Research Innovation (Branded) or Generics – Which is the Better Bet?
Proportion of branded versus generic prescription drug revenues in the United States from 2005 to 2016
Pricing of Drugs:
The Various Factors that may be considered by a Pharma Company for setting the Price of a drug.
- Patent Status: If the drug is patented it is usually priced high because for that time no other company can manufacture it.
- Uniqueness: The uniqueness of the drug must be considered i.e., how many other drugs are already available to treat the same condition.
- Competition: Popularity and Success of the drug’s competition plays an important factor as the aggressiveness of competition may put pressure on the drug pricing.
- Added benefits over competing drugs – Added benefits usually lead to higher prices.
- Potential to change the current practice of medicine like dosage route & schedule, can be taken without food etc.
- Delay the progression of disease or avoid surgical treatment: As delay in surgery or progression of disease can save a lot of cost for the patient, it can help in pricing the drug on higher side.
- Health Economics – Number of working days gained by this modality of treatment.
- Life Saving Drug
- Health Insurance payment Policies- coverage of drug in insurance policies.
- Institutional business Pricing for Bulk selling.
- R & D expenditure that has been already done need to be recovered too.
If we look at the above mentioned factors of pricing, it clearly gives a hint that a new branded drug usually ticks most of the factors & that too on a positive note. Due to this the pricing of Branded drugs is on a higher side. As the price is high & patent of drug is active, the low volume sales may bring cash fortunes for the company. If the company can market the drug in an aggressive mode & to the right target patients, then sky is the limit.
From the above discussion & the data from US drug market, it is quite evident that putting money in Research & Development for Drug Innovation is always beneficial in the long run. The US market shows a revenue share of more than 70% in the favor of branded drugs even if the volume proportion of Generics may be on higher side.
Indian Perspective & Make in India
In context of Make in India, Indian Pharma has to be considered within top 5 Industries. Indian Pharma Industry is in top five among industries pertaining to exports figures. Indian Pharma is at top spot in relation to Generics manufacture & export but there is a felt need of shifting focus on Research-Innovations to produce branded drugs of high repute. It is high time to create a sustainable research & innovation based model which can make Indian Pharma Sector Numero-Uno .
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