Hailed as the “hybrid model”, this strategy though, may not quite be the right way forward for the long term, observes Mr Murray Aitken, Senior Vice-President with IMS Health, a leading provider of market intelligence
to pharmaceutical and healthcare companies.
The hybrid model may be attractive today, he said, given that drug companies are faced with pricing and regulatory pressures across different world markets. But it may not be good for the long term, Mr Aitken told Business Line, giving details from an IMS study that reveals an increased pick-up in branded innovative products after 2015 – as the “patent cliff” (where drugs go off-patent) is passed and research pipeline matures.
Company heads will have to “manage” their hybrid models against the backdrop of the optimism that the market reveals in terms of innovative products driving growth, said Mr Sameer Savkur, IMS Managing Director, in India.
Generic medicines are not covered by patents, while innovative drugs enjoy patent-protection, or market exclusivity for 20 years. The next five years will see $ 94 billion impact from the loss of exclusivity, and a $ 89 billion impact from new launches. The next five years will see reduced impact of $ 66 billion due to loss of exclusivity, and an increase of $ 271 billion from the new products launched in the previous five years, the study said.
In the Indian market, the hybrid model is illustrated by Japanese innovative drug-maker Daiichi Sankyo's acquisition of generic drug company Ranbaxy or the more recent acquisition of Piramal Healthcare's domestic formulations business by Abbott.
Giving a “more optimistic than expected” outlook – the IMS study projects that the pharmaceutical industry is headed to clock $ 1 trillion in 2020, on the back of a renewed pipeline and growth in the pharma-emerging markets, among other things. The study also shows a healthy pipeline of products across 41 focus categories including oncology, diabetes and HIV, a contrast to the gloomy picture that industry often paints.