The economic and pricing impact of authorized generic medicines in South Africa

• Published in: International journal of pharmaceutical and healthcare marketing 2015-04, Vol.9 (1), p.20-35
• Main Author: McGee, Shelley-Ann Marion
• Format: Article
• Language: English
• Subjects: Blister packs; Brands; Cloning; Competition; Consumer Price Index; Cost control; Erosion; Generic drugs; Generic products; Immunoglobulins; Impact analysis; Incentives; Market entry; Market shares; Marketing; Marketing strategy/methods; Markets; Pharmaceutical industry; Prices; Pricing; Product lines; Registration
• ISSN: 1750-6123; 1750-6131
• DOI: 10.1108/IJPHM-11-2013-0059

Purpose – This paper aims to examine whether authorized generics (AGs) have influenced prices and market shares in markets for molecules facing generic competition in South Africa. AGs (clones), which are identical to the originator brands, offer a solution for originator companies to protect their markets from independent generic (IG) competition. IG competitors have claimed that AGs have a negative impact on pricing and competition. Design/methodology/approach – In a retrospective analysis, pricing and quantity data for 24 months post generic entry were extracted for oral solid dosage form products which experienced generic entry into their markets between 2005 and 2011, divided into “Authorized generic affected” and “no authorized generic” markets. A series of indices was calculated, as well as market shares of competing originator and generic products, and the number of generic competitors determined. Indices and market share data for clone affected and unaffected groups were tested at 6, 12, 18 and 24 months using unmatched t-tests, at a 95 per cent significance level. Findings – None of the evaluated pricing indices showed a consistently significant difference existing between AG-affected and no-AG samples. The only variable for which the two samples consistently differed was market shares, with originator brands experiencing significantly more market share erosion in AG-affected markets. Pricing levels of generics and originator products as well as growth of numbers of generic competitors were similar in both AG-affected and no-AG groups. Originality/value – A study of this nature on the impacts of AGs in the South African generics has not been previously published and reflects the situation particular to the country.