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Patent Cliff Defense: Countering Generic Competition

This is the first entry in a series that will focus on countering generic competition and preserving pharmaceutical brand revenue.

Much has been made about the slew of drugs that face the loss of patent protection in 2011. In all, experts estimate that $30 billion in branded drug revenue could dwindle away due to pharmaceutical generics competition in the next few years. Blockbuster brands like Pfizer’s Lipitor, Lilly’s Zyprexa, AstraZeneca’s Seroquel and Ortho McNeil’s Levaquin all have U.S. patents expiring in 2011.

Many articles have touched on patent cliff defense through how each of these pharmaceutical companies plans to overcome lost revenues through R&D pipeline growth or mergers and acquisitions. Very few of them highlight what these companies have done and what other companies can do to extend the profitability of a brand, even as market exclusivity draws near, however.

Counter-Generics Defense Strategies

Figure 1: Percentage of Brands Using the Following Counter-generics Strategies

In a recent study, we asked marketing executives and brand managers the most commonly used counter-generics strategies aimed at maintaining revenue streams in the face of potential generic incursion into the market. As shown in the accompanying figure, surveyed companies identified four common techniques for preserving revenues:

Percentage of Brands Using Counter-Generics Strategies

  • Pricing – 38% of the brands in the study raise or lower brands’ cost in the years preceding patent expiration and/or the years directly following the loss of market exclusivity.
  • Counter-Promotions – another 38% of these brands use counter-promotions strategies, like increasing advertising and developing patient programs, in an attempt to raise the profile of the brand; or offering coupons and co-pay rebates, to try and make the branded drug cheaper for end-users without directly lowering the price. Sometimes companies also promote the downside of using generic copies of branded drugs like different side effects, or in the case of biologics, unsubstantiated bioequivalence.
  • Litigation – Used by 34% of the brands surveyed, litigation is a way companies can defend brand’s patent protection if, and when, the validity of the patent is challenged in court by a generic drug manufacturer. The Hatch-Waxman Act gives generic drug makers an incentive to be the first to successfully challenge the validity of a patent. That first company will have 180 days exclusively sell the generic version of the drug. Challenges often come prior to patents actually running out.
  • Pediatric exclusivity – Also used by 34% of brands, pediatric exclusivity grants the brand an additional six months of market exclusivity in exchange for detailed pediatric data. The prolonged exclusivity period designates the brand manufacturer as the sole supplier and prevents any generic competitors from reaching the market.

Next time I will look more closely at some litigation strategies used to counter generics’ entry into the market.

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The “big day” has arrived, though it’s one that many people, both at Pfizer and across the wider sector, have not been looking forward to.


Lipitor loses patent protection and marketing exclusivity today. Pfizer is not exactly letting go quietly and we’re watching closely to learn how other companies may be able to use 2011’s lessons to better manage the lifecycle of their products.

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[…] This is the second installment in a blog series focusing on counter-generic strategies. Read the first part here. […]

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