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Biopharm Development & Manufacturing Generic Drugs: An Impending Drought? By Cliff Mintz, Ph.D., contributing editor harmaceutical drug sales in the United States totaled roughly $320 billion in 2011, according to IMS Health. Last year, more than 40 brand-name drugs, including blockbusters like Plavix, Lexapro, and Seroquel — valued at $35 billion in annual sales — lost their patent protection. P This year, an additional $17 billion in branded drugs sales is expected to be lost as other blockbusters are scheduled to lose patent protection and be sold as lower-cost generic drugs. While the patent expiry of so many blockbuster brands — the so-called "patent cliff" — should seemingly be good news for generic drug manufacturers, it is making many generic drug company executives extremely anxious. Recently, Heather Bresch, CEO of Mylan, the second-largest generics company in the U.S., quipped, "I can't go anywhere without being asked about the patent cliff." A CHANGING GENERIC DRUG LANDSCAPE Historically, generic drug manufacturers have relied on the lucrative six-month market exclusivity that follows patent expiry of branded drugs as a major revenue driver. During those periods, companies that are first to file an application with the FDA win the right to sell their generic version of a branded prescription drug exclusively or with little competition. However, the patent cliff has forced generic drug companies to reevaluate that business 32 LifeScienceLeader.com model. Asa Cox, chief executive and founder of Generic Pharma 2.0, a global generic drug manufacturing consulting firm, said, "The patent cliff is over, and generic drug company executives understand that they can no longer rely on six months of market exclusivity as their main revenue driver." He added, "There is simply too much competition for too few brands." Likewise, Paul Bisaro, CEO of Watson Pharmaceuticals (now Actavis), suggested in a recent article that, while big blockbuster brands like Plavix or Lipitor get a lot of attention when they lose patent protection, patent expiry does not always translate into guaranteed profits for generic drug manufacturers. To that point, generic companies are now scrambling to find creative ways to redefine their business models and reinvent themselves to cope with the impending generic drug drought that is likely to occur over the next few years. Some of these new strategies include selling branded products, specializing in difficult-to-make drugs, and expanding globally into new markets. NEW BUSINESS STRATEGIES FOR GENERIC DRUG COMPANIES Many of the top generic drug companies, including Teva, Actavis, and Mylan, July 2013 are already selling their own branded products (in addition to generics) to ensure growth and maintain revenue streams. Teva is perhaps the best example of this with Copaxone, its injectable blockbuster drug to treat multiple sclerosis. Mylan's and Actavis' sales revenues have also benefited from selling their own branded products including Mylan's antiallergy EpiPen and Watson's branded oral female contraceptives and other women's health products. Other generic drug makers are going after difficult-to-make products, such as extended-release tablets, patches, creams, and reformulated injectable drugs, based on the notion that with less competition, the prices of these so-called speciality products will not erode as quickly as conventional generic drugs (which can lose as much as 80% of their value once the six-month exclusivity period has expired and the market is flooded with multiple competitors). Scott Tarriff, former CEO of the NY-based generic manufacturer Par Pharmaceuticals and currently CEO of Eagle Pharmaceuticals, believes that specialty pharmaceutical products may represent a major growth opportunity for generic drug makers. "I think the key to success in today's generic industry is to look for the next products that may