the revolution?
8) Patient power
Consumers are now growing in knowledge
about drug quality, supply chain and
pricing. Mobile monitoring technologies
are giving patients physician-level health
data. There is more of a demand for the
selection of drug manufacturers based on
ethics, reports and stats. There is also a
growing connection between diagnostic
data, diet and lifestyle and the request for
drug programmes.
The immediate opportunity is to identify
patient drug requirements; deliver better
generics, differentiated delivery systems
and improved compliance.
Challenge: Is your company ready to
differentiate its offerings to consumers?
9) New marketing
technologies
Social media is becoming a prime channel
for patient influence. Mobile apps now
allow patients to select a pharmacy based
on the manufacturer listed and use price-
comparison websites linked directly to
drug fulfillment services.Drug monitoring
and selection have also developed game-
like reward programmes, and virtual drug
education (sponsored by Big Pharma) is
being used to appeal to consumers.
Challenge: How long will your traditional
marketing to wholesalers be effective?
10) Government
protectionism
Growing economies recognise that
healthcare costs can become a massive
burden. They do not want to be reliant
on expensive imported drugs, especially
essential drugs. The need is growing
to develop their own manufacturing
programmes to contain costs and be self-
reliant. The use of programmes to direct
investment in RD, education and IP
development and setting policies to favor
local manufacturing sources for all product
types are essential steps to success.
Challenge: How quickly can you partner
with governments?
Competitive Advantage
The best companies look into the future,
see its challenges and opportunities,
and work to turn their strategy into a
competitive advantage. Innovation takes
place least when times are good; crisis
and adversity are good environments
for radical ideas to flourish and for the
unimaginable to become necessity.
It is easy to turn one’s head and look
the other way. Market analysts predict
trends that do not upset the old order,
and running strategies counter to
established data can be risky. So what is
the motivation to change? The generic
industry has reaped incredible profits for
the past 20 years. It is now faced with a
future that will not allow for the same
simple price-driven model to do the
same. Every company, large and small,
faces a challenge to determine its strategy
for overcoming these challenges and
creating a plan for competitive advantage
or they could risk extinction.
Which do we rank higher?
• A company that successfully comes out
of a tough situation, or
• A company that successfully avoids the
tough situation
If you can devise a strategy better than
your competitors: you win. Simple.
What Will the
Generic Industry
Look Like in
Ten Years?
What Will the Generic Industry Look Like in Ten Years? - GENERIC
“You need to
find experts
who can
help you
plot a path
through the
minefield.”
“Game changers will force
companies to consider their
growth strategy, product
selection and fundamental
business models in a
different way....”
Peer Reviewed By: Karan Arora,
Andrej Gasperlin, Aziz Hiouni, Markku Huhta-
Koivisto, Allen Lefkowitz, Sherri Leonard
August 2012Want to talk about the latest industry issues? Join the discussion forum. NPT | The Community of Big Thinkers