Generic drug market is gearing for a big fight

11 November, 2005

GlaxoSmithKline Plc. introduced its own cheaper version of the depression drug Paxil after few days of launching it in the market. In doing so, Glaxo deprived Apotex Inc. of six months of market exclusivity that it had expected under a U.S. law designed to nurture the generic drug industry. Apotex said the competition cost it as much as $400 million in sales.

Glaxo's tactic, since endorsed by the U.S. Food and Drug Administration, represents the latest bid by big pharmaceutical companies to fend off generic drug makers, which produce $58 billion of unbranded medicines a year. The biggest makers of such treatments, Teva Pharmaceutical Industries Ltd. and Mylan Laboratories Inc., are lobbying for new laws to stop this happening as it can hamper their business the most.

The threat is tremendous to independent generic drug companies as the FDA dealt a blow to generic drug makers on July 2, 2004, by ruling that the law does not ban patent holders from selling unbranded versions of their own drugs once they fall into the public domain. The agency said the practice increases competition and brings down prices. It also instigates a battle between the generic companies and the branded one.