Specialty generics: it sounds like a contradiction, but we’ll be hearing it a lot.
As competition heats up in generics and profit margins shrink, more and more pharma manufacturers want to get into specialty generics. These generic drugs are complex, expensive, or “high touch”--products that need a significant amount of service delivered along with them.
Few manufacturers have the manufacturing abilities and legal backing it takes to produce these expensive drugs, but it’s the only way for generics companies to break into the most lucrative markets. Most new drugs right now are specialties.
While “specialty” usually refers to high cost, “complex” drugs are those with complicated active ingredients, formulations, or drug/device combinations such as eye drops. Both markets are experiencing major growth, which is expected to continue.
Those who get into the market early will have the opportunity to charge the highest prices; as more generics enter the market, competition will drive prices down. Chemical and small molecule specialty generics are easier to manufacture, meaning competition is likely to be stiffer; the harder and therefore more lucrative option will be generic biosimilars, which tend to turn out not so similar to the branded drug.
Either way, the manufacturing involved is complex and can require specialised manufacturing facilities. Smaller generics producers may not have a chance in these markets, losing out to large companies with more manufacturing and scientific resources. Supply chain logistics are also an issue, meaning companies with their own proprietary API production are at an advantage.
Smaller companies are also at a disadvantage on the legal front: good lawyers are a must to navigate the challenging regulatory landscape of specialty generics and especially of complex generics.
The evergreening or extension of patents for branded drugs, which may be done for legitimate reasons but is sometimes just a marketing strategy, also makes it harder for companies of any size to produce new specialty generics.
However, despite the challenges, getting into specialty generics may be the only option if generics manufacturers are to survive.
