Emerging Generic Drug Markets in Europe

Summary

The many generic companies and investors looking to Asian and Latin American markets for generic drug market growth could be missing a trick! The four EU countries analysed in this report are expected to deliver significant double digit growth over the next 5 years and present stable, regulated operating environments with excellent prospects. France

In 2007, the French generic market is valued at US$3.7 billion at retail prices, equal to 8.6% of the total pharmaceutical market. Espicom projects annual real growth in the generic market of 15% which will take the generic market to US$7.4 billion at retail prices by 2012, equal to 15.5% of the total pharmaceutical market. Currently, the generic market remains under-developed, although there has been a marked increase in sales over the past four years. Nevertheless, France remains the third leading generic market in Europe.

The government is keen to control spiralling healthcare costs and therefore reducing pharmaceutical expenditure by using generics is a major aim. France has a number of medium-sized generic companies. These tend to be foreign-owned, by companies such as Merck KGaA (now US company Mylan), Sandoz, Ranbaxy and Teva. In 2006, Merck KGaA expanded its leadership position in France, with market shares of 25.5% in the pharmacy sector and 34% in the hospital sector. The leading domestic company is Biogaran, owned by Servier.

Portugal

Portugal is the only country in the EU where the generic market by value represents a higher percentage than by volume in the pharmacy sector. High generic prices have limited generic market penetration as they are not competitive with original product prices. New government measures have been put in place to reduce generic prices, including a scheme of cumulative price reductions depending on market share, established in 2007.

Growth by value is expected to slow down whilst growth by volume will increase with the market which is expected to reach US$1.7 billion in 2012. The generic market is fragmented, with many companies having low market share. Leading domestic generic producers include Farmoz (part of Tecnimede), Generis (part of Farma-APS), Medinfar, Hovione, Bluepharma and ToLife. Foreign generic producers include Actavis, Alter, Merck (now Mylan), ratiopharm, Stada and Winthrop. Two leading Brazilian generic producers, Medley and EMS, have small subsidiaries in Portugal.

Italy

The current generic market, valued at US$809 million in 2007, is small considering the size of the overall pharmaceutical market, partly due to extended national patent supplementary certificates. In 2007, the Italian generic market value is equivalent to the Portuguese even though the overall Italian pharmaceutical market is over six times bigger. In 2008, the Italian generic market is expected to overtake the Portuguese market and will reach US$1.8 billion in 2012.

Eight blockbuster drugs will be coming off-patent in 2007, increasing market opportunities for the leading generic players. Teva, which acquired Pfizer's Dorom in 2004, claims to be the leading generic producer in Italy while both Sandoz and Merck Generics have strong positions in the generic market. Being generic pioneers in Italy, German companies still retain a significant presence, including Stada (via Eurogenerici) and ratiopharm Germany (via ratiopharm Italia) as well as Merck Generics, which was acquired by the US company Mylan in 2007.

Spain

The Spanish Association of Generic Medicines believes that the industry has the capacity to double its generic market share by volume by 2012. In 2007, the generic market is valued at US$1.7 billion at retail prices. The generic market is expected to grow by 17.4% per year between 2007 and 2012. As a percentage of the pharmaceutical market, generic sales will rise from 6.7% in 2007 to 11.2% in 2012. Of the generic markets analysed in this report, Spain is second behind France.

Many producers, most of them domestic, decided to enter the generic market in Spain ten years ago, encouraged by the Ministry of Health. Market consolidation, however, has resulted in many acquisitions by foreign generic producers, including Gminis and Bexal by Sandoz, Bayvit by Stada, Edifen, UR and Pliva by Barr, Merck by Mylan, Mabo by Meiji, Davur by Bentley and Mundogen by Ranbaxy. Leading domestic producers remaining include Normon, Cinfa and Alter, all of which have strengthened their local positioning and, slowly, are increasing their export opportunities.

The four EU countries analysed in this report - France, Italy, Portugal, Spain - are expected to deliver significant double digit growth over the next 5 years and present stable, regulated operating environments with excellent prospects. Key Areas Addressed:

• 5-year market forecasts to 2012 for the pharmaceutical and generic drug markets
• Analysis of market trends and outlook of key developments
• Domestic production and review of leading companies
• Regulatory environment
• Health provision and plans

This Report Answers Key Questions

• Which therapy sector accounted for the greatest part of the Spanish generics market in 2006?
• What measures are in place to reduce generic prices in Portugal?
• How might developments in the French reference pricing system affect the generics market?
• What developments with supplementary protection certificates will positively affect the Italian generics market after 2010?
• What are the 8 leading active ingredients to lose patent protection in Italy in 2007?
• How has generic pravastatin fared in the French statin market against simvastatin?

For a complete review of the market, prospects and competitive environment in these important generic drugs markets make sure you read this unique report.

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