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March 31, 2009


Generics on the rise

One recent trend in the industry has been a boom in generic drug sales worldwide. The biggest generic drug manufacturers -- Israeli firm Teva (which acquired rival generic manufacturer Barr Pharmaceuticals in July 2008 for USD$7.46 billion) and US-based firm Mylan Inc. -- have thousands of employees and boasted more than USD$11 billion in revenue in 2007.

The expiration of patents on branded pharmaceuticals has also increased generic drug companies' revenues. As more brand-name drugs go off patents in coming years, generic drug manufacturers' profits are likely to increase. Big pharmaceutical companies that make brand-name drugs usually attempt to extend their drugs' exclusivity and prevent generic competition. They do this in various ways, including litigation. Some big pharmaceutical companies have responded to generic competition by entering into licensing agreements with generic drug manufacturers.

To complicate things further, not all pharmaceutical companies make just generics or only branded drugs. For example, Novartis has a generics division, called Sandoz. Due to strong growth and two major acquisitions in 2005, Sandoz is currently the second-largest generics company in the world based on sales after Teva. Sandoz raked in USD$7.2 billion in pharmaceutical sales in 2007 alone. Some generic companies also sell branded pharmaceuticals.


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