For Indian companies, the challenges in product patent regime, in the generics business are significant: margin pressure, legal issues, parallel launch of authorised generics, accessing the distribution channels and so on.
Margin pressures continue to rise in the regulated international generic markets, because of a host of factors, such as increasing competition from India and other low-cost destinations; more aggressive brand defence by innovator companies (via authorised generics, for instance); and increasing bargaining power of large distributors in these markets.”
The punch line:
Japan, the second largest global market for pharmaceuticals after the US, is ushering in regulatory changes to promote generic prescription for its aging population. As a result, share of generic drugs in the Japanese market, currently in low single digits, is set to grow significantly in the next few years. Generic drug segment is also growing much faster than the patented segment in the US, the world’s largest market, and other big global pharma markets. As health systems around the world run out of funds, governments are looking at cost-cutting measures including promoting generic drugs. This will make Indian companies candidates for acquisitions.