Generics at the Crossroads: Will Europe Lead the Way Forward?

Abstract

The generics industry is at a crossroads. Fundamental growth drivers remain unchanged, and should result in sustained long-term growth. However, growing cost and pricing pressures mean the industry of the future will look very different and the longer term impact of the financial crisis is still unclear. Future industry structure will also be determined by the extent to which genuine competition is allowed to emerge and to overcome the trend towards nationalist protectionist policies. The companies that succeed will be those that excel in four key areas: launches, differentiation, geographic presence and operational excellence. They will implement variations on three basic strategies: leveraging fixed costs/economies of scale, using new technologies and focusing on value products. Although many questions remain to be answered, including the future role of Europe, several global trends are clear, including ongoing industry consolidation and the growing importance of biosimilars. Otherwise, much will depend on developments in the European Union (EU), the world's largest single market. The EU offers an object lesson in the need for political leadership not only from the top but also at the national level, where varying approaches can have make-or-break importance for generic penetration rates and thus for the industry as a whole.