Branded Generics?

Our last blog discussed the rise in popularity of generic prescription drugs domestically without mentioning their status overseas. Since most consumers outside the US market pay for drugs out of pocket and cannot afford expensive name brands, generics are very popular internationally. With the drop in brand name drug market share domestically, pharmaceutical companies are more than willing to fill this desire for low cost drugs.

Emerging markets are set to overtake US markets in overall sales. Pharmaceutical revenue in China in particular, with its current strides towards universal health coverage and improving its healthcare infrastructure, is predicted to double by 2013. Much of the growth in emerging markets (i.e., China, Brazil, Russia and India) is driven by low-cost generic drugs.

As a result, many pharmaceutical companies are now hawking branded generic drugs in overseas markets. While the term “branded generic” may seem at odds, it is actually becoming quite a lucrative market.

Americans, because they have been “brand washed” so extensively, tend to view generic drugs as lower in quality than brand name products, despite containing the same active ingredients. Marketed to less extensively, overseas populations are less biased against lower cost, generic formulations.

Branded generics make sense. There is no additional cost for a company to attach their company name to a generic formula, instilling consumer confidence in a less expensive formulation without adding millions in cost to marketing and promoting a specific brand name.

Companies approach this tactic differently. Some associate their main brand with the generic, while others purchase local overseas generic companies to sell their products under a different name.

“We are able to create different tiers of products at prices they haven’t previously seen with our stamp of approval,” Andrew P. Witty, the chief executive of GlaxoSmithKline told the NY Times.

According to the same article, “It definitely represents a change in thinking,” said David Simmons, the president of Pfizer’s established products business unit, whose company has already added over 200 generic products to its portfolio.