Commercial Insight: Generic Cancer Market - New Legislation and a Wave of Patent Expiries to Transform the Market

A Report by Datamonitor

Author - Fleur Pijpers, Oncology Analyst, Datamonitor

"Growth of Generics Market in Asia" , Interview with Laura Harris, Analyst, Datamonitor

The generic cancer market was worth $1.3 billion in 2004 , however a new report by independent market analyst Datamonitor (DTM.L) forecasts this market to reach $10.9 billion in value by 2014, achieving a compound annual growth rate (CAGR) of 24%. This staggering level of growth is attributable to upcoming patent expiries on key products, as well as the imminent introduction of a regulatory pathway for biogenerics, which will open up a previously untapped market that is currently worth billions. Despite the value of the market, for some, the perception of generics as being inferior to branded products remains. However, increasingly cost conscious governments endeavoring to cut down on healthcare expenditure will remain generic manufacturer’s greatest ally.

Billions at Stake

A large number of anticancer products were granted regulatory approvals in the 1990s and early 2000s and as a natural progression from this high volume of product approvals, there is an increase in the number of impending patent expiries in the coming years. Several of the products facing patent expiry currently achieve blockbuster sales, while others are forecast to break the $1 billion sales barrier in coming years- thus representing a highly lucrative opportunity for generics manufacturers, says Datamonitor oncology analyst Fleur Pijpers. “Datamonitor has identified 2009 as the year with the greatest potential for generics manufacturers, when nearly $15 billion worth of oncology product sales will be at risk from generic erosion. As a result of this, the impact of generics on the cancer market will become dramatically amplified in the next five years.”

Due to an aging population and rising incidence of cancer, healthcare expenditure is continuously on the increase. As a result, governments across the globe have begun to prioritize their cost-containment policies in order to drive costs down. Strategies are now being implemented to promote the use of generics as an alternative to more expensive branded products. In many markets, pharmacists must prescribe a generic where available over the branded counterpart, while in others, when a patient specifically requests a branded product over its generic version, a mandatory co-payment must be made. Pijpers says, “Reimbursement systems are also being altered to provide larger margins on generic versions than on branded products, thus offering national healthcare systems an incentive for the use of generics. It is this overwhelming demand for low-cost medicines that will help fuel growth of the generics industry, leading to a period of sustained growth that will last for several years.”

Biogenerics Waiting in the Wings

While legislation is firmly in place to ensure the relatively simple and rapid approval of generics in the US, EU and Japan, an implicit regulatory framework for biogenerics is not yet final. A number of factors have slowed development of biogenerics legislation, much of it centering around the characterization of proteins in order to prove equivalence. Biologics are generally large, complex molecules upon which minor changes in the manufacturing process can have a major impact, causing significant variations in the quality or properties of the final product. Variations in the final product are often not detected by analytical techniques, thus limiting the ability to characterize structure and measure clinical activity. For any potential biogenerics manufacturer, this ‘quality control’, or proving equivalency is a difficult prospect without conducting clinical trials.

The EU is a long way ahead of the US in terms of finalizing legislation pertaining to biogenerics, with first approvals likely in 2007. In January, the European Agency for the Evaluation of Medicinal Products (EMEA) gave a positive opinion for Sandoz’s Omnitrope, meaning it will most likely be approved soon via the new approval pathway for biogenerics. Interestingly, Omnitrope was approved in Australia recently, but via the standard drug approval pathway as opposed to a biogeneric approval pathway. However,t he imminent regulation and legislation of biogenerics in the EU still provides the opportunity to set precedent for the rest of the world. Pijpers says, “Although progress is slowly being made, the US is lagging behind the EU in terms of developing biogeneric legislation, therefore first approvals are not expected there until at least 2010.”

Other Challenges

Across the five largest EU markets, the generic cancer market was worth only $523 million in 2004, but Datamonitor forecasts it to reach $5.3 billion by 2014. Within the EU, the most well developed and mature generics markets exist in Germany and the UK, due to the propensity for cost effectiveness in their healthcare systems. In Italy and Spain, generics have traditionally had a negligible impact on the market, however, efforts in both countries to promote their use have increased of late. While both the Italian and Spanish generics markets remain underdeveloped, growth is in evidence. Pijpers says, “Generic products have traditionally had a low profile in France, due to a combination of low drug prices, small price differentials between branded and non-branded products and the elimination of co-payments. However, their use is now being promoted by the government, which has resulted in the take off of the French generic sector.”

Despite the increasingly welcoming environment for generics, the industry still faces challenges aside from the current lack of biogeneric legislation. Generic products have long been viewed with suspicion by those not convinced of their bioequivalence to the original brand. Concern may arise over potential differences in efficacy, side effects, media perception and familiarity with the branded product. Pijpers says, “Ongoing patient education is aiming to counter these concerns by raising awareness of the safety and bioequivalence of generic products.”

“However, it’s the increasingly parsimonious nature of national healthcare systems that will remain the greatest ally of generic manufacturers.”

For Futher Details, please contact: dmason@datamonitor.com

Report Published: 21st December 2005