Authorized Generic Tidbit With Relevance to Various Companies
When the first generic version of PFE’s Neurontin entered the US market in Oct 2004, PFE countered with an “authorized generic” from its Greenstone subsidiary (#msg-4254726, #msg-4295965). The AG product was profitable for PFE during the 180-day exclusivity period when there was only one other generic in the market (from Alpharma with backing from Teva). However, when multiple generic products entered the market thereafter and Greenstone had to cut its price to retain any business, PFE found that the AG product was losing money and it pulled out.
Upon further contemplation, PFE decided it wanted to make some money from Neurontin after all. Using a cheaper API source and a more efficient production process, Greenstone eventually re-launched an AG product. In so doing, Greenstone not only made money on the product, but also captured a *60% market share!
Experiences such as this one are part of the reason PFE—and several other Big Pharma—have been acquiring generic-drug companies (e.g. #msg-36001046) and are talking up the business model of selling off-patent drugs all over the world.
*Source: PFE presentation at the Goldman Sachs Global Healthcare Conference, 6/10/09.
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