the generic impact
The cancer market is
set for a boom in low cost drugs, as a significant number of high value
cancer drugs are set to lose patent protection over the next decade,
triggering a dramatic influx of cheaper generic equivalents. But as
patients and generics manufacturers bask in the glow, pharmaceutical
companies will be forced to gamble on innovation for fear of being left
out in the cold?
Extensive savings are
expected in the cost of cancer treatment as the value of the cancer
generics market dramatically expands. This is forecast to occur due to the
sharp increase in the number of cancer product approvals toward the end of
the 20th century, many of which now face patent expiry.
In addition, the
regulatory environment of the pharmaceutical market is facing proposed
changes that could favor the earlier introduction of generic drugs.
A $15 billion saving
pharmaceutical companies, this poses a considerable threat to their
revenue stream from the oncology market, while for generics manufacturers
this is a dramatic new opportunity. Overall, cancer patients are expected
to benefit most: from cheaper treatments and increased innovation.
calculates the total value of the generic drugs market across the
seven major pharmaceutical markets to be approximately $20 billion. Of
this, oncology products currently account for less than 10% of generic
However, in line with the
increasing number of cancer drug approvals toward the end of the 20th
century, a significant number of cancer drugs will lose patent protection
over the next decade.
The total value of these
cancer drugs by the time of patent expiry is forecast to be in excess of
$15 billion, triggering a dramatic expansion in the cancer generics
market. This represents a significant opportunity for generics
manufacturers, many of whom view the current cancer market as unattractive
compared to other therapy areas in terms of generating revenue.
This translates into
enormous cost savings for consumers, as generic drugs are typically priced
at around 30% to 60% of the price of the original. This will allow
effective treatment of more patients for the same cost in developed
markets, and greater availability of cancer therapies in developing
markets, which face restrictive healthcare budgets.
The cost of cancer
treatment is expected to rise in line with the increasing incidence of the
major tumor types - as the number of patients diagnosed with cancer grows,
so too will the cost of treating this increased patient population. This
will result in more cancer products achieving high sales in a
traditionally low sales market compared to other therapy areas.
The launch of a generic
equivalent to the widely used cancer drug paclitaxel in the US by Ivax
Pharmaceuticals in 2000 illustrates the potential value of high sales
cancer products to the generics industry. Bristol-Myers Squibb's original
branded paclitaxel product, Taxol, achieved global sales of almost $1.6
billion in 2000, of which $988 million was from the US market.
BMS saw US sales of Taxol
drop by 45% to $545 million in 2001 following the launch of generic
equivivalents like Ivax's Onxol. 2002 sales of Taxol are not expected to
exceed $200 million following a price drop and further generic
The end of patent protection
Revenue from this single
generic product accounted for 17% of Ivax's total generic sales revenue in
2001. Although Bristol-Myers Squibb's Taxol sales in 2000 are the highest
recorded sales for any cancer drug in a single year so far, several
current drugs have the potential to exceed this figure prior to patent
Several high revenue
cancer products are faced with imminent patent expiry within the US and
European markets, including AstraZeneca's tamoxifen (marketed under the
brand name Nolvadex) loses market exclusivity in the US in February 2003.
Tamoxifen is considered
to be the gold-standard hormonal treatment for breast cancer, used as both
a first-line treatment for post-menopausal early-stage patients and as a
preventative treatment. Global sales of tamoxifen in 2001 were $1,024
platinum-based cancer drug Paraplatin (carboplatin) faces US patent loss
in 2004. Carboplatin is indicated for the treatment of ovarian cancer, but
also used in the treatment of several other cancer types including lung
cancer, leading to global sales in excess of $700 million in 2001.
Low cost generic
equivalents to these, and other cancer products expected to achieve sales
of over $1 billion by patent expiry, will both expand the cancer generics
market, currently valued at around $2 billion, and create significant
The generic solution for healthcare
Governments are under
increasing pressure to reduce healthcare spending, leading to the
advancement of regulatory changes that will favor the generics industry.
For example, the McCain-Schumer Act, recently approved by the US Senate,
could see the earlier introduction of generic drugs and the sealing of
loopholes that allow pharmaceutical manufacturers to delay generic drug
Despite the opposition of
the pharmaceutical industry, these regulations are backed by a
collaboration of generics companies, consumer groups and large
corporations keen to reduce health insurance costs, in addition to
bipartisan political support.
If the President signs
this bill into law, it could render many of the traditional strategies
utilized by pharmaceutical companies to extend product lifetime and delay
the launch of generics obsolete.
The Big Pharma response
reform over the next decade will allow the production of generic
equivalents to biological therapies, such as therapeutic proteins, which
are high price, innovative therapies.
In addition to the
advantages of low cost generics the market change is also expected to have
a positive impact on the major pharmaceutical organizations, as they will
no longer be able to depend on strategies such as extensive patent
litigation to maintain revenues.
research-based pharmaceutical companies will be driven toward the
development of novel, more efficacious therapies, as they can no longer
depend on prolonged revenue from older products facing patent
expiry," says Paul Tunnah, cancer analyst at Datamonitor.
"The cost savings
triggered by extensive genericization of the cancer market will allow the
treatment of more cancer patients, more effectively, with the same amount
of healthcare spending."
If you found this
week's Expert View useful, you may be interested in Datamonitor's reports:
Generics Guide: Capitalizing On an $82 Billion Opportunity priced
Perspectives: Impact of the Cancer Generics Market Active priced
Generics Industry in 2005: A New Threat to Pharma priced $6,100