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Introduction to Generics and Biosimilars

TOM BUTCHER: What are generic drugs, and why are they important?


JAMES DUFFY: Generic drugs are drugs that are comparable to their brand-name counterparts. They are comparable in terms of the dosage, effectiveness, and intended use. Generics are important because they are essentially a less-expensive alternative to their brand-name counterparts. This, of course, is going to be important to those who are ultimately picking up the tab, governments, who are the biggest purchasers of health care, insurance companies, and individuals.


BUTCHER: Is there a generic drug for each branded drug?


DUFFY: No, there is not. One of the biggest reasons for this is that when new drugs are approved and brought onto the market, they are usually afforded a certain period of patent protection and exclusivity. Now, these patent protections and exclusivity periods will vary from country to country. Once these periods expire, prevailing market conditions will usually kick in and determine whether or not a generic variant is manufactured.


BUTCHER: Going back to what you said about generics being a cheaper alternative, why are they cheaper?


DUFFY: The barriers to generic markets are usually a lot lower. If we look at the United States, back in 1984 they passed the Hatch-Waxman Act and essentially what this did was allow for an expedited approval process for generics. Prior to that, any generic coming onto the market had to prove the effectiveness of the drug. That has been changed since the effectiveness of the brand-name drug was already proven. All generics are required to do now is to prove that they are a comparable drug to the brand-name drug.


BUTCHER: You mentioned the United States. Is generic drug manufacturing and use global?


DUFFY: It is global. As of 2015, about 88% of all U.S. prescriptions are filled with generics. Looking over at Europe, that number is about 55%. And if we look at Japan over in the Asia-Pacific region, that number is about 47%.


BUTCHER: Are they manufactured in the U.S. and elsewhere?


DUFFY: It is a global business. They are manufacturing in the U.S., India happens to be a very large manufacturing area, as well as other countries. It truly is a global business.


BUTCHER: Many of the blockbuster pharmaceutical drugs are now off patent. What does the future hold for generic drug manufacturers?


DUFFY: We believe that the future of generics lies within biosimilars. Biosimilars are essentially the generic form of biotech drugs. Biotechs are the drugs that we have heard so much about over the past ten or fifteen years. What is exciting about this space is that the anticipated margins are supposed to be higher than that of their chemically-synthesized counterparts. Biosimilars are expected to be sold at anywhere from a 20 to 30% discount to the brand name, where chemically synthesized generics are sold at an approximately 50 to 80% discount1.


BUTCHER: Wonderful. Jim, thank you very much indeed.


DUFFY: Thank you.


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IMPORTANT DISCLOSURE


1Source: Indxx.


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