Generic companies facing some of the same issues as big pharma (part 1)

Manufacturing problems leading to consent decrees.... Products being pulled from the market.... products that haven't lived up to efficacy claims.... The patent cliff.... These sound like familiar challenges for the pharmaceutical industry. But now the drugs in the headlines are generics. As the industry has grown and matured, it's faced greater scrutiny from regulatory agencies. Now it faces many of the same setbacks that plague their branded brethren.

During the past two years, generic manufacturers have benefited from the infamous patent cliff as several of the largest selling branded drugs of all time - Lipitor, Plavix, Lexapro and Seroquel - have all lost patent exclusivity. This has provided a real boost to the generic manufacturers who could sell versions of these products.

But now, these same manufacturers are facing a patent cliff of their own. Over the next few years the value of branded drugs losing exclusivity will drop by more than 50%. In the meantime, generics have been plagued by high-profile manufacturing and quality issues that have raised questions about the sector's safety and ultimate viability. For example, the manufacturing woes that shut down two Ranbaxy plants in 2008 and resulted in 30 products being barred from the US, led to a $500 million settlement with the FDA and a five-year consent decree. Further issues recently led to a recall of its generic Lipitor. And in October, the FDA determined that Teva pharmaceuticals' generic version of Wellbutrin XL 300 MG did not demonstrate therapeutic equivalence and has asked the manufacturers of four other versions of the drug to submit bioequivalence data by March 2013.

As the generic makers adjust to the challenges posed by the introduction of new, large-selling products and related regulatory scrutiny, it's increasingly clear that generic manufacturers will need to develop new capabilities to be prepared. They'll need to broaden their attention -- and their relationships with regulatory agencies -- from securing approval for their products toward more management of mundane but vital issues, such as product quality. The market is increasingly complex for generic manufacturers, and business-as-usual isn't going to cut it. In my next post, I'll describe another critical issue facing these drugmakers and their relationship with regulatory agencies: moving into the new space of biologics.

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