Carethics

Global pharma biggies will have to fight their share of market in the coming time, when patent protections for some of the top selling drugs in history of mankind, expires. WSJ reports More than 3 dozen drugs are going to lose patent protection between 2007 and 2012. Some drugs in the list are considered to be most successful drugs ever. For e.g. Pfizer's Lipitor, considered to be most sold drug ever, will lose patent by 2010 (Last year only, the drug brought revenue of $13 billion to the company). By 2012, three top selling drugs of Merck & Co. will face generic competition. These drugs presently account for 44% of company's revenues. Generic competiti–on is expected to wipe $67 billion from top companies' annual sales. Generally, drugs are granted 20 years of patent protection which also includes drug development period. So, most of the companies are not able to get the product in the market before half of the period has elapse–d. But, once they are in the market, they are highly profitable. Mostly the gross margins are in the range of 90-95%. And once the patent expires, generic makers also bring their products in the market with much lower price.

Ironically, Industry's process of production for new drugs has also slowed down, while the spends on R&D has gone up. Between ‘02 & '06, companies have brought 43% less drugs than between '95 & 2000. While, globally companies have spend over $60 billion in 2006 for R&D compared to $15 billion in 1995. Most companies are trying their way out of reduced revenues. Many believe future lies in Biotechnology. Biotech drugs are appealing because first, there is no competition from generics, two, there is no regulatory path that exists as of now. Plus some big companies are opening their generic arms, which seems to be growing faster than branded drugs.