Pharmaceutical companies are known to most of us for their role in the creation and stabilization of new medications and medical devices. Every day, millions of consumers utilize pharmaceutical products and create billions of dollars in sales revenue for companies – especially when the medication or device being purchased is a brand name and not a generic one.
Since brand-name medications are subjected to a number of clinical trials to prove their safety and effectiveness, and pharmaceutical companies invest a great amount of time and money into their creation, brand-name medications are usually protected by patents. Once the patent for a brand-name medication expires (or is successfully challenged), however, the medication is up for grabs and can be produced in a generic form.
Generic drugs are essentially the same as brand name drugs; They contain the same active ingredients, work the same way, and are equally as effective. But unlike brand-name drugs, generic versions can be sold at a much lower price. Companies who sell generic medications have the advantage of producing an already FDA approved medication, and thus, get to skip out on clinical trials (saving them billions of dollars).
Recently, AstraZeneca, a global pharmaceutical company founded in 1999, found out that what goes on behind the scenes for the pharmaceutical industry is just as critical to their generated sales revenue. AstraZeneca faced a huge detriment to their product sales revenue when they lost the patent to their best selling drug – an anti-cholesterol medication, Crestor. AstraZeneca’s patent for Crestor protected them from other companies creating generic versions of the medication and selling it to consumers at a lower price. In a federal lawsuit, AstraZeneca tried to challenge the expiration of their patent, which was set to expire on July 8 of this year, but was unsuccessful. A day later, eight other manufacturers were allowed to release generic versions of Crestor and market them at a drastically cheaper price to consumers.
What this means for AstraZeneca is this; In Europe and Japan, where the patent expired, AstraZeneca no longer has exclusivity on Crestor. Their competitors capitalized on this and released generic versions of the drug. As a result, sales revenue for the famed pharmaceutical company fell through the roof, leaving them with a multibillion-dollar deficit. To fill this void, AstraZeneca is producing new medications, but of course, they are making sure they have longer patents to protect themselves from a situation like this in the future.
Sources:
https://www.insider.co.uk/company-results-forecasts/astrazeneca-shares-sales-statin-patent-12983946
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“Pills” – Edward Kammerer