Pharma Patent Expirations: How European Generics are changing the Market

Due to recent patent liberalizations in Europe, new generics of essential drugs are available and, at the same time, affordable. This adaptive alteration is advantageous to both the health organizations and patients since it cuts cost while at the same time expanding the variety of ways through which a health issue could be addressed. Nevertheless, there are some problems the generics have to face, such as competition and perception by the public, patient organizations, and physicians. Generics are a crucial component of healthcare systems in sustainable Europe, as the data demonstrate.

Introduction:

The industry whereby most products are pharmaceuticals is usually fueled by innovation, research and last but not least, patents. Patents enable drug manufacturers to sell a new drug for a certain amount of time, so they can indeed recover their research and development costs. However, once the patents for the medicine expire, any different company can legally manufacture the copy of the same drug, which will cost much less. Especially in Europe, due to expiring patents, there are market-bearing changes of significant dimension. This article discusses about the effects of European generics in the pharmaceutical industry and examines the consequences on all stakeholders, including care providers, consumers and the entire market.

1. Understanding Pharma Patents and Their Role in Innovation

Drug patents are among the critical ways through which innovation is promoted. This process usually requires more than ten years, and it is not cheap—it might cost billions of euros. To be able to recoup these cost, governments offer patents to these companies for a specified time, usually 20 years, allowing the company to market their drug unchallenged. This time exclusivity enables the company to charge very high prices that include the cost of developing the drug besides its expensive research, clinical trials and approval.

In Europe, the exclusivity of patents is further rolled over in the first period by Supplementary Protection Certificates (SPCs), which holds up to five additional years. However, these extensions have bases once they expire and the drug is open to other manufacturers to copy and market at throwaway prices. It brings generics into focus in a drastic manner.

2. The Emergence of Generics in the European Market

If one company has the patent on the drug for a certain term, no other company can market the same drug, but once they get out of the patent, other cheap manufacturers can develop it. A generic substance has the same strength of the first movant and to be marketed, the FDA has laid down conditions that the product be as effective and safe as the patented product. EMA stands for European Medicines Agency institutions, which supervises these approvals in Europe.

Thus, generic drugs have managed to change the face of the pharmaceutical industries in Europe since they are cheaper to patients and the healthcare systems. As the prices of generics are normally cheaper when compared to the branded drugs, as they range from 20%-80% cheaper, and more people can afford the treatments. It also helps healthcare systems to cut billions of euros of costs, which can be reinvested in other pressing healthcare needs.

3. Impact of Patent Expirations on the Pharmaceutical Market

With generics in the market, players’ strategies can turn the entire pharmaceutical industry upside down. Nearly all brand-name drug manufacturers suffer a major loss of sales revenue after patents expire. For instance, a most selling drug that records annual revenue of up to one plus billion euros will experience a significant decline in its market share within a mere few months after the patent expiry.

Accordingly, a variety of brand-name producers attempt to lessen these losses employing tactics like launching second-generation or next-in-line versions of their drugs, modifying their medicines, or producing coactive therapies that would prolong patent protection. In fact, certain manufacturers engage original equipment manufacturers, who then create authorized generics, thus getting a slice of the generic market while at the same time regulating the price somewhat.

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