Guest Column | April 14, 2023

The Global Market For Generics & Biosimilars Through 2032

By Aditi Shivarkar, principal consultant, insightSLICE

generic drug pills in bottle GettyImages-851552186

Generic drugs may have different appearances (e.g., shape, color, or packaging) than the original brand-name drug, but they are required to have the same active ingredients, dosage, strength, and route of administration. They are often considered to be just as safe and effective as brand-name drugs. According to our new analysis, the global market size for generic drugs (including biosimilars) was estimated to be $566.85 billion in 2022 and is expected grow at a CAGR of 5.7% from 2023 to reach a value of $990 billion by 2032. In this article, I’ll share the factors driving the market, market segment insights, and more.

Factors Driving The Market

Cost-effectiveness (For Patients & Healthcare Providers)

The cost-effectiveness of generic drugs is a major factor driving the growth of the global generic drugs market. The lower cost of purchasing generic drugs compared to brand-name drugs makes them an attractive option for both patients and healthcare providers. In many cases, generic drugs are just as effective as their brand-name counterparts, but they cost significantly less.

The cost savings associated with generic drugs can have a significant impact on healthcare budgets, particularly in developing countries or those with limited healthcare budgets. By choosing generic drugs over brand-name drugs, healthcare providers can save money while still providing their patients with high-quality medications.

For example, in the United States, the cost of a generic drug can be up to 85% lower than the brand-name equivalent. This cost savings allows patients to access needed medications and provides healthcare systems with a more affordable solution for managing their budgets.

Patent Expiries

The expiration of patents for many popular brand-name drugs is another key factor driving the growth of the global generic drugs market. Once a patent expires, other pharmaceutical companies can produce and sell generic versions of the drug, which creates competition in the market.

This competition can lead to lower prices for medications, making them more accessible to patients. In addition, the introduction of new generic drugs can increase the availability of certain medications, particularly in areas where there may have been shortages of a particular drug due to high costs.

For example, in 2021, the patent for the popular cholesterol-lowering drug Crestor expired in the United States. As a result, several pharmaceutical companies launched generic versions of the drug, leading to a significant reduction in the cost of the medication and making it more accessible to patients.

Government Initiatives

Government initiatives aimed at promoting the use of generic drugs are also driving the growth of the global generic drugs market. Governments in many countries are taking steps to increase the use of generic drugs to reduce healthcare costs. These initiatives can take a variety of forms, such as laws requiring doctors to prescribe generic drugs unless there is a specific reason to use a brand-name drug, or the implementation of schemes to provide quality generic medicines at affordable prices to the masses.

For example, the Indian government has implemented several initiatives to promote the use of generic drugs, such as the Pradhan Mantri Bhartiya Janaushadhi Pariyojana. This scheme aims to provide quality generic medicines at affordable prices to the masses and has been successful in increasing the availability of generic drugs in India.

Also in India, the government has implemented drug price control orders (DPCOs) to regulate the prices of essential drugs, including generic drugs. These orders ensure that prices of generic drugs are affordable to the general public, increasing their accessibility and affordability.

Additionally, the Indian government maintains a National List of Essential Medicines (NLEM), which specifies the essential medicines that should be available and affordable to all citizens. The list includes both generic and branded drugs. The government has also implemented price controls on some essential drugs to ensure that they are affordable to the general public.

Increasing Focus On Biosimilars

One of the key trends in the global generic drugs market is the increasing focus on biosimilars. Biosimilars are generic versions of biological drugs, which are large, complex molecules that are derived from living organisms. Biosimilars are becoming more important as an increasing number of biological drugs are coming off patent.

The biosimilars market is expected to continue to grow in the coming years, driven by factors such as increasing demand for lower-cost alternatives to biological drugs, regulatory support for biosimilars, and increasing acceptance of biosimilars by healthcare providers and patients.

For example, in 2019, the FDA approved a biosimilar for use in the United States that is expected to be a lower-cost alternative to a popular biological drug used to treat cancer. This approval is expected to increase access to the medication for patients and help reduce healthcare costs.

Growth In Emerging Markets

Another key trend in the global generic drugs market is the growth in emerging markets. Emerging markets such as China, India, and Brazil are experiencing significant economic growth and an increasing demand for healthcare services.

The growth of the generic drugs market in emerging markets is being driven by factors such as increasing demand for affordable healthcare, rising population levels, and increasing government support for the development of local pharmaceutical industries.

For example, in India, the generic drugs market is expected to continue to grow due to initiatives such as the "Make in India" campaign, which aims to promote the development of local manufacturing capabilities for pharmaceuticals.

Market Segment Insights

Product Segment Insights

The global generic drugs market is segmented into Simple Generics, Super Generics, and Biosimilars on the basis of product type. Amongst these, The Simple Generics segment is the largest in the global generic drugs market because these drugs are the most widely produced and consumed. Simple Generics are exact copies of brand-name drugs and have the same active ingredients, dosage, strength, and intended use. They are also typically the first type of generic drugs to be produced once a brand-name drug's patent expires. The super generics segment is also a growing segment in the global generic drugs market, as pharmaceutical companies seek to differentiate their products and capture a larger share of the market. Super generics typically offer improved benefits over simple generics, such as faster onset of action, improved dosing, or reduced side effects. However, they are also more expensive to develop and manufacture, which can limit their market penetration.

There are several key industry trends in the simple generics segment. These include:

  • Increasing competition: As more manufacturers enter the simple generics market, competition is intensifying, leading to lower prices for generic drugs. In order to remain competitive, manufacturers are focusing on improving efficiency, reducing costs, and investing in marketing to increase brand awareness.
  • Regulatory changes: Changes in regulatory frameworks are also affecting the simple generics segment. For example, the FDA is increasing its focus on quality and safety standards for generic drugs, which has led to greater scrutiny of manufacturers and higher compliance costs.
  • Increasing use of generics: The use of generic drugs is increasing globally, driven by cost pressures and the expiration of patents for brand-name drugs. This trend is expected to continue, particularly as healthcare systems in emerging markets continue to improve and demand for affordable drugs grows.
  • Emergence of new markets: The simple generics market is also expanding into new markets, particularly in emerging economies. Manufacturers are investing in new manufacturing facilities, partnerships with local companies, and regulatory approvals to sell their products in these markets.

“Super generics” are developed through various methods, including new formulations, drug delivery technologies, and modifications to the active ingredient or dosing regimen. Unlike traditional generics, super generics often require additional clinical trials and regulatory approval, which can result in longer development timelines and higher costs. However, they can also command higher prices and market share due to their added value proposition.

Application Segment Insights

On the basis of applications, the global generic drugs market is segmented into cardiovascular products, anti-infective drugs, anti-arthritis drugs, central nervous system drugs, anti-cancer drugs, respiratory products, and other drugs. The cardiovascular products segment is the largest in the global generic drugs market because cardiovascular diseases are one of the leading causes of mortality globally. As a result, there is a high demand for affordable drugs to treat and prevent these conditions.

There are several key industry trends specific to the cardiovascular products segment. Here are two of them:

  • Increased focus on preventive medicine: With the rising incidence of cardiovascular diseases, there is an increasing focus on preventive medicine. This includes lifestyle changes, such as diet and exercise, as well as the use of drugs to manage risk factors such as hypertension and high cholesterol.
  • Growing demand for combination drugs: Combination drugs that combine multiple active ingredients into a single pill are becoming increasingly popular in the cardiovascular products segment. This is because many patients with cardiovascular disease require multiple drugs to manage their condition.

Geographic Segment Insights

North America is expected to continue to hold a significant share in the global generic drugs market (currently at 36% of the market) due to several factors, including:

  • High healthcare spending: North America has one of the highest healthcare spending rates in the world, which drives demand for affordable drugs. This, combined with a well-established regulatory framework for generic drugs, creates a favorable market environment for manufacturers of generic drugs.
  • Patent expirations: Many blockbuster drugs have recently come off-patent in North America, creating significant opportunities for manufacturers of generic drugs. This has led to increased competition among manufacturers, which has in turn led to lower prices for generic drugs.
  • Growing emphasis on value-based care: There is a growing trend toward value-based care in North America, which focuses on improving health outcomes while reducing costs. Generic drugs are a key component of value-based care, as they offer the same efficacy as brand-name drugs at a lower cost. As a result, payers and healthcare providers are increasingly incentivizing the use of generic drugs, which is driving demand for these products. Manufacturers are responding to this trend by developing new generic drugs that offer better outcomes and lower costs than existing products.
  • An increasing focus on specialty drugs, which are typically used to treat complex or rare diseases, is driving R&D of biosimilars: While traditional generic drugs are still an important part of the North American market, there is also a growing focus on specialty drugs, particularly to treat rare diseases or conditions. Specialty drugs can be very expensive, and the high cost of these drugs is driving demand for more affordable generic versions. Manufacturers are responding to this trend by investing in the development of generic versions of biologic drugs used in specialty care.

Europe and Asia-Pacific are the other two regions rounding out the top three. All three regions together account for over two-thirds of the global market.

Competitive Insights

Companies operating in the global generic drugs market adopt various growth strategies to gain a competitive advantage and expand their market share. Here are some key strategies:

  • Product development: Many generic drug manufacturers invest in research and development to create new and innovative generic drugs. This allows them to differentiate themselves from competitors and meet the evolving needs of the market. Biosimilars are more difficult to manufacture than traditional generic drugs, but they offer higher profit margins and longer periods of exclusivity. As one company example, Teva Pharmaceutical Industries has a robust pipeline of generic drugs in development, including complex generics (which are an emerging segment in addition to the segments listed above) and biosimilars. This allows the company to diversify its product offerings and stay competitive in the market.
  • Strategic partnerships and acquisitions: Many companies in the generic drugs market enter into strategic partnerships or acquire other companies to expand their market reach and access new technologies and products. For instance, in 2020, Mylan merged with Pfizer's Upjohn unit to form Viatris, a new global pharmaceutical company focused on developing and commercializing generic drugs. This merger allowed Viatris to expand its product offerings and gain a stronger foothold in the market.
  • Geographic expansion: Many generic drug manufacturers seek to expand their operations into new geographic regions to gain access to new markets and customers. For example, in 2020, Lupin Limited announced that it was expanding its operations in Japan, a key market for generic drugs, allowing the company to tap into Japan's aging population and growing demand for affordable healthcare.

In summary, companies in the global generic drugs market adopt growth strategies such as product development, strategic partnerships and acquisitions, and geographic expansion to gain a competitive advantage and expand market share. These strategies allow companies to stay ahead of competitors, meet the evolving needs of the market, and capitalize on new growth opportunities.

About The Author:

Aditi Shivarkar is principal consultant at insightSLICE, a market intelligence and strategy consulting company. She has been a part of the research industry for 13 years. She joined insightSLICE in 2021, and she works with clients to design studies that efficiently generate the data needed to answer their strategic market analysis, segmentation, brand equity, and pricing questions. She works across various domains, including healthcare, industrial automation, consumer goods, IT, and telecom.