Yet, many experts agree that the increase in APIs, compounded with supply chain disruptions, have made issues much more difficult for generic manufacturers than they have for innovative manufacturers, leading to higher overall costs.
Schmidinger comments: “Innovatives are, typically, not outsourced as the price the API is so expensive and there are not a lot of alternative manufacturers. There is a lot of investment in research and development, and the market is not saturated with competitors. Generics, on the other hand, are commodities and this goes back to supply chain issues.”
Badwy adds: “Generic producers are quite efficient in their production process. They’re very cost price-focused and the API price (or the ingredient prices of the medicine itself) has a way bigger impact than for innovative medicines, where you usually also calculate R&D costs in your cost price or marketing costs. If your production process is very efficient, and then the [API] price starts to increase, then you get in trouble with your selling prices.”
An increasing number of pharmaceutical companies have considered, or are already, cutting back on the number of generics offered, following the economic downturn in recent years. Some health policy measures have been aimed at promoting the prescription of generics, but generic manufacturers may still see a decrease in their output.
