Consumers love to save money and companies love to make it. So why do all pharmaceutical manufacturers not supply generics to the animal health industry?

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ANIMAL HEALTH GENERICS AND THE ANIMAL HEALTH INDUSTRY - ANIMAL HEALTH
by Cheryl Raeburn
C
onsumers love to save money and companies love to
make it. So why do all pharmaceutical manufacturers
not supply generics to the animal health industry?
When it comes down to a choice between generic
or branded pet drugs consumers are increasingly choosing the
cheaper generic options. With a 5% increase in generic animal
health drugs over the last five years, it is an industry with great
potential.
The Players
The dominant players in the animal health generics market
are TEVA and Putney in the United States, and Norbrook
and Chanelle in the United Kingdom. Pfizer’s Animal Health
Division, another big contributor, has grown to a point where
they are considering divesting. There have also been several
major mergers in the animal health segment; specifically, Merck
and Sanofi-aventis who entered into a sequence of mergers with
Schering-Plough and Merial.
The Market
The United States is a nation of pet lovers who own more
than 86 million cats and 78 million dogs. People tend to treat
their pets like part of the family, and as such, they are making
regular visits to veterinarians. According to the American Pet
Products Association, in 2011 approximately US$25 billion was
spent on medicine and veterinary care in the U.S. In addition to
the growing number of companion animals, there is perpetual
growth in the agricultural food production industry. As of
January 2012, there were more than 90 million head of cattle in
the United States. This global increase in population will only
Future Generics Competition on the Horizon
Generics and the
Animal Health Industry
continue to drive the growth
in meat production. Merck
predicts that the global
animal health industry will
grow at a rate of 5% per year
in nominal value through
2014.
Mutual Benefits to
Manufacturers and
Consumers
Generic drugs that have
the same active, inert, and
additive ingredients as their
pioneer drug are required to
test for purity and potency.
However, according to Food
and Drug Administration
rules for Abbreviated New
Drug Applications, they may
not be required to conduct
tests to show animal safety
and efficacy if they are
bioequivalent to the pioneer
drug.This greatly reduces the
costs of testing and regulatory
approval and eases entrance
into the market. In 2008,
the Animal Generic Drug User Fee Act was introduced that
reduced the process for completing the review on submissions,
and accelerated the time of approval for generic animal drugs.
The generic availability of endectocides, anthelmintics, anti-
infectives, and vaccines represent a large portion of the generic
market and hold great potential for R&D and the entrance of
brand generics. However, as reported by the Generic Animal
Drug Alliance, “…of the top 20 human drugs that lost patent
protection between 2005 and 2007, 100% went generic; and of
the top 20 veterinary companion animal drugs during the same
time frame, only 20% went generic.”
Animal drug competition is less susceptible to generic
influences than human drugs because of the lack of insurance
and employer programs that require the selection of generic
alternatives when available. According to the U.S. pet insurance
company, Embrace, they estimate that in 2008 only 0.3% of
owners had pet insurance. That leaves the responsibility to the
consumer. When offered a choice between brand-name drugs
versus a less expensive generic version, you can be confident that
pet owners will choose the more cost-effective option. This also
enables vets to pass on savings to their clients and increase their
sales margin.
The other large – and largely untapped – market in generic
animal health pharmaceuticals is in livestock production for
consumption. Consumers want to know more about what they
are eating and require assurances that it is safe. As a result,
meat producers are under more pressure to provide the highest
standard of care to their
livestock. If alternative, cost-
effective drugs with equal
efficacy were available to the
producers it would reduce
costs for cattle producers to
provide quality treatment to
livestock and in turn provide
less expensive beef for
consumers.
The Future
The generics sector in the
animal health industry
will evolve as it expands,
not unlike the way human
healthcare has changed
by generics. The current
economic downturn increases
the demand for cost-effective
alternatives in order to build
the future of generics in the
animal health industry as a
viable option for additional
revenue. Companies with
existing animal health
products will have the
advantage, being in a position
to create generic versions of their branded drugs and get them
to market. Utilizing existing networks will enable them to
communicate and market their products more effectively to
distributors.
Additionally, as generic competition increases in the animal
health market, demands will be made for innovation and
thus encouraging companies to develop new products and
technologies. Overall, this process stands to benefit consumers
with more options for animal healthcare.
Understanding and forecasting the future of generics in the
animal health industry should be part of pharmaceutical
manufacturing strategy as it remains a relatively untapped
market with future potential for growth.
Cheryl Raeburn is a Business Development Consultant for Generic
Pharma 2.0. She has a background in the animal health industry and is
currently involved with developing The Generics Federation. Please contact
Cheryl via Twitter: @AnimalHealth_
According to the American Pet
Products Association, in 2011
approximately US$25 billion was
spent on medicine and veterinary care
in the U.S.
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