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Fortune magazine recently published an article on the growing trend of generic companies challenging pharmaceutical drug patents. I enjoyed working with the writer to help layout the industry landscape, and share my knowledge of drug patents and trends from DrugPatentWatch.com. It’s a good read, and it does an excellent job of laying out the legal, regulatory, and economic mess that the pharmaceutical industry has become.

“Patent Expirations Will Stabilize the Pharmaceutical Industry.”

I must believe it, because I’m quoted in the St. Louis Observer as having said it!

The reporter did a good job of capturing what I meant, quoting me as saying “the industry will be more diverse, with a more stable, though smaller, revenue base spread among many more products.”

To expand, I think that the loss of patents on some of the larger brands will mean that the pharmaceutical industry will rely on a larger number of smaller-market products for the lion’s share of its revenues. The loss of marketing exclusivity on drugs like Lipitor, Nexium, and Plavix will mean that drug companies will need to derive their revenues from a greater number of products. While this might be bad for Pfizer, Astrazeneca, and Sanofi Aventis, the overall result should be a healthier, less volatile, pharmaceutical industry.

A lot of people have been asking my opinion on when a concise generic biologic regulatory pathway will emerge in the United States, and I give them all the same answer: Later.

In my opinion complex regulatory schemes are not areas in which the United States can effectively lead. Why not? Because the size of the market makes tracking problems difficult, and implementing regulatory change can be very slow.

As I’ve described before, regulating generic biologics is no easy feat. A good regulatory scheme must address safety issues while enabling productive competition. Failure to accomplish either objective could potentially set the field back by years (consider the field of gene therapy which, despite some early signs of progress, is haunted by the deaths of study subjects).

The United States is the world’s largest pharmaceutical market, and accomplishing regulatory change can be slow. It is not an effective place to experiment with or refine generic biologic approval schemes. That is best left to smaller and more agile countries. Smaller countries often seek opportunities to serve as testbeds for emerging opportunities like alternative fuels, patient tracking, personalized medicine, etc. and will likely be the first places where comprehensive generic biologic regulations emerge (likely supported by consultants and regulators from the U.S. and EU).

The challenge to driving this innovation in smaller countries, however, is that they often lack the very resources necessary to test policy or technology innovations. This is where large nations, the EU, or agencies and organizations such as the WHO, ADB, IMF, etc could be directing their resources to simultaneously help development in smaller nations while supporting innovations offering global benefits, ultimately serving their own interests