Branded Generics: Misunderstood, but Lucrative

Pharmacy Times
Volume 0

Although the name "branded generic" may be an oxymoron, these products are very real and very profitable for many companies.

Mr. Lamb is a freelance pharmacy writer living in Virginia Beach and president of Thorough Cursor Inc.

When Indian drug maker Ranbaxy made itself available for acquisition earlier this year, it drew significant interest from several large, brand name pharmaceutical manufacturers. Ranbaxy eventually merged with Japan's Daiichi Sankyo, and the combined firm became the 15th largest prescription drug company in the world as measured by dollar sales. By itself, Ranbaxy had been 50th in the sales ranking—still impressive, given that the FDA recognizes more than 3000 drug makers.1,2

The greatest contributor to Ranbaxy's existing and ongoing value is its large portfolio of branded generics sold mostly outside the United States; the company's focus on the branded generic category is far from unique, however. For the past several years, Dr. Reddy's Laboratories has pursued a strategy of growth through acquiring smaller firms that manufacture branded generics.3 Another example can be found in topical dermatologic specialty company Fougera, which began producing branded generics in the mid-1990s.4 Thus, although the term branded generic may be an oxymoron, the products are very real and very profitable for many companies.

Sometimes, It Is All in a Name

IMS Health, which began tracking and reporting on branded generics in 2002, defines the category as including prescription "products that are either novel dosage forms of off-patent products produced by a manufacturer that is not the originator of the molecule, or a molecule copy of an off-patent product with a trade name."5 This definition is used by both the FDA and the United Kingdom's National Health Service (NHS).6,7

As examples of products that meet the criteria it has set for branded generics, IMS lists Purdue Pharma's OxyContin version of extended-release oxycodone and Procter & Gamble's Asacol version of mesalamine, both of which would fall under the first part of the research firm's definition.5 Also falling under the definition would be a large number of FDAapproved hormonal contraceptives that contain just progesterone (eg, Solvay's Prometrium, Ferring's Endometrin) and 3 of the 4 FDA-approved isotretinoin products (ie, Genpharm's Amnesteen, Barr's Claravis, Ranbaxy's Sotret), which all have the identical active pharmaceutical ingredient but were given brand names by their manufacturers.

A third type of branded generic product is one that contains a different salt of an FDA-approved brand name drug. For example, Dr. Reddy's amlodipine maleate–based AmVaz was marketed as a competitor to Pfizer's amlodipine besylate–based Norvasc.8 More recently, Biovail has received FDA approval for Aplenzin (contains bupropion hydrobromide), which Biovail hopes to market as an antidepressant alternative to GlaxoSmithKline's Wellbutrin XL (contains bupropion hydrochloride).9

Note that branded generics are prescription products and are not authorized generics, which are drugs made by or under license from the innovator company and sold without a brand name. These are important distinctions that are often missed or blurred in both general discussions of branded generics and in pharmacy benefits management (PBM) contracts. The NHS has spent a good part of this decade refining its list of products that qualify for generic, branded generic, and brand name reimbursement.7

In the United States, PBM contracts can be unclear on which products fall into which category. This has led at least one analyst, Linda Cahn, president of Pharmacy Benefit Consultants, to argue that PBMs intentionally miscategorize drug products in order to get brand prices for generics, get higher rebates for brands they determine are generics, and overstate generic fill rates.10

A Profitable Niche

The profitability of branded generics is undeniable, but that is not the sole reason drug makers have for creating such products—sometimes, it is to increase the products' recognizability.

Although branded generics have outearned unbranded generics in the United States in 5 of the past 6 years, prescriptions for branded generics remain a fraction of prescriptions for unbranded generics. Products that met the IMS Health definition for branded generics accounted for about 9% of prescriptions dispensed in the United States during 2007, whereas unbranded generics accounted for about 58% of US-dispensed prescriptions, and the percentage of US prescriptions for branded generics fell from 11.4% in 2002 to 9.3% in 2007.11 It seems most likely that branded generics will remain a small but lucrative segment of the pharmaceutical market.


  • Ranbaxy, Daiichi Sankyo will dominate Japanese market. The Economic Times. June 19, 2008.
  • Congress told of FDA's lax inspection of foreign drug makers—again. OMB Watch. November 6, 2007. Accessed July 1, 2008.
  • Bisserbee N. Dr. Reddy's eyes cos with branded generics presence. The Economic Times. November 1, 2007.
  • Siegel J. Getting respect for branded generics. Pharmaceutical Business Strategies, November 2004.
  • Long, D. IMS 2003 Year in Review. Accessed June 26, 2008.
  • US Food and Drug Administration, Office of Planning. FDA White Paper: Generic Drug Prices in the US Are Lower Than Drug Prices in Canada. November 2003. Accessed June 23, 2008.
  • UK expands branded generics pricing survey. FDA News. September 15, 2005. Accessed June 23, 2008.
  • Harris G, Slater J. Bitter pill: "Branded generics" eat into drug makers' profits. Wall Street Journal. April 17, 2003.
  • Biovail receives FDA approval for Aplenzin (BVF-033) [press release]. April 23, 2008.
  • Learner N. PBMs allegedly manipulate definition of "brand" and "generic" Rx at payers' expense. Drug Benefits News. June 3, 2008.
  • Generic Pharmaceutical Association. Annual Report 2008—Generics: The Right Choice for Better Health. Accessed June 26, 2007.

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