Lotrel

SAN DIEGO -- A slowdown in sales growth continues to plague the branded pharmaceutical industry, according to an industry expert from IMS Health, leaving the field open for new inroads by generic drug competitors.

Describing pharmaceuticals as a "cyclical business," IMS vice president of industry relations Doug Long noted that a general weakening in sales tot branded drugs had opened the door wider for generic competition.

"When it was very strong, you had a lot of innovation," he said. "And now that it's weak on a dollar basis, what you see is many patent expirations, and that gives generics companies an opportunity to compete."

That competition, he added, is based on price discounting. "The way they compete is on price, and since there are many more generics companies in the game today, the price is going lower and lower and lower.

"That necessitates the branded companies that lost the patent to go back and replace those lost products with new ones," Long noted. "That's the part that's broken right now: They can't replace what they lost with new products in this environment. It's getting tougher, and the FDA is getting more cautious at the same time.

"That means it will be even more expensive to bring drugs to market--and longer. And there will be more burdens after the product is launched until the marketing is available. So it's going to be difficult, and it will be less likely to see as many new products entering the market."

Last year, on the other hand, "was a pretty good year" for branded drug makers, said Long, with 31 new molecular entities approved by the Food and Drug Administration. "Right now, we have 10 [this year]," he noted.

Several trends have put the brakes on growth momentum for branded pharmaceuticals, according to the IMS official. Among them: moderating prices for drugs as cost pressures continue to mount for government and private health plan payers; a delay in new product approvals from the FDA; a general, if temporary, slowdown in prescription utilization; and a weak flu season. Also slowing sales growth is the continued shift of prescription drugs to OTC status and the highly publicized and controversial withdrawals of blockbuster medications like Vioxx over safety concerns.

Ironically, more aggressive efforts by payers and pharmacies to shift patients to generics also have stymied branded pharmaceutical sales growth, said Long.

JAMES FREDERICK

CATEGORY SPECIALIST

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