A NEW GENERATION OF GENERICS
This new reimbursement scheme and price referencing system has resulted in a lower generic market share. The clash between
originators and generics is an unusual situation in Austria. In 2005, the Austrian Sick Funds put into place a new system
for generic market entrance. If a product is to be reimbursed, generics companies have to lower the price of a product by
48 percent compared to the originator. The second generic that enters the Austrian market subsequently has to reduce the product's
price by an additional 15 percent and the third generic product a further 10 percent. To make matters even more confusing,
three months after the third generic hits the market, originators have to decrease the value of their product to the price
of the third generic.
Martin Spatz, General Manager, TEVA Austria
In 2000, the Austrian Generics Industry Association (OEGV) was created to represent the interests of generics companies in
Austria. Compared to many other countries in Europe, the penetration rate of generics in Austria is still relatively low;
although compared worldwide Austria finds itself in the middle of the road. IMS data from 2010 indicates that generics only
had 26 percent of the market share, putting Austria as one of the lowest in Europe. Bernd Leiter, president of OEGV, notes
that until recently, most Austrians were not even aware of the existence or the role of generic drugs. His main task as President
is to "raise the awareness of the other stakeholders in the pharmaceutical industry about the existence and actions of an
association entirely focused on defending the interests of generics companies in Austria." Leiter feels that through convincing
authorities, physicians and patients about the quality and safety of generic drugs, the potential savings by switching to
generics in the future could equate to roughly EUR 256 million (USD 344 million), which represents a 55 percent difference
in price between patent-free originators and third generics.
Alexander Papanikolaou, managing director Austria, Czechia, Slovakia & Switzerland, HOSPIRA Austria GmbH
Dr. Martin Spatz, general manager of generics company Teva Ratiopharm is optimistic about the future of generics in Austria.
"Whereas the total pharmaceutical market in Austria is expected to grow by 1 or 2 percent, the generic market could grow
by 5 to 7 percent. If it is not spoiled by voluntary price cuts and by fully exploiting the potential, it could even grow
by 10 to 15 percent," remarks Spatz. "If your brand is not known, you will need huge upfront investments; if you are here
as an established generic player, the market is rather protected. Barriers to entry are rather high because it is a branded
BOSTON CONSULTING GROUP: A Fresh Perspective
Dr. Robin Rumler, CEO of Pfizer Austria and president of PHARMIG, is also aware of the shift towards generics that is gradually
taking place. "With respect to the cost of drugs, Austria belongs to the low cost countries in Europe," Rumler remarks. "Drug
costs are approximately 18 percent below the EU-15 average. Nevertheless sick funds and payers still put pressure on drug
cost to decrease health care expenditure. The so called 'block-buster' era is over; the future belongs to more targeted therapies.
The industry is talking about the patent-cliff, which means that many of the block-busters are losing their patent these days."
Alfred Grün managing director, Schülke & Mayr GmbH
Additionally, there has been some evidence in Austria that biosimilars tend to be treated as generics. Alexander Papanikolaou,
managing director of Hospira for Austria, Czech Republic, Slovakia & Switzerland, says that "the biggest development in the
future lies in monoclonal antibodies. If these are treated as generics, we start to destroy a future market that has huge
potential for hospitals and for patients. You will not launch a product if you do not have the potential to get a return on
investment. If you do not launch these products in the first place, there will be no 'generic' solutions for the market."
Michael Norman, General Manager Austria, Czech Republic, Hungary, Romania, Bristol-Myers Squibb GmbH