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| Pharma manufacturers typically spend billions of dollars to develop a path breaking drug. To recover this cost and to earn a profit, they usually market the drug at a high cost. They need to do this to sustain their growth and to fund the research involved in inventing a new drug. However, many patients from the economically backward countries cannot afford this high cost. Generic drug manufacturers have stepped in to reduce this gap between the ‘haves’ and the ‘have nots’. As mentioned elsewhere, many countries grant branded companies a license period wherein they have an exclusive right to manufacture the drug. Once this period expires, any pharma manufacturer can produce the drug, retaining the same efficacy as the original drug. Generic drugs account for 51% of all prescriptions dispensed in the U.S. Advantages of Generic Drugs: 1.Generic drugs introduces competition Because the drug manufacturer does not have to bear the cost of making the drug, a generic drug is very inexpensive. As an example, according to the data made available by the National Association of Chain Drug Stores in the U.S., in 2004, the average price of a branded drug was $96.01, whereas the average price of a generic drug was $28.74. Thus, the introduction of competition prevents any one drug manufacturer from dictating the price, benefiting the consumer. 2.No need for research As the parent drug manufacturer has already done all the research, the other drug producers need not ‘reinvent the wheel. Drug companies thus incur fewer costs in creating the generic drug, and are therefore able to maintain profitability while offering the drug at a lower cost to consumers. Further, the price of manufacturing a generic drug decreases with a rise in production. Most drug manufacturers pass on this benefit to the patients. 3. No need for advertising The typical lifecycle of a branded drug is about 10 + years. In all these years, the original drug manufacturer has already invested enough money advertising the product to ensure its success. A generic drug manufacturer need not incur additional expenditure trying to popularize their product, as the market for it is already existing. He thus saves on the cost. |
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| Copyright 2008 SPB Pharma – Generic Drugs Manufacturer. Best viewed at 1024 x 768. |
