From the Generic to the Supergeneric Era

Generic drugs save patients and European healthcare systems approximately EUR 35 billion (US$46bn) each year, according to the European Generics Association (EGA). Of the 16 health-related recommendations made by the European Commission for 2014–2015 to EU member states, 11 concerned cost efficiency in the healthcare sector. But, speaking at the EGA Conference in Madrid, Spain, earlier this summer, EGA President Nick Haggar noted that  vague recommendations by the Commission would only make it difficult for member states to implement measures and monitor their progress. The Commission has recommended that France, for example, should go beyond short-term savings and tackle pharmaceutical spending over the medium to long term, but has given no specific measures to help the country achieve this objective. EGA is calling for the Commission to refer to the role played by generic drugs in adding value to patients as well as the competitiveness of the EU pharmaceutical industry.

One question, however, is whether or not the European generic drug market is sustainable, given that the blockbuster era has reached its end and the shift in the type of medicines losing patent protection in Europe over the coming years. According to the Boston Consulting Group, between 2014 and 2020, specialty drugs and biologics will make two thirds of the value of products losing patent protection in Europe.

The market for standard generics may look bleak but there are opportunities for supergenerics. Unlike the copycat version of the branded product with established bioequivalence, supergenerics offer a therapeutic advantage with product differentiation achieved through improved pharmacokinetics, such as with novel controlled release delivery, combination formulations, modified dosage strengths, or different routes of administration. The development of supergenerics requires limited financial investment despite being more expensive to develop than standard generics. The risk of failure, however, is low compared to innovative molecules; development timelines are shorter; the route to commercialization is far less complex; and there is some scope for exclusivity.

By investing in the development of supergenerics, pharmaceutical companies can remain competitive and create value through satisfying unmet medical needs or by targeting specific patient populations (i.e., geriatrics or paediatrics). For the bigger players, a strategy for success will include focussing on products with technologically challenging formulations, products that require significant regulatory support, or products with limited API availability, according to Frost and Sullivan. Medium-sized firms, on the other hand, could employ a differentiated approach that focuses on products with relatively higher profit margins and time their market entry appropriately.