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What future for the French retail generic market?

Abstract

The worldwide generic market doubled, in volume, over the past 10 years. It appears, at first sight, very attractive. However, generic companies’ profitability is on average lower than that of R&D-based companies and their future risk of deterioration higher due to stronger commoditisation. The attractiveness of generic markets being significantly different from one country to the other, thus, the author proposes an approach, that he has applied to the French market, to assess country-specific business opportunities and threats. The analysis of different stakeholders shows that the French generic market development has been driven by a series of governmental measures to encourage physicians to prescribe, pharmacists to substitute and deliver, and patients to accept generic products. Physicians, who did not play a major role so far, could be asked to prescribe significantly more generic products, or at least more genericized brands, so that pharmacists can substitute them. Retail pharmacists, who substitute more than 70% of genericized brands, have been instrumental in the development of generic products and will be asked to further increase their substitution rate.

Patients, of whom almost two-third accepts generic products, are not expected to change their attitude over the short term. Generic companies, operating in France are in danger due to anticipated price cuts of the government in one hand, and the refusal of retail pharmacists to accept any decrease of their discounts, in the other hand. In such an increasingly unattractive environment, survivors will be the biggest generic companies which will manage to secure the lowest production costs and the highest Generic Preference Mix index. 

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