To defend market share, more branded drug companies today release generic versions of their branded drugs before other generic companies enter the market, according to a study by pharmaceutical intelligence firm, Cutting Edge Information.
Marketing generic versions of a company's own brand, an increasingly popular generic strategy, prevents revenue loss upon patent expiry. Branded drug companies who create their own generic drugs take advantage of their existing resources to control the market. The strategy limits overall competition by making entry into the market less desirable for other generic companies, thus channeling a portion of generic revenues back to itself.
Most branded drug companies wait to promote their own generics until another generic company announces its intentions to enter the market. Reaching the market first not only allows the branded drug company to leverage the price of the generic market, it also maintains a portion of generic drug prescriptions that constitute 50% of all U.S. drug prescriptions.
"If a pharmaceutical company's generic subsidiary can be first-to-market, the company essentially retains devalued market share for its off-patent drug," said Jon Hess, senior analyst for Cutting Edge Information. "With patents for drugs such as Prevacid and Zoloft set to expire in July and December 2005, respectively, generic drug makers stand poised to enter the market with competitive generic products. It will be interesting to see which generic defense strategies these brands utilize."