25. Generics & Biosimilars

Generics

What is a Generic?: 

A generic drug is a medication created to be the same as an already marketed brand-name drug in dosage form, safety, strength, route of administration, quality, performance characteristics, and intended use. These similarities help to demonstrate bioequivalence, which means that a generic medicine works in the same way and provides the same clinical benefit as the brand-name medicine. In other words, you can take a generic medicine as an equal substitute for its brand-name counterpart.

Generic drugs have become a cornerstone of health care systems around the globe, offering a cost-effective alternative to expensive brand-name medications. Despite accounting for only a small percentage of total prescription drug spending, generic medications dominate the market in terms of prescription volume. This stark contrast between cost and usage highlights the significant impact generic drugs have on making healthcare more accessible and affordable for millions of people worldwide.

The total global generics market was close to $420 billion in 2023, against a total pharma market of $1.3 trillion. But the volume is much higher. For example, in the US, branded drugs account for only 8-9% of total prescriptions dispensed in the US.

Another definition of Generics: A generic drug is a pharmaceutical product that is created to be the same as a brand-name drug. Generic drugs are usually much cheaper than the brand equivalent and are generally only different in flavour, colour, shape etc. Generic drugs can be developed following the patent expiration of an existing brand product. However, some countries, that have not yet developed or recognised patents, allow in-country manufacture of generic drugs. A common example of a generic drug is paracetamol which is also marketed at a higher price as a branded product such as panadol.

Here's the market evolution. 

And here's an indicative share in different countries. 

Generics are possible only when the patent expires.

Here are a few largest companies in this space:

Mylan/now Viatris (after merger with Pfizer's off-patent division), has a strong distribution network with presence in over 165 countries. (Against Teva's 60 countries)

Where for pharma development, key capability is R&D and related patents, here, it is generics development, manufacturing efficiency, and the operations and marketing in different countries. A large portion of the generics market is dominated by companies from India and China.

As per the analysis by IMARC Group, the top generic drugs companies are increasingly focusing on investments in R&D to expand their product portfolios. The major market players are introducing affordable variants of more expensive patented drugs by developing and launching new formulations, thereby targeting price-sensitive consumers in developing economies. Moreover, the key players are adopting strategic collaborations with healthcare providers to market new drugs and facilitate faster time-to-market at reduced costs and risks associated with drug development. In addition to this, the manufacturers are also adopting various digital technologies to streamline operations, enhance supply chain efficiency, and improve the overall patient care experience, which is also propelling the market. Besides this, key players are focusing on the development and manufacturing of specialty generic drugs with higher profit margins compared to traditional generics, which is creating a positive market outlook. The market is further fueled by the rapid utilization of data analytics by the market players to gain insights into drug utilization patterns, identifying areas of unmet patient needs, and analyzing patient behavior. Some of the other factors contributing to the market include the rising healthcare expenditure, growing development of biosimilars for patented biologic drugs, an enhanced focus on expanding manufacturing capabilities, and rising investments by government and private agencies.

Biosimilar

A biosimilar is a biological product highly similar to an already approved reference biologic, demonstrating no clinically meaningful differences in safety, efficacy, and quality. Unlike generic drugs, biosimilars are not exact copies due to the complexity of biological molecules, but they undergo rigorous comparative studies to ensure similarity in structure, function, and clinical outcomes. Biosimilars offer benefits such as increased access to biologic therapies, reduced treatment costs, and enhanced competition in the market. Regulatory agencies have established strict guidelines to ensure biosimilars' safety and equivalence with reference products, fostering innovation and affordability in the biopharmaceutical industry.

Another definition: Owing to the complexity of biological drugs, generic versions are not always possible. As such there have been attempts to develop biosimilars which are similar in therapeutic effect to a reference biologic product. They may only be similar and not identical as they may contain small differences in terms of composition, molecular structure or impurities. However, these minor changes would not be clinically meaningful.

The total global biosimilar market is ~$35 billion. (Against the total pharma market of close to ~$1.3 trillion)




In the US:

Since 2015, when the Food and Drug Administration (FDA) approved the first biosimilar drug in the US, the market has grown as more reference brands lose exclusivity and more biosimilars are approved. As of August 2024, ten different molecules have biosimilars, 43 biosimilars have launched, and the US market represents approximately $7 billion in annual revenue for biosimilars manufacturers.

Reference brands worth roughly $200 billion will lose exclusivity and be eligible for biosimilar entry over the next ten years. Going forward, we expect the US biosimilars market to resemble complex generics, such as complex peptides and inhalation therapies, rather than commodity generics such as oral solid doses. For biosimilars manufacturers, it is critical to have a clear strategy for pipeline choices, internal development versus business development, and go-to-market capabilities.