Generic Drug Market: Global Industry Analysis and Forecast (2024-2030) by Type, Brand, and End-User

Generic Drug Market Overview

A generic drug is made to be identical to a brand-name drug in terms of dosage form, safety, strength, administration method, quality, performance qualities, and intended purpose. It also shares the same active component as a brand-name drug. This indicates that a generic medication functions and has the same therapeutic benefit as a name-brand medication. Usually offered at significant savings, generic medications are 80–85% less expensive than name-brand ones. The FDA thoroughly examines them to make sure they adhere to the same exacting requirements for manufacture and quality as the name-brand goods.

The Global Generic Drug Market is influenced by factors like significant market growth, Increasing Popularity of Injectable Drugs, Product Recalls, and the new market expansion in Africa. The Generic Drug market is primarily driven by factors such as the rising prevalence of Chronic Disease, Cost-Effectiveness, Patent Expiries, Geriatric demographics, the Introduction of Generic Competition to Branded Drugs, and the increasing application of Robotic Process Automation (RPA). The Generic Drug market also faces restraints such as High Barriers for newcomers, stringent regulations, Consolidation of Suppliers, Limited Access to Information, and Low Transparency in prices. The Generic Drug Market is segmented through Type, Brand, and End-User.

The Generic Drug Market through Region is segmented into North America, APAC, Europe, South America, and the Middle East. North America leads the Global Generic Drug market with a substantial share with the United States being the dominant nation as of 2023. The strong demand for generic medications in North America was fueled by the dominance of branded generic medications as well as the 180-day exclusivity granted by competitive generic treatment (CGT).  North America is followed by the APAC region for holding the second-largest share in the Generic Drug market with nations like India and China being at the forefront with their strong domination in the Generic Drug market for volume. For the year 2023, China held a market share of 43%, emerging as a frontrunner in the APAC region. With big pharmaceutical businesses based in Germany, Switzerland, and the UK producing and distributing generic medications, the European market is also a prominent player in the global generic drugs market.

Generic Drug Market Dynamics

Rising Prevalence of Chronic Disease- The market for generic drugs is driven by the increasing incidence of chronic illnesses such as diabetes and cardiovascular disorders, as these drugs are more affordable than name-brand ones. Generic medications are becoming more and more appealing to patients and healthcare professionals alike as the patient base expands and the demand for cost-effective treatments increases. Also, Generic substitutes for name-brand medications become available once their patents expire, offering even more affordable treatment options. The move toward generic medications ensures that necessary treatments are easily accessible and reasonably priced, which lowers healthcare costs and enhances patient outcomes.

Cost Effectiveness- Cost-effectiveness is a major driver of the market for generic medications. Because generic medications are typically less expensive than name-brand ones, both patients and healthcare professionals find them to be a desirable alternative. Because generic medications rely on pre-existing data rather than undertaking fresh research, they have cheaper development costs. The fact that generic medications are not as aggressively advertised as name-brand medications further lowers their price. Another group that gains from generic medications' affordability is healthcare professionals. Healthcare providers are under increasing pressure to cut costs without sacrificing quality of care as costs continue to rise. This objective can be met using generic medications, which enable doctors to provide efficient therapies at a reduced cost.  For instance, Lisinopril, a medication used for treating high blood pressure, is a brand-name drug whereas its generic versions including lisinopril hydrochloride are available at a much lower cost. As a month’s supply of lisinopril tablets (20 mg) costs approx. 30 USD whereas the same dose of the generic version costs around 10 USD.

Government Initiatives- One important factor driving the expansion of the generic drug business is government measures that encourage the use of generic medications. The Patient Protection and Affordable Care Act (ACA) and the Drug Competition Action Plan (DCAP) by the United States, among other policies, encourage the introduction of generic drugs into the market, which lowers prices and improves patient affordability. These policies aim to increase access to cheap prescriptions. DCAP primarily concentrates on lowering obstacles to the production of generic drugs and market entry, encouraging competition, and providing consumers with access to necessary pharmaceuticals. China, on the other hand, has implemented policies focused on promoting the use of generic drugs and ensuring accessibility to affordable medication. China's Healthy China 2030 policy emphasizes the provision of generic drugs at very affordable prices. India has implemented measures aimed at fortifying its pharmaceutical sector and fostering self-sufficiency in terms of both bulk medications and active pharmaceutical ingredients (API). The government provides productivity-linked incentives and promotes the development of bulk drug manufacturing clusters.

Restraints of the Generic Drug Market-

High Barriers to Entry- The market for generic drugs is severely constrained by high barriers to entry, which are mostly caused by onerous regulatory requirements and expensive research and development (R&D) expenses. The Food and Drug Administration (FDA) in the United States, in particular, has stringent requirements for clearance that include lengthy review periods and comprehensive clinical trials. The difficulties with intellectual property and the cost of creating and evaluating new medications deter new players even more. These elements support the dominance of a small number of powerful companies in the generic medication industry, which reduces competition and drive up prices.

Stringent Regulation- One of the main factors impeding the growth of the generic medication business is the strict rules enforced by government organizations like the FDA. Although the purpose of these rules is to guarantee the efficacy and safety of generic medications, they cause delays in the approval process and increase expenses for producers. The Generic Drug User Fee Act of 2012's high user fees have made it more difficult for new businesses to enter markets and encouraged some established ones to close, which eventually reduced competition and hiked costs.  These elements indicate the substantial impact of strict restrictions as a key restraint factor and contribute to the low competition and high pricing seen in the generic medication industry.

Low Transparency in Prices- One of the main obstacles to the generic medication market's growth is the lack of price transparency. Prospective customers hesitate to choose generic medications over brand-name equivalents due to unclear pricing information. This problem is partially caused by the fact that the cost of generic drugs varies according to geographic location, insurance coverage, and manufacturer competitiveness. This issue is further made worse by the intricacy of reimbursement schemes and the lack of uniform pricing procedures. Low pricing transparency thus prevents generic medications from being widely used, which has a detrimental impact on the market's overall competitiveness. To empower patients and healthcare providers alike, participants should endeavour to build transparent pricing mechanisms and distribute trustworthy information about generic medicine prices.

Generic Drug Market Segment Analysis

By Type, the Global generic drugs market is further divided into Simple Generics, Super Generics, and Biosimilars. The Supers generic segments occupied the largest market share of approximately 40% in the year 2023. Super generics are hybrids that are different from the original product in terms of composition or mode of distribution, as well as value-added generics and unique therapeutic agents. In contrast, simple generics don't need clinical trials and have a defined regulatory approach and development roadmap for filing an ANDA. The clinical impact of biosimilars is equivalent to that of generics, although their similarity to the original branded medication is limited by validation technology.

By Brand, Pure Generic and Branded Generic are the two brand-based segments of the worldwide generic medicine market. Branded generics are generic medications sold under a brand name; authentic brand names that are registered as trademarks are created using distinct packaging, logos, and brand names. With branded generics, businesses can use the same promotional strategies and distribution networks as original medications to get into emerging markets. The term "chemical name" is used to refer to pure generics, which lack a brand name. In 2021, the Pure Generic segment accounted for the highest revenue share, with 53.13%.

By End-User, The market for generic drugs includes end-users such as hospitals, homecare providers, specialty clinics, and others. Generic medications are widely used by hospitals, both for inpatient and outpatient treatment. Generic medications are used in homecare settings for patients who are receiving therapy at home. Another factor driving up the need for generic medications is the presence of specialty clinics that concentrate on particular illnesses or therapies. The various end-user categories highlight how generic medications are widely used in a range of healthcare settings and highlight their significance in offering accessible and affordable treatment alternatives.

Competitive Landscape for the Generic Drug Market

The generic drugs market is highly competitive, with a few significant manufacturers controlling the majority of the market share despite a mix of large and small players. Many competitors are fighting for market share in this very competitive industry. High entry barriers are another feature of the market that make it challenging for new businesses to enter and compete with more established ones. By making R&D investments, and introducing new technologies and innovative solutions, these corporations are concentrating on growing their market share. For instance,

Novartis AG (Sandoz International) - Novartis AG (Sandoz International) stated that it will invest over $500 million in new biosimilar capabilities in Germany and Slovenia. As part of its commitment to maintain its leadership in the worldwide market for biosimilars and generics, Sandoz is making this investment. Furthermore, Novartis declared its plan to split Sandoz into a completely autonomous business with a focus on biosimilars and generics. The spin-off was successfully completed in October 2023, with Sandoz shares included in key market indices.

Sun Pharma- Recently, Lyndra Therapeutics, a US-based business creating cutting-edge delivery technology for long-acting oral medications, received funding from Sun Pharma. Sun Pharma acquired about 16.7% of Lyndra Therapeutics' shares on a fully diluted basis for $30 million. Sun Pharma invested as part of its plan to help advance the creation of cutting-edge drug delivery systems and get access to the technology for specific molecules and regions.

Lupin Limited- recently acquired a portfolio of established products in Europe and Canada from Sanofi for a purchase consideration of EUR 10 million (Rs 91 crore). The purchase is a component of Lupin's plan to establish a new respiratory brand in Germany and increase the range of goods it offers. The turnover of the acquired brands in Germany and Canada for the year ended March 31, 2023, was about USD 6.494 million (Rs 53.7 crore).

Generic Drug Market Key Players

• Teva Pharmaceutical Industries Ltd.
• Novartis AG (Sandoz International)
• Viatris
• Sun Pharma
• Fresenius Kabi
• Aurobindo Pharma
• Mylan N.V.
• Pfizer Inc.
• Sanofi
• Novel Understanding
• Fresenius SE & Co.
• Lupin Limited
• Endo Pharmaceuticals Inc.
• Aspen Pharmacare Holdings Limited
• Dr. Reddy's Laboratories
• Glenmark Pharmaceuticals
• Cipla Ltd.
• Alkem Laboratories
• Cadila Healthcare Ltd.
• Intas Pharmaceuticals Ltd.