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2017 – A Great Year for Generics – Yes or No?

Generic Firms Looking for Revenue with 505(b)(2)

AAM’s Annual Conference is over and most of the generic companies are glad 2017 is over, too. Despite media reports that 2017 was the best year ever for generics, only 3 companies of the top 30 companies reported a profit. This discrepancy can be found in the point of view taken. Almost 90% of the prescriptions written in the U.S. are filled by generics – an all time high. The dollar cost of these prescriptions has dropped. So, the public sees a thriving generic business. However, the public doesn’t see the entire supply chain – manufacturers are just one source of costs. PBMs, distributors, and pharmacies are also part of the chain. The lower pricing is hurting the generic manufacturers, leading to consolidation and potential for supply issues. Some generic companies are evaluating the expansion of their business into ‘brands’ – 505(b)(2) and biosimilars.

Be Careful of What You Ask for

Somewhere there is the law of unintended consequences. In this case, the generic industry fought for GDUFA to increase the speed of approvals. They got that, but they got faster approvals of many more copies of the same molecule. At AAM’s meeting, it was reported that the number of first-to-file drug products has not changed over the past 3 years. We simply have more copies and more competition driving down prices.

2017 Generics Pharmaceutical Industry recap

The Generic industry also faces a problem being lumped in with the ‘high cost of drugs’ campaign by the current Administration. It isn’t brand versus generic. AAM lacks the resources to compete with PhRMA. The CEO of Mylan estimated the latter trade organization outspends AAM by at least 30 to 1. And PhRMA execs show up in the media and in front of Congress – AAM does not.

Was 2017 a Good Year for Generics?

So, no, 2017 wasn’t a good year if you were a generic company. 2018 doesn’t look too good either. At this year’s meeting, the usual session with financial analysts was missing. Maybe they didn’t want a doom and gloom forecast.  But in prior years, these analysts, led by Ronny Gal, suggested that 505(b)(2) drug development might be explored to broaden the revenues. We spoke to several companies at AAM’s meeting who shared the same sentiments.


Author: Ken Phelps, President and CEO, Camargo Pharmaceutical Services