Effectiveness of Market Strategy for Management of Brand Portfolio Consisting of Innovative Drugs and Their Generic Equivalents

Abstract

Empirical evidence implies that soon after patent expiration generic competitors enter the market with their usually cheaper substitutes of the original drugs. For a long time previously innovative companies primarily had lost their interest in the off-patent drugs and had focused their attention entirely on promotion of new innovative drugs (new chemical entities - NCE) which only had just been approved for manufacturing and selling. However over recent years the number of newly introduced innovative drugs has been decreasing, which in turn has led to growing market competition. Currently a different approach may be observed as innovator pharmaceutical companies strive to maintain a strong competitive market position even following expiration of the drug’s patent. However, they try to avoid strengthening their market edge based solely on price. Such an approach would inevitably lead to significant loss in sales and a fall in product margins. It is for that reason that some innovator companies decide to enter the market with a one or more ‘generic’ versions of their original drugs, ie. to implement a brand portfolio strategy on a single chemical entity market. This paper examines the results of such strategies adopted in the Rx (prescription medicines) markets including analysis of reasons for failure and success. As it stems from research completed, the brand portfolio strategy is very popular in some developed pharmaceutical markets and very often brings significant financial benefits to innovator companies. In case of the strongly regulated Rx pharmaceutical market in Poland, very different results have been observed – this kind of strategy displays weaker popularity and relatively seldom brings intended effects to the patent holders.