Some prestigious brand-name pharmaceutical companies that once looked askance at the high-volume, low-cost business of generic drugs are now becoming major purveyors of generic medicines.
Just don't call them no-name drugs.
Giants such as Sanofi-Aventis and GlaxoSmith- Kline are not looking to enter the commodity generics market in the United States, where chain pharmacies often determine which generics they offer based on the lowest available price - and where consumers often view generic makers as interchangeable.
Instead, the big drug makers are pursuing a growing consumer base in emerging markets such as Eastern Europe, Asia and Latin America, where many people pay out of pocket for their medicines but often cannot afford expensive brand-name drugs.
And in some emerging markets, where the fear of counterfeit drugs or low-quality medicines runs high, consumers who can afford it are willing to pay a premium for generics from well-known makers, industry analysts said.
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These products are known as company-branded generics, or branded generics. They carry the name of a trusted local or foreign drug maker stamped on the package, seen as a sign of authenticity and quality control.
"We are able to create different tiers of products at prices they haven't previously seen with our stamp of approval," said Andrew P. Witty, the chief executive of GlaxoSmithKline.
Last year, Glaxo bought a stake in Aspen, a generic maker in South Africa, and signed agreements with Dr. Reddy's, an Indian generic firm, to sell its products in emerging markets. Under the distribution agreement, the Dr. Reddy's products are subject to Glaxo quality control checks and, eventually, will carry a Glaxo logo, a company spokeswoman said.
Until recently, many brand-name drug makers invested the bulk of their research and marketing money in the development of blockbuster drugs, only to cede their intellectual property and market share to lower-priced generic competitors once patents expired.
But now, with an estimated $89 billion in brand-name drug sales in the United States at risk to generic competition over the next five years, according to IMS Health, a health information firm, some drug makers are selling generics to offset revenue declines - as well as to wring some post-patent profits from the innovative drugs they developed.
It is a topic sure to be discussed at the Generic Pharmaceutical Association's annual meeting, which begins today in Naples, Fla.
"It definitely represents a change in thinking," said David Simmons, the president of Pfizer's established-products business unit.
Simmons' recently started division sells off-patent brand-name Pfizer products such as Zoloft, an anti-depressant. It also markets generic versions of those off-patent drugs under its own Greenstone label and distributes a number of generic drugs licensed from a few other producers.
In the last year, Pfizer signed licensing deals with three India-based generic makers to sell those companies' pills and injectable drugs in the United States and other markets, adding more than 200 products to the company's generic portfolio.
Pfizer said its Greenstone generic subsidiary had become the world's seventh-largest purveyor of generic medicines, as measured by number of prescriptions dispensed.
While drug sales in developed markets such as North America have low single-digit annual growth, emerging markets, including India, China, Russia and Brazil, have growth in the midteens, said Doug Long, vice president for industry relations at IMS Health.
As a result, some drug makers are pursuing a two-tiered strategy in developing markets: selling their own lines of more expensive name-brand products to the more affluent, as well as offering midpriced branded generic lines that include prescription and over-the-counter medicines for the broader market.
Branded generics can give prominent drug makers a way to capitalize on those markets without having to compete with no-name generic producers whose selling point is rock-bottom pricing. Company-branded generics can charge more for the promise of quality.
