Generics then and now
While looking for some information, I came across a copy of the NERA report entitled ”POLICY RELATING TO GENERIC MEDICINES IN THE OECD COUNTRIES” commissioned by the EU and delivered to them in December 1998 by NERA (National Economic Research Associates).
The purpose of this report was amongst other things to conduct “an examination of the role of generics in medical practice in the regions studied, including how far the authorities are promoting the use of generic medicines…” and also to look at “the technical requirement for licensing and marketing authorisation, issues relating to intellectual property and R&D”.
What is particularly interesting about this report now is how it gives a snapshot of the state of European and world generics in 1997 and early 1998. In its summary, NERA stated “In the EU, the weighted average of generics in all prescribed medicines by value was 15 per cent in 1996 - 1997 with generics’ shares being highest in Germany (39 per cent), Denmark (38 per cent) and Finland (32 per cent). It was lowest in Spain (insignificant), Portugal and Italy (3 per cent) and Sweden (4 per cent).” It also noted “Outside Europe, the weighted average by value for those OECD countries for which we have data is 10 per cent. It was highest in Canada (15 per cent) followed by the USA (11 per cent)”.
| |
Market Share By Value (%) |
| Country |
NERA 1997 |
EGA 2004 |
| Austria |
9 |
7.8 |
| Belgium |
6 |
6.1 |
| Denmark |
38 |
32 |
| Finland |
32 |
7.6 |
| France |
2 |
6.4 |
| Germany |
39 |
22.7 |
| Ireland |
13 |
5.4 |
| Italy |
3 |
2.1 |
| Netherlands |
13 |
19.8 |
| Portugal |
3 |
8.8 |
| Spain |
0 |
5.2 |
| Sweden |
4 |
12.3 |
| United Kingdom |
22 |
20.6 |
Sources: NERA - 1997 data, EGA - 2004 data
Have things changed since then? The answer as always is “Yes and No”. The table shown on the left compares the position in Europe as seen by NERA with the current situation as seen by the EGA (European Generic Association. This is in turn based on data supplied to them by individual country associations to reflect the market position at the end of 2004.
There is a difficulty in that the two are not directly comparable as each uses a slightly different definition of what is a generic with NERA, for example, including branded generics in the numbers. In addition NERA made a number of assumptions and calculated estimates, as they could not find any published data. Indeed, the authors comment, “Volume data as to generics’ market penetration and the shares of INN and branded generics are too incomplete for conclusions to be drawn.”
Nevertheless, and treating the comparisons with suitable caution, there are some signs of change. The figure for France of 2% in 1997 is probably roughly correct and similarly the estimate of 0% for Spain is likely to be accurate. The 3% generic market share for Italy and Portugal in 1997 is almost certainly inaccurate as it was probably closer to 0% for both at that time.
Assuming that all the respondents to the recent EGA survey were working on the same basis of a generic being a product known and prescribed by its INN name, then the picture for these same four countries in 2004 is somewhat different, but not hugely so. Although there must be some doubt concerning the accuracy of the NERA figures, there is no doubt that a generic market has arisen in each country although it is not yet particularly large in any of them, with market shares of only a few percent.
The countries have much in common from a generic perspective as all have made significant efforts in the last few years to create a generics industry and promote generics use as a cost control measure. They have succeeded in this to the extent that all have introduced measures to facilitate generic registrations, encourage generic prescribing and dispensing and introduced reference-pricing schemes.
Local generics industry observers though suggest that while the government measures to promote generics have been welcome, their efforts to tightly control pricing have been less welcome and could even prove counterproductive. The feeling is that the price squeeze has been too tight and that there is a risk that the newborn generics baby will be strangled, if not at birth, then at an early age.
Has anything changed in the larger, more mature markets? Well, market share has certainly not dropped from 32% in Finland to 7.6%, as it is unlikely that the figure was ever as high as 32%. It is similarly unlikely that generic market shares have fallen in Denmark, Germany or the UK as the table implies at first glance. Market shares in volume terms have been steadily rising in all these countries although it is fair to say that market share in value terms have certainly lagged behind due to pricing pressures, but they have not lagged so far as to result in a significant fall when compared to 1997.
In summary, NERA’s comments were certainly correct about the negligible sizes of the generic market in the countries shown as being at the bottom of the generic ladder with only a few percent market share. On the other hand, the figures that NERA provided can probably not be relied upon as being exact but rather as being illustrative. Nevertheless, things have changed as market shares have risen from “negligible” to “small” which is at least a form of progress.
The full report is available at:
http://pharmacos.eudra.org/F2/pharmacos/docs/nerareport.pdf
Peter Wittner
September 2005
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