Portfolio Management for Generics: 40 Years of Evolution and Rising Complexity
ANA GAVALDÁ ESCUDÉ
Annion Consulting SL, Barcelona, Spain
Abstract
The generic drug industry, now marking its 40th anniversary since the 1984 Hatch-Waxman Act, has expanded globally and is expected to reach $600 billion USD by 2030. However, the sector faces significant challenges, such as price erosion, global competition, and drug shortages, which threaten market sustainability. Additionally, emerging trends, including the rise of orphan drugs and the dominance of oncology, add complexity to portfolio decisions. In this evolving landscape, portfolio management plays a crucial role within the companies, requiring a strategic and holistic approach. To succeed, portfolio managers must balance strategic vision, technical expertise, and data-driven insights to optimize their companies’ portfolios. This article aims to guide portfolio managers in generic companies as they navigate the unique challenges of this industry.
INTRODUCTION
This year the generic drug industry reaches its 40th anniversary. It was in 1984 that the US Drug Price Competition and Patent Restoration Act Commonly known as the “Hatch-Waxman Act” created a regulatory pathway for the introduction of lower-cost generic drugs. This act laid the foundation for the global development of generic drug markets by simplifying the approval process for generics, while ensuring safety and efficacy, and helped establish the balance between innovation and affordability. After the United States, other countries followed suit in the development of their own generic drug markets.
In 1984, when the Hatch-Waxman Amendments were enacted, generic drugs accounted for only 19% of all prescription drug purchases in the United States. Today, generic drugs account for more than 90% of prescriptions filled and there is a continued rise in the availability of generics.
In 2022, the total market for generic drugs worldwide was estimated to be at around 412 billion USD. The market is expected to increase to more than 600 billion USD by 2030, with an expected Compound An ...
