Generic drugs are bioequivalent to branded drugs in terms of safety, efficacy, dosage, strength, route of administration and intended use. Generic drugs contribute significantly towards cost-savings for patients and payers and have a major share in the global pharmaceutical market. They replace branded drugs after patent expiry and require lower development costs as compared to new drug development, thereby enabling affordable healthcare worldwide.
The Generic Drugs Market is estimated to be valued at US$ 439.37 Bn in 2023 and is expected to exhibit a CAGR of 5.4% over the forecast period 2023 to 2030, as highlighted in a new report published by Coherent Market Insights
Market key trends:
The rising generic drug approvals by regulatory bodies is driving the growth of the generic drugs market. For instance, according to the 2019 generic drug approval report released by US FDA, the FDA approved 862 generic drugs including 211 brand-name drugs that went generic in 2019. Similarly, European Medicines Agency (EMA) and other national regulatory bodies are approving higher number of generic drugs every year to improve access and reduce healthcare costs. The rising approvals provide opportunities for generic manufacturers to market their products and expand globally. For example, according to Indian Brand Equity Foundation (IBEF), India has the highest number of US FDA approved plants outside of the USA. This has cemented India's position as "Pharmacy of the World" to meet the generic drug demand.
Porter’s Analysis
Threat of new entrants: The generic drugs market has moderate threat of new entrants due to high R&D costs involved in developing generic drugs and long approval time for generic drugs by regulatory authorities. However, growing demand for low cost drugs provides opportunities for new players.
Bargaining power of buyers: Buyers have high bargaining power due to availability of substitute drugs from many players. Buyers can negotiate on price owing to intense competition among existing players.
Bargaining power of suppliers: Suppliers have low bargaining power due to presence of many raw material suppliers and substitutes. Suppliers are dependent on stable demand from generic drug manufacturers.
Threat of new substitutes: Threat of substitutes is moderate as branded drugs lose patent and become available in generic versions. However, high R&D investment acts as entry barriers.
Competitive rivalry: The generic drugs market experiences high competitive rivalry due to many global and local players competing on basis of cost and quality.
SWOT Analysis
Strength: Generic drugs have lower prices compared to branded drugs providing cost savings to patients. Growing healthcare expenditure in emerging nations boosts market growth.
Weakness: Lower profit margins compared to branded drugs impacts investments in R&D. Require regulatory approvals and bioequivalence tests which are costly and time taking.
Opportunity: Patent expiry of blockbuster drugs provides opportunities for generic versions. Growing demand for affordable healthcare in developing nations.
Threats: Stringent regulations delay market entry. Initiatives to encourage branded biologics impact generics market.
Key Takeaways
The global Generic Drugs Market is expected to witness high growth, exhibiting CAGR of 5.4% over the forecast period, due to increasing healthcare expenditure worldwide especially in emerging economies. As per our analysis, the market was valued at USD 439.37 billion in 2023 and is projected to reach over USD 656.22 billion by 2030.
Regional analysis for Generic Drugs market is dominated by North America due to established generic drugs industry and patent cliff of major drugs. Europe and Asia Pacific also provide lucrative opportunities for market players owing to initiatives to make healthcare affordable and rising medicare in middle income countries like China and India.
Key players operating in the generic drugs market are Mylan N.V., Novartis International AG, Pfizer, Inc., Allergan Plc, Sun Pharmaceuticals, Fresenius Kabi, Sanofi, Endo International, Lupin Ltd., Abbott Healthcare, AstraZeneca Plc, and Novo Nordisk. These players are focusing on partnerships for commercialization and product launches in high growth regions.
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