Generic drugs market shoots up

News of the Swiss generics market's growth in 2005 went down well in Basel Keystone

Thomas Cueni, head of the pharmaceutical industry association Interpharma, tells swissinfo why generic drugs boomed in Switzerland last year.

News of the 40 per cent market growth comes less than two months after the government introduced measures encouraging people to choose generic drugs over brand products.

In November last year Swiss Interior Minister Pascal Couchepin put forward a series of measures aimed at cutting health costs by at least SFr86 million ($65.5 million) a year.

From January 1, 2006, patients with prescriptions for brand drugs rather than generics have had to pay 20 per cent of the drug’s cost – unless there is a valid medical reason.

Previously the patient’s contribution for a brand drug was ten per cent. The patient’s contribution for a generic drug has remained at ten per cent.

swissinfo: Last year the generic drugs market in Switzerland increased by almost 40 per cent. What are the reasons for this growth?

Thomas Cueni: There are basically two reasons. Historically the Swiss generics market has been relatively low compared with other European markets such as Britain, Germany, the Netherlands or Denmark.

Second, over the past couple of years the generics market in Switzerland has almost exploded because of a strong push from the government and from health insurance companies to exploit the generic potential much stronger than previously.

Also, quite a number of major patented medicines came off patent.

swissinfo: Why has the level of generics historically been low in Switzerland?

T.C.: By and large brand loyalty was strong and the reputation of the major pharmaceutical companies was such that Swiss doctors, who weren’t really pressured to use low-price alternatives, gave preference to brand drugs if they had a choice.

swissinfo: What are the likely effects of Couchepin’s measures on the generics market?

T.C.: I think it’s going to have a dramatic effect. The generics market, which almost tripled over the past few years, will grow significantly over the next couple of years. We’ll see probably the biggest change within a short timeframe in January, February and March.

swissinfo: How does Swiss consumption of generic drugs compare internationally?

T.C.: Over the past three years [in Switzerland] there have been a number of examples where major products have lost the patent and within three or four months 50-60 per cent of sales were gone. That’s pretty much equivalent to what you have in other major European markets. Switzerland is becoming more European in the generic market segment.

swissinfo: Generic drugs currently make up around eight per cent of the Swiss medicine market but the head of Mepha Pharma said recently he expects a “German ratio” of around 22 per cent within five years. Is that possible?

T.C.: Twenty per cent doesn’t seem unreasonable. More than 60 per cent of the Swiss drugs market is patented medicines – and more than a third of the rest is OTC [over-the-counter] medicines where you don’t have generics – therefore eight out of the remaining 20 or 25 per cent is pretty high.

Doubling this eight is not impossible, but there are a number of question marks in terms of value versus volume. By and large, generics in Switzerland were on the high end in terms of European price levels because of the agreement signed between the pharmaceutical industry and the government on price reviews of off-patent medicines.

Over the next few years you will see a dramatic decrease in prices of off-patent medicines and the generics will have to lower their price too. Therefore they will sell more but at a lower price.

swissinfo-interview: Thomas Stephens

In brief

Health costs in Switzerland have been spiralling upwards in recent years. In 2003 they represented 11.5% of gross domestic product, compared with 9.7% in 1995 and 8% in 1985.

Health spending amounted to SFr6,736 per inhabitant in 2003, representing a total cost of almost SFr50 billion.

As a result, health insurance premiums have been rising every year and have become unaffordable for many people.

In November 2005 Swiss Interior Minister Pascal Couchepin introduced measures encouraging people to choose generic drugs over brand products. Those wanting the original drug would have to dig deeper into their pockets.

Key facts

Last year turnover at Mepha, the Swiss market leader of generic drugs, rose by 19.6% to SFr261.3 million.
Mepha’s 2005 growth in the Swiss market, which accounts for almost half its turnover, was 40%. Growth abroad was 9.7%.
Mepha says the generics section of the Swiss drugs market in general grew by 38% in 2005 from 6.2% to 8.3%.
In Germany the generic share of the drugs market is 22.7% and in Denmark it is 32%.