Generic Benchmarking: Brand Erosion at Patent Expiry

Not only is Pharma facing a continued slow down in sales growth in the seven major markets, but erosion of branded drugs by generics follow patent expiry is increasing, driven by evolving payer initiatives to incentivize generic use.

Tough competition, a focus on cost-containment and incentives for prescribing generic drugs, make the US, UK and Germany prone to severe brand erosion immediately after patent expiry. The US saw the strongest erosion for both oral and injectable drugs, reflecting the high level of generic substitution in the US compared to other markets.

Across all markets, the higher the annual sales of a branded drug, the more intense its generic erosion at patent expiry. Competition among generic players targeting high value drugs is also fierce, leading to a rapid decline in generic prices as more players enter the market.

Overall, the most heavily eroded drugs by therapy area in the US were respiratory drugs, due to the large market size and low entry barriers for generics companies, while CNS drugs experienced the lowest levels of erosion.

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