CONFIDENCE BOOSTS MARKET

DAVID VACZEK

Growing confidence in generic drugs on the part of patients, doctors and pharmacists is fueling generics' increased use. The rate of generic use, when prescriptions are either written generically or a generic is substituted for a brand, continues to climb, from 34% in 1991 to 40% in 1994, according to IMS America.

At the same time, a record number of brand-name drugs, many of them best sellers, are coming off patent. The number of brands losing patent exclusivity peaks in 1994 and 1995, exposing 40 branded products with $5 billion in sales to generic competition, according to Edward Thwaite, E.W. Thwaite Associates Inc., Totowa, N.J.

In 1994, 40% of all units dispensed were generic, representing 9% of the market in dollars. Thwaite forecasts that by 2003, generic drug sales will account for two-thirds of all units, with 10% to 15% of the dollar market.

A total of 163 brands with a current acquisition cost of $24 billion, out of a total prescription drug industry worth $55 billion, face generic competition through the year 2003, says Thwaite.

Brand-name companies, meanwhile, are positioning themselves to participate in the growth of the generic drug market through acquisitions of generic drugmakers and marketers and/or alliances.

In just the past year, Ivax Corp., Miami, acquired Zenith Laboratories, Northvale, N.J.; Bayer AG, Leverkusen, Germany, bought a stake in Schein, Port Washington, N.Y.; Roche, a division of Hoffmann-La Roche, Nutley, N.J., purchased Syntex, Palo Alto, Calif., and its Hamilton Pharma generic division; Lilly, Indianapolis, entered a marketing agreement with Mylan Pharmaceuticals, Morgantown, W. Va., and SmithKline Beecham, Philadelphia, has teamed up with Lederle Laboratories, Wayne, N.J., to market a generic version of Tagamet.

SmithKline, in fact, has taken a two-pronged approach to try to hold on to its share of Tagamet, which had 1993 sales of $648 million. In addition to launching its own generic version to compete against versions being offered by Mylan, Novopharm and others, SmithKline began a rebate program on its brand. "Once you apply the rebate to the brand, it's cheaper than the generic," notes one pharmacy manager.

Pharmacists expect to see the price of cimetidine (recently selling for just 25% to 30% off the brand) tumble as occurred with naproxen and naproxen sodium last year when fierce price competition set in among the suppliers. (A shortage of raw materials has kept the price of cimetidine from falling more, for now, industry sources say.)