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CPhI Report Predicts Return of Generics Production to U.S.

August 7, 2014

Recent overseas quality concerns opens U.S. market for growth

CPhI Worldwide has released the CPhI Pharma Insights USA market report, a joint venture with InformEx examining domestic and international perspectives on the generic drug market in the U.S. According to the report, the U.S. pharma economy will grow by an annualized rate of as much as 4% over the next few years.
 
Overall the report concludes that the U.S. market remains the most dynamic pharma economy and that structural changes are presenting new opportunities. For U.S.-based pharma companies, the key trend is the return of generic production, with increased investment opportunities and imminent acquisitions taking place predominantly overseas. The report claims 12.5% are undertaking a domestic acquisition with a further 25% internationally. However, 30% of international companies are looking for acquisitions within the U.S.
 
Additionally, more than 70% of domestic respondents forecast such growth in domestic production of generics, going against past outsourcing trends as a result of safety concerns of generics produced overseas. Domestic companies see more than 60% of sales coming from within the U.S. However, the interest in international acquisitions shows the desire to expand in higher growth markets and, possibly, to increase potential domestic margins via lower costs.
 
In contrast, the international companies surveyed only receive a minority of their sales, most under 10%, from the U.S. (75% of companies surveyed do not have facilities in the U.S.).However, many are planning domestic rather than international acquisitions, showing that international firms are trying to increase their revenues from the U.S.
 
One domestic manufacturer stated, “The U.S. market is still a huge international draw because drugs can be sold at much higher prices compared to overseas countries, allowing us to increase revenues and decrease marginal pressures.”
 
With FDA regulatory changes providing more opportunities to export drugs directly to the U.S., international companies expect to overcome the previously prohibitive and complicated regulatory framework.

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