Generics and the Animal Health Industry

Generics and the Animal Health Industry

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  NPT | TheCommunity of Big Thinkers ANIMAL HEALTH GENERICS AND THE ANIMAL HEALTH INDUSTRY - ANIMAL HEALTH by Cheryl Raeburn C onsumers love to save money and companies love to make it. So why do all pharmaceutical manufacturers not supply generics to the animal health industry? When it comes down to a choice between generic or branded pet drugs consumers are increasingly choosing the cheaper generic options. With a 5% increase in generic animal health drugs over the last five years, it is an industry with great potential. The Players The dominant players in the animal health generics market are TEVA and Putney in the United States, and Norbrook and Chanelle in the United Kingdom. Pfizer’s Animal Health Division, another big contributor, has grown to a point where they are considering divesting. There have also been several major mergers in the animal health segment; specifically, Merck and Sanofi-aventis who entered into a sequence of mergers with Schering-Plough and Merial. The Market The United States is a nation of pet lovers who own more than 86 million cats and 78 million dogs. People tend to treat their pets like part of the family, and as such, they are making regular visits to veterinarians. According to the American Pet Products Association, in 2011 approximately US$25 billion was spent on medicine and veterinary care in the U.S. In addition to the growing number of companion animals, there is perpetual growth in the agricultural food production industry. As of January 2012, there were more than 90 million head of cattle in the United States. This global increase in population will only Future Generics Competition on the Horizon Generics and the Animal Health Industry continue to drive the growth in meat production. Merck predicts that the global animal health industry will grow at a rate of 5% per year in nominal value through 2014. Mutual Benefits to Manufacturers and Consumers Generic drugs that have the same active, inert, and additive ingredients as their pioneer drug are required to test for purity and potency. However, according to Food and Drug Administration rules for Abbreviated New Drug Applications, they may not be required to conduct tests to show animal safety and efficacy if they are bioequivalent to the pioneer drug.This greatly reduces the costs of testing and regulatory approval and eases entrance into the market. In 2008, the Animal Generic Drug User Fee Act was introduced that reduced the process for completing the review on submissions, and accelerated the time of approval for generic animal drugs. The generic availability of endectocides, anthelmintics, anti- infectives, and vaccines represent a large portion of the generic market and hold great potential for R&D and the entrance of brand generics. However, as reported by the Generic Animal Drug Alliance, “…of the top 20 human drugs that lost patent protection between 2005 and 2007, 100% went generic; and of the top 20 veterinary companion animal drugs during the same time frame, only 20% went generic.” Animal drug competition is less susceptible to generic influences than human drugs because of the lack of insurance and employer programs that require the selection of generic alternatives when available. According to the U.S. pet insurance company, Embrace, they estimate that in 2008 only 0.3% of owners had pet insurance. That leaves the responsibility to the consumer. When offered a choice between brand-name drugs versus a less expensive generic version, you can be confident that pet owners will choose the more cost-effective option. This also enables vets to pass on savings to their clients and increase their sales margin. The other large – and largely untapped – market in generic animal health pharmaceuticals is in livestock production for consumption. Consumers want to know more about what they are eating and require assurances that it is safe. As a result, meat producers are under more pressure to provide the highest standard of care to their livestock. If alternative, cost- effective drugs with equal efficacy were available to the producers it would reduce costs for cattle producers to provide quality treatment to livestock and in turn provide less expensive beef for consumers. The Future The generics sector in the animal health industry will evolve as it expands, not unlike the way human healthcare has changed by generics. The current economic downturn increases the demand for cost-effective alternatives in order to build the future of generics in the animal health industry as a viable option for additional revenue. Companies with existing animal health products will have the advantage, being in a position to create generic versions of their branded drugs and get them to market. Utilizing existing networks will enable them to communicate and market their products more effectively to distributors. Additionally, as generic competition increases in the animal health market, demands will be made for innovation and thus encouraging companies to develop new products and technologies. Overall, this process stands to benefit consumers with more options for animal healthcare. Understanding and forecasting the future of generics in the animal health industry should be part of pharmaceutical manufacturing strategy as it remains a relatively untapped market with future potential for growth. Cheryl Raeburn is a Business Development Consultant for Generic Pharma 2.0. She has a background in the animal health industry and is currently involved with developing The Generics Federation. Please contact Cheryl via Twitter: @AnimalHealth_ According to the American Pet Products Association, in 2011 approximately US$25 billion was spent on medicine and veterinary care in the U.S. Want to talk about the latest industry issues? Join the discussion forum. July 2012