A generic drug company waits until a big-name drug comes off patent, and then begins producing essentially, chemically the same product for the healthcare market.  In so doing, the generic drug manufacturer has dodged all the R&D costs associated with the original drug.  Many consumers benefit from this longtime strategy.

A bit of a challenging twist has developed recently in a related segment of the market.  A category known as biologics is produced via a person’s own cells as opposed to chemical reactions in a reaction chamber.  Derivatives of biologics are called biosimilars.  Because of this human-body interactive dynamic, the stretch from branded product to a generic equivalent becomes a bit hazier.  Therefore, the normal model of an inexpensive startup for a generic drug suddenly becomes less applicable.  Many stakeholders are concerned.  Makiko Kitamura and David Wainer write about the dilemma in Bloomberg Businessweek (“Similar But Not the Same” 3/25/13–3/31/13, pp. 19–20):

The challenge for the makers of biosimilars lies in the compound’s very name:  They are similar to but not the same as the drugs they aim to replace.  Generic drugs are chemical duplicates of existing medicines.  Making exact copies of biologics is practically impossible as even batches made by the same manufacturer will have slight variability.  As in winemaking, a host of factors can affect the product, such as where it was made and the temperature at the time of production.  Regulatory approval of biosimilars requires . . . makers of the replicants to demonstrate through lab work and human testing that the interactions between the drug and the body are comparable to the branded drug in head-to-head trials.  But that still leaves room for doctors and patients to question whether the copy is as effective as the original over time.” (p. 20)

The problem of course is who will assume the added costs associated with all this chemistry clarification and testing?  If the generic drug company assumes that responsibility, it is subtracting from its profit margin.  Big pharma is the player with the most well developed resources for doing it, but try bringing them to the negotiating table.

Better living through chemistry, eh?  Well, it seems in this case we still have a lot of work to do on the chemistry as well as the collaboration.

About James Meadows

Currently I serve as a training team manager for Johnson Controls at a customer-care center in Kansas City. Additionally, I am a business consultant, a freelance corporate writer, an Assembly of God ordained minister, a Civil Air Patrol chaplain, and a blogger. I believe we are living in the most fascinating times of human history. To maximize the opportunities these times present, I have a passionate interest in leadership development and organizational success, both of which I view as inextricably linked.

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