The consolidation of drug distributors is resulting in mergers among manufacturers of generic drugs. In the US, four companies buy the majority of generics, and generic-drug firms could merge to increase their abilities to negotiate with distributors. Merging may also help the companies face the costs of heightened examination of the industry by US regulators and reduced opportunities for growth as a result of a decrease in patent expirations of big-name drugs. The $40.5 billion merger of Teva Pharmaceuticals and Allergan’s generic unit, anticipated to close in early 2016, would result in the largest manufacturer of generics. Along with Novartis’s Sandoz and Mylan, Teva-Allergan would form the three major generic-drug companies in the US. To compete with them, other companies, such as Endo, Impax Laboratories and Sagent Pharmaceuticals, are expected to look to mergers. A likely consequence of these consolidations is a rise in generic-drug prices.

Source: Bloomberg