Generic drug firms are facing a tougher business environment. In efforts to cut spending, some European countries, have recently reduced the prices they pay for generics. As a result, generic makers are less likely to bid for the contracts, which has allowed the makers of branded drugs to secure the contracts and make a profit due to their large drug stocks. Generic companies still in the market are selling products at a steep discount. To adjust to the lower profits, many generic makers are trying to diversify by investing in R&D to introduce reformulated versions of drugs that are off patent. Brand name drug companies, such as GlaxoSmithKline, Sanofi-Aventis and Pfizer, also are concentrating more on the generic market, with an emphasis on emerging markets, where margins are higher.

Source: Financial Times

< | >