'Flanking generics' helps pharmas hold market share

Mar 23 2005

Pharmaceutical companies are finding innovative new strategies to retain market share after drug patent expiration. One of the most successful of these new strategies appears to be 'flanking.' Under this strategy, brand-name drug companies sign licensing agreements with their generic competitors to establish manufacturer- distributor relationships.

According to a new industry report from pharmaceutical business intelligence firm Cutting Edge Information, the strategy enables branded companies to capture a share of the generic market -- via royalty payments from generics distributors -- after their drugs' patents expire, and allows them to keep manufacturing facilities running at capacity.

"More than $80 billion worth of branded drugs are set to come off patent in the next four years," says Jon Hess, project leader at Cutting Edge Information. "That poses a tremendous revenue stream risk for virtually all of the industry's leaders. Brand teams steering marketed drugs and even those still in development need to prepare now for the eventual threat their drugs will face from generic competition. The report contains the findings to help them do just that."

By partnering with companies that they would otherwise be in a death struggle with, pharma companies can soften the blow of patent expiration and minimize the disruption to their manufacturing. This revenue boost and cost cushion can help avoid the sort of extreme shocks that some companies have experienced in recent years as other generics defenses have failed.

Cutting Edge Information published the full findings of its research in a detailed report, "Combating Generics: Pharmaceutical Brand Defense," which is available at http://www.pharmagenerics.com/ . The report examines 'flanking generics' and other strategies available to branded drug companies for retaining market share and franchise value in the face of patent expiration. The report also includes more than 250 metrics on the timing of generics- defense lifecycle management planning and execution, budgets allocated for franchise and line extension R&D, staffing resources dedicated to combating generics, and more.

To view the online summary of this report, visit http://www.pharmagenerics.com/