The vast majority of prescribed drugs, approximately 80%, are generics. They comprise a sizeable and growing segment of the pharmaceutical marketplace. In the U.S. alone, the generic drug market reached a value of $115.2 billion in 2019, having grown at a CAGR of 11.7% since 2014. It’s no wonder. When available, generic drugs are chosen more than 90% of the time. Manufacturing of generic drug APIs, long ceded to China, is returning to Western countries out of abundant concern about the potential for shortages should China decide to curtail supply. Forward-looking CDMOs are preparing to manufacture them.
This article will focus on the three criteria for choosing the right CDMO partner as generic drugs—like many drugs–have grown increasingly complex.
Globally, the generic drug market is more than triple that of the U.S., reaching $367 billion in 2019 with a CAGR of 5.7% during 2014-2019. Global growth is expected to accelerate according to various industry reports, reaching $738 billion by 2026 and growing at a CAGR of 10.0% or more during 2019-2025.
Generics are off-patent drugs that are bioequivalent to branded medications in terms of dosage, strength, quality, form, effect, intended use, side effects, and route of administration. Largely because they are equivalent to branded drugs in quality and performance, there has been a substantial rise in their production for two main reasons. : 1) They are less expensive than branded drugs (unless insurance companies have a reason to favor branded medications), and 2) they do not require extensive research and testing. For regulatory approval generic drug makers need only submit data to show they are bioequivalent.
Another factor driving the growth of this pharmaceutical sector is the rising prevalence of chronic diseases such as diabetes and heart disease, as well as the large number of patent expirations.
Not all generic drugs are unbranded. Branded generics, which comprise 21% of the generic market, bring to the market new formulations of off-patent drugs. Although sold at a higher price point than generics, branded generics are still less expensive than branded drugs for patients, and more profitable for pharmaceutical companies. The sector is expected to grow at a CAGR of 8% in the next five years.
Ordinary generic drugs are usually known by their chemical name. Branded generics, on the other hand, are given names that are meant to drive recognition and consumer preference. Digitek, for example, is a branded generic of digoxin, so named to increase the likelihood that patients will request it by name.
It has been decades since Western countries have manufactured generic drugs, so essential to health and quality of life. But now, as trade disputes proliferate and Western countries realize they are vulnerable to shortages of needed medications, production is returning to the West as a matter of national security.
It has been decades since generics were manufactured in the West, and in that time generic APIs have become more complex. Sponsors onshoring critical complex generics, whether ordinary or branded, would do well to establish relationships with CDMO manufacturing partners that meet the following criteria:
Forward-looking CDMOs are preparing for the return of complex generic drug substance manufacturing to Western countries. Sponsors should prepare too.
For more articles on project managers, check out the following: “5 Important Things to Look for in Your CMO’s Project Management Capabilities,” “What Does It Take to be a Good Project Manager for Drug Substance Development?” and “Does Your CDMO Manage Multiple API Development Projects Well?” Or to ask us questions about our project managers, call us at (978) 462-5555 or email us at firstname.lastname@example.org.