what is the impact of patent expiring for a drug in the context of a case interview? Competitors may launch generic, so would this only impact potential revenues we cant get post expiry?
Certainly, increased competition can lead to revenue decrease. Therefore, I would suggest thinking more broadly about the strategic response (e.g., obtaining approval for different diseases, considering other markets with longer protection, adjusting marketing to target specific groups, pricing review, securing the supply of API - increased demand with limited supply may lead to cost inflation). It is not a MECE list but you can start building an appropriate framework based on these examples.
Hi there,
It depends on the case prompt + objective here. Can you provide more detail?
In essence however, when a drug comes off a patent, that means it no longer has monopoly power. Generics can come in and sell for a far lower price.
There is a huge impact here in terms of both volumes and price.
One way we can compete is by leveraging brand awareness (like Aspirin and Claritin did).
Drug comes-off the patent → other companies make generics and sell it at cheap price since they don't have any R&D cost to amortise → original company can't sell at the same monopolistic price any more → plus the market becomes fragmented because the suppliers become many
It impacts mainly post-expiry revenue. Plus you need to factor-in the fact that post-expiry lowered revenues may not be enough to pay-off the amortised R&D cost so you might have to amortise it while the patent is in effect. Companies can try to get extensions, file other patents for other medicines, etc. etc.
Expert case by
