During the five years to 2012, industry revenue is expected to increase at
an average annual rate of 5.4%. According to IBISWorld industry analyst Sophia
Snyder, “Sales growth in recent years slowed slightly due to the recession and
pricing pressures from large wholesalers and retailers.” IBISWorld expects
revenue will continue to increase in 2012, thanks to an improved economic
environment and the most significant year of the brand-name drug patent cliff.
Brand-name manufacturers faced a significant patent cliff beginning in
2011. In 2012 and the years ahead, several blockbuster-branded drug patents are
set to expire, opening up the market to generic versions. This factor will
stimulate industry sales but threaten the long-term viability of generics since
less innovative drugs are being developed. In response, generic manufacturers
are moving into biosimilar production, a relatively new product segment for the
Generic Pharmaceutical Manufacturing industry.
Additionally, more players are focusing on emerging markets, Snyder says,
where growth will likely be strong as consumers demand cheaper alternatives to
brand-name medicines. The number of companies continues to grow, as entrants
are enticed by the industry's strong profit margins. During the five years to
2012, the number of operators is expected to increase to 1,103, representing
average annual growth of 1.6%. For many years, generic companies were the small
players in the pharmaceutical industry, with modest growth rates and little or
no international business operations.
As generic companies have grown, often by
acquisition, they have developed an even greater need to consolidate because
biologics, which are difficult to make into generics, are becoming a larger
portion of industry sales. The long overdue consolidation in the generic drug
industry has been particularly active during the past five years. Teva is the
largest public company in the industry; others include Watson Pharmaceuticals
Inc., Sandoz Ltd. and Mylan Inc.
Continued growth in the industry will further attract new entrants, but
sustained consolidation will hamper the increase in the number of operators.
Also, healthcare reform will largely benefit the industry, with more consumers
gaining insurance coverage for prescription drugs, improved generic drug
approval processes and an established pathway to approval for biosimilars. For
more information, visit IBISWorld’s Generic Pharmaceutical Manufacturing report in the US industry page.
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