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Designing, implementing, and managing efficient product distribution can present pharmaceutical distributors and wholesalers with opportunities to create a long term strategic advantage. Distribution of pharmaceuticals has always been about more than just product delivery due to issues like product expiration, special handling requirements for some products, and the thicket of regulations pharmaceutical wholesalers and distributors must navigate.
Even some pharmaceutical manufacturing giants like Merck and Lilly, which have historically been heavily research and development oriented, are investigating the possibilities pharmaceutical distribution presents. Outpatient pharmaceutical spending is increasing steadily in the United States, and at the same time, pharmaceutical wholesalers are establishing closer relationships with large retail chains. Addressing the challenges of pharmaceutical distribution in the U.S. is the key to making the most of the opportunities in this promising sector. Following are some ways pharmaceutical distributors are doing that.
Authorized generics are prescription drugs produced by brand pharmaceutical drug manufacturers that are marketed as generics under a private label. These drugs have already been approved as brand name drugs under a New Drug Application (NDA), yet they are marketed, sold, and distributed as a private label generic. Thus they offer consumers savings they expect from purchasing generics while affording them the ability to take a medication with the identical size, color, taste, and active ingredients as the branded product.
Another advantage to authorized generics is that raw materials and production capacity for these products is less likely to experience fluctuations, so marketplace supply interruptions are less likely.
Tentative approvals are granted to generic drug applicants before the expiration of applicable patents or exclusivities on the original name brand product. In other words, the FDA grants tentative approval that tells a generic manufacturer that their product is approved, but it cannot be marketed or sold in the U.S. until patent expiration. This way, a generic manufacturer can be ready to start marketing and selling the product in the U.S. as soon as it's legally possible to do so.
Knowing that a generic has been granted tentative approval can be an advantage for pharmaceutical distributors and wholesalers, and for those who invest in them.
Intelligence about tentative approvals is valuable to the investor in pharmaceutical wholesalers.
Pharmaceutical manufacturers rely on patents to sell the products they invest so much in developing, and the patent cliff - when a patent expires and competitors can then begin to sell competing generics - can be particularly hard on revenues. Although patents are effective for 20 years from the date of filing, many years may be necessary to bring a drug to market, making the "effective" life of the patent far shorter.
As a result, big pharmaceutical makers file patents frequently, and often go to court to fend off generic competition. Simultaneously, generic makers often file lawsuits to invalidate patents, making for a milieu of constant legal battles. Therefore, any player with a stake in pharmaceutical distribution can gain an advantage by having regular, reliable intelligence on patent cliff status, as well as lawsuits, and "pay-for-delay" deals designed to stave off generic competition.
Authorized generics and tentative approvals, which indicate who has approval to launch a drug for an existing expiration, are critical intelligence pieces for the pharmaceutical investor, because generics manufacturers are often the first suppliers with whom a distributor would want to make contact. The importance of the pharmaceutical supply chain to success in the pharmaceutical industry cannot be overstated, and as complex and challenge-filled as the supply chain is, the need for critical intelligence concerning patent cliffs, tentative approvals, and authorized generics is absolutely critical for the pharmaceutical distributor as well as the investor.