Case Study For Potential Impact of New Generics Legislation?
Written by Kristie Prinz on Thursday, July 19th, 2007
Pfizer may serve as a good case study for the potential impact of new generics legislation, in light of its reports today of plunging profits due to generic competition.
Dow Jones Marketwatch reported:
Pfizer Inc. said Wednesday its second-quarter profit fell 48%, largely due to generic competition for its top-selling drugs Zoloft, Norvasc and Lipitor. . . .
Pfizer’s top line has been under pressure in recent quarters because of the loss of patent protection for several of its once-popular products, such as Zoloft, Zithromax and, most recently, Norvasc.Once a patent expires, other drugmakers are legally permitted to make generic versions of the drug, which are often sold at considerable discount.Pfizer has said that it expects revenue to be largely flat until 2009, when it sees sales of newer products compensating for those lost to patent expirations.
Could the example of Pfizer serve as a case study for how new generics legislation could affect the biotech industry?
Certainly, drugs are patented today and will eventually go off patent, opening up the marketplace to generic competitors, which will of course affect the company’s bottom line, as in the case of Pfizer. However, this is the normal course of a patent.
If new generics legislation is implemented, though, could it be possible that we will see these kinds of profit drops across the industry? Could the profits of the whole industry be slashed in half?
I think the example of Pfizer should yet again make us all stop and think about the potential impact of new generics legislation on the biotech industry across the board.
Category: Biotech Legislative Developments
