Generic Drugs Have Biggest Market Share by Unit Volume, but not by Total Revenues

One of the goals of marketing research is to study market facts, industry tendencies, and consumption behaviors so that organizations can continue producing goods and services that create value for diverse consumers.

This week, you have been hired as a market researcher to complete an exploratory study brief on innovative market sectors such as:

· Aerospace, aircrafts, and drones

· Games, apps, and social media

· Green technology

· Biotechnology, drugs, and genetics

· Nanotechnology

Choose only one innovative market sector, and using the Plunket Research Online Database, the class textbook, and at least one article from a marketing journal, complete the following:

1. Consumer behavior

A. Anticipated consumer behaviors

B. Anticipated consumer needs

2. Research goals

A. Scrutinize results and propose a question that have not been answered by the market or consumer behavior analyses

B. Choose any of the research collection methods described by Solomon et al. (2016) to collect data. Examples of data collection methods include observations in natural settings, conducting focus groups, interviewing market experts, or surveying public, among others)

C. Discuss how you would conduct primary research for this product

3. Use the traditional introduction, body, and conclusion outline.

4. Use APA for both in-text citations and slide of references.

· Biotechnology, drugs, and genetics

Generic Drugs Have Biggest Market Share by Unit Volume, but not by Total Revenues

U.S. patent policy grants drug manufacturers the normal 20 years’ protection from the date of the original patent (which is most likely filed very early in the research process), plus a period of 14 years after FDA approval.  Once the patent on an existing drug expires, competing drug companies may be allowed to market cheaper generic versions which are nearly-identical chemical compounds.  (However, the FDA must approve the generic version, which may require several years of effort and a substantial financial investment on the part of the generic manufacturer.)  Generic prescriptions as a percentage of all U.S. pharmaceutical sales rose from 49% by volume in 2000 to 91% in 2015 (but accounted for a significantly lower percentage of total drug expenditures), according to PhRMA.  Some drugs sell in such low volume that they aren’t taken up by generic manufacturers even though they have gone off-patent.

Retailers including Wal-Mart, Target, Walgreens, Kmart and Publix offer a large number of generic drugs for a flat monthly fee.  As of 2016, Wal-Mart offered 90-day supplies of hundreds of generic drugs for $10 each in an effort to undercut mail-order pharmacy businesses.

Some major drug companies are trying to get in on the generic business by quietly creating their own generic drug subsidiaries.  Pfizer, for example, has a division called Greenstone, LLC, which produces generic versions of its blockbuster drugs including Zoloft, an antidepressant that brought in upwards of $2 billion in 2006 sales, at which time its patent expired.

There’s a wild card where generic drugs are concerned that has some doctors and patients wary of choosing generics over brand-name drugs.  The FDA has a broad definition of bioequivalence, stating that a generic’s maximum concentration of active ingredient in the blood must not fall more than 20% below or 25% above that of the brand-name equivalent.  The result is a significant potential difference to the original, brand name drug.  Also, while the generic must contain the same active ingredient as the original, additional ingredients (called “excipients”) can be different and may be of lower quality in a generic.  Concern is greatest over generic versions of “narrow therapeutic index drugs” which require precise dosing because even minor variations can cause life threatening complications.  In 2012, the FDA’s advisory committee for pharmaceutical science and clinical pharmacology voted to support the tightening of bioequivalence standards for these narrow therapeutic drugs.  In addition, the U.S. Congress passed the Generic Drug User Fee Amendments of 2012, which calls for generic drug manufacturers to pay the FDA $299 million annually to beef up inspections of generic manufacturing plants abroad and speed up the review and approval of generic drug applications at home.

APA Style Plunkett, Jack W., Plunkett, M. B., Steinberg, J. S., Faulk, J., & Snider, I. J. (2017). Generic Drugs Have Biggest Market Share by Unit Volume, but not by Total Revenues. Health Care Industry. Retrieved January 24, 2018, from