Innovation Asset Blog

Pharmaceutical companies approaching the 'patent cliff'

With some of the nation's largest and most lucrative pharmaceutical companies approaching the expiration dates on their exclusive production rights, the industry may experience a significant power shift in the coming months.

Pfizer, which produces the world's most prescribed drug, Lipitor, will see its basic product patent protection expire in the U.S. market in November, according to Genetic Engineering & Biotechnology News. The company already lost intellectual property protection for the cholesterol-controlling pill last year in Canada, Spain, Brazil and Mexico.

Once the U.S. patent expires next month, generic drug companies will be allowed to create inexpensive, non-branded versions of Pfizer products, according to Healthcare Global contributor Abbie Smith. As a result, Pfizer may lose as much as 90 percent of its sales associated with the formerly protected drug.

"Over 80 percent of a brand's prescription volume is replaced by generics within six months of the patent loss," noted Smith.

Pfizer is just one of many leading pharmaceutical companies facing similar circumstances, according to NPR. The prevalence of generic competitors is expected to be welcome news for consumers in the struggle to manage healthcare expenses. However, if leading manufacturers respond by developing more targeted, specialty drugs, the expense of these prescriptions may offset earlier savings.

Peter Ackerman

Peter Ackerman

Founder & CEO, Innovation Asset Group, Inc.