Impact of generic drug companies in Merck and Co.'s

02 December, 2005

Merck & Co.'s have made an announcement this week that it is slashing its work force by 11 percent and shuttering several plants. The reasons behind this are many such as an increased generic competition, pressures from health insurers to lower prices, rising drug development and marketing costs, fewer new blockbuster medicines, and worries about possible governmental price controls.

Generic drugs, which now account for 53 percent of U.S. prescriptions, contribute to these pressures. Next year, drugs with $28 billion in annual sales lose patent protection, according to health information company IMS Health. To counter this problem, the brand-name drugmakers must offer rebates and discounts to get on managed care companies' lists of preferred drugs.

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