Generic Pharmaceutical Companies Rely on M&A Deals to Gain Market Share, According to Thomson Reuters
(Thomson Reuters ONE) -
Philadelphia, PA, London UK, February 14, 2011 - The generic pharmaceutical
industry is positioned for an uptick in mergers and acquisitions, according to a
report released today by the Generic and API Intelligence business of Thomson
Reuters.
The report, Gaining Market Share in the Generic Drug Industry Through
Acquisitions and Partnerships, notes that generics firms are being buffeted by
heavy competition in the small molecule generics market, government mandated
price cuts in Europe, and policies such as lowest price tendering.
In response, they are likely to seek M&A deals that allow them to diversify
product portfolios, secure pipelines of high-quality Active Pharmaceutical
Ingredients (API), expand into emerging markets, and achieve economies of scale.
"Pricing pressures in established generics markets have forced the industry to
look for economies of scale in manufacturing and opportunities in emerging
markets. Companies are also cutting out the middle-man and diversifying their
product portfolios by moving into niche areas, including follow-on biologics,"
said Kate Kuhrt, director of Generics and API intelligence at Thomson Reuters.
"Many generic companies have relied on M&A rather than organic growth to achieve
these strategies."
A number of products losing patent protection over the next five years will be
biologics and generic companies unable to develop or manufacture biologic
therapies in-house will have to rely on deal-making to remain
competitive.Follow-on biologics are associated with significant barriers to
entry, including the cost of developing and running clinical trials,
manufacturing, and marketing. The development costs for follow-on biologics are
estimated to be between $100 and $200 million, compared to $1 - $5 million for a
typical small-molecule generic drug.
Early access to high-quality APIs that are not infringing existing patents is
critical to the success of the generics market and the cause of much M&A
activity in the sector. 39 of the industry's top 50 generic companies are now
backward integrated and have at least one or more subsidiaries that manufacture
API.
According to the report, total M&A activity in the generic sector was valued at
$6.8 billion in 2009, down from an eight year peak of $24 billion in 2008. The
generic industry is currently worth an estimated $80 billion, up from $50
billion in 2004 and the largest four generic companies worldwide by sales (Teva,
Mylan, Sandoz and Watson) account for nearly 50 percent of generic subscriptions
in the US and nearly 40 percent worldwide. All four companies have used M&A to
gain market share.
To download the report, please go to:
http://science.thomsonreuters.com/info/newport_whitepapers/
About Thomson Reuters Generic and API Intelligence
Built on more than a decade's experience supplying solutions to meet critical
business challenges in the highly competitive and global generic and API
markets, Thomson Reuters Newport products are now used by more than 250 of the
world's leading generic companies and API manufacturers operating in 50
countries around the world. Thomson Reuters Newport Premium integrates
intelligence on more than 40,000 launched products with more than 300,000 brand
names containing over 10,000 different active ingredients and over 20,000
corporate groups involved with manufacturing and marketing dose products of both
small molecule and biologic active ingredients.
For more information on Newport Premium, please
visit:http://thomsonreuters.com/products_services/science/science_products/a-
z/newport_premium_generics
Thomson Reuters
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CONTACTS
Paul Sandell
Healthcare & Science
+44 (0) 207 433 4704
paul.sandell(at)thomsonreuters.com
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Source: Thomson Reuters Corporation via Thomson Reuters ONE
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Datum: 13.02.2011 - 07:00 Uhr
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