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State of the market: Are generic drugs approaching their peak?

BY Alaric DeArment

Generic drugs have been on a roll with their share of total prescriptions dispensed in the country seeming to increase on a nearly constant basis. But it appears the peak is coming soon.

(For the full category review, including sales data, click here.)

According to IMS VP industry relations Doug Long, in the next few years, generics will likely peak at about 86% to 87% of the total prescriptions dispensed due to fewer high-profile drugs coming off patent. More liberal estimates predict a somewhat higher market share, around 90%. The current share is 83%.

In recent years, much of the rapid growth has been due to several blockbuster drugs losing patent protection, creating windfalls for generic drug companies and pharmacy retailers alike. The most high profile of these was Pfizer’s statin Lipitor (atorvastatin calcium), whose patent expired in November 2011. In 2016, AstraZeneca’s cholesterol drug Crestor (rosuvastatin calcium), which belongs to the same class of drugs as Lipitor, will lose its patent. According to IMS, it is currently the No. 3 drug in the United States, with 2012 sales of $5.1 billion.

The shift to generics for a large percentage of primary-care disease states — particularly cardiovascular disease and gastroesophageal reflux disease — comes at a time when generic drugs are growing in sales and prescriptions, but branded drugs are not. According to EMS, generic sales grew by 5% during the 12-month period that ended in March, while dispensed prescriptions grew by 7.8%.  At the same time, branded drug sales fell by 6.2% and dispensed prescriptions fell by 16%. Of the top 10 companies in sales growth as of June 2013, four were generic companies. Johnson & Johnson took the top spot with 1.6% sales growth, and generic drug maker Mylan was not far behind with 1.5%. Meanwhile, among the nine companies with the highest growth in prescriptions, all but Endo were generics-focused, with Apotex ranking at the top with 43% growth.

An even greater contrast was seen among the top 10 drugs, ranked by sales and prescription growth. For sales, all 10 drugs were branded, with AbbVie’s autoimmune disorder treatment Humira (adalimumab) at the top, having grown by $977 million year-over-year as of June 2013. But among the drugs that grew the fastest in terms of prescriptions dispensed, Johnson & Johnson’s Xarelto anti-clotting (rivaroxaban) was the only branded drug on the list, dead last with prescription growth of 5 million. Generic versions of Lipitor made by Apotex and Mylan showed the strongest growth, at 15.2 million and 12 million prescriptions, respectively.

There’s even more evidence of how far generic drugs have come when one looks at the overall growth of spending on medicines in the United States — or rather, the lack thereof. According to a report released by IMS in May, "Declining Medicine Use and Costs: For Better or Worse," spending on medicines fell 3.5% on a per capita basis in 2012 as use of healthcare services overall declined. According to the report, patent expiries that year contributed $28.9 billion to the reduction in medicine spending. Total spending on medications was $325.8 billion.

"The cost curve for medicines was clearly bent in 2012, for better or for worse," IMS Institute for Healthcare Informatics executive director Murray Aitken said. "To some extent, this is a harbinger of more efficient use of our healthcare resources, but it also reflects a decline in utilization that may be the result of under treatment and an imbalance between prevention and care."

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Calling ‘next game’

BY Rob Eder

Retail futurist Doug Stephens, founder of Retail Prophet talks about ordering a New York Yankees baseball cap from eBay Now and having it delivered to him on a New York City park bench (for the complete interview, visit DrugStoreNews.com/Audio/ebay-now-and-demand-greater-consumer-convenience). I snapped this picture (far right) of an eBay Now deliveryman about a block from my house during Labor Day weekend.

There is no question that the way people shop has changed. Here in New York City my apartment building has a special block of refrigerators in the lobby to handle FreshDirect deliveries when residents aren’t home.

For years, when I would tell people that I sometimes shopped for groceries that way, many chalked it up to some crazy urban fad that really wouldn’t play outside of Manhattan. While FreshDirect may control about 80% of the local market its biggest competitor here, Ahold’s Peapod division, is growing its footprint significantly throughout the mid-Atlantic and New England regions. By the end of August, the company was up to 47 in-store pickup locations: 20 in Giant Food stores and 27 in Stop & Shops (for more photos visit DrugStoreNews.com / Photos.)

This isn’t a fad — it never really was. It’s getting harder and harder to get customers to engage with your brand. In this issue, DSN takes a look at how savvy retailers and CPG companies are utilizing game-based technologies to grow trips, build brands and help move the customer relationship from a transaction-based to a consumer-engagement model.

Does your brand have its game face on? Tell me how your company is using gamification to engage customers or grow talent. Email me at [email protected].


Rob Eder is the editor in chief of The Drug Store News Group, publishers of Drug Store News and DSN Collaborative Care magazines. You can contact him at [email protected].

MORE ARTICLES FROM ROB EDER >

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Unlocking employees’ new skills with competitive training

BY Michael Johnsen

Financial firm Deloitte recently leveraged a gamification platform, called Badgeville, to augment its Deloitte Leadership Academy, a digital executive training program that’s deployed across 50,000 executives at more than 150 companies. The gamification elements included ranks and rewards to be showcased in participant profiles, missions and leaderboards.

The results were tangible. Utilizing the game mechanics associated with Badgeville, the Deloitte Leadership Academy improved user retention by 45% after three months. Specifically 46.6% of users returned daily and 36.3% of users returned weekly. An average of three achievements were unlocked per active user with top users earning as many as 30 achievements all told.

To help spawn interactions between participants, each executive’s home screen featured an updated news feed chronicling engagements of the users they follow. And similar to Facebook, executives could post on another’s site.

As executives completed each online learning program, they received a badge to mark their achievement. There also were "secret" badges that were "unlocked only by achieving certain goals," the Harvard Business Review reported. "For example, if all members of one department watch the same video during the same week."

"Feedback from some clients is that the DLA experience has become ‘addictive,’ and competing with peers is now part of how clients are achieving their learning plans. The leaderboard has been an important element, as it creates a status-oriented competition," said Tom Richardson, Deloitte Leadership Academy partner.

Automotive aftermarket retailer Pep Boys recently employed a gaming platform called Axonify to address safety incidences and inventory shrinkage among its more than 19,000 employees. The use of informational posters and monthly manager-led meetings wasn’t really working.

"Associates answered quick, targeted questions related to risk, loss prevention, safety and operational policies and procedures — standard questions in these areas. If they answered correctly, they played a slot-machine game titled ‘Quiz to Win’ for a chance to win cash prizes. If they answered incorrectly the system immediately presented a short training piece designed to specifically address the topic covered in the initial question," noted Karl Kapp, instructional technology professor at Bloomsburg University and author of "The Gamification of Learning and Instruction," in an article published this summer in Learning Solutions Magazine. The entire process took less than two minutes each day.

Upon completion of the program, Pep Boys realized a reduction in safety incidents and claim counts of more than 45% and shrinkage was down 55%. "In the case of internal loss, each time a burst of content related to employee theft is pushed out, they see at least a 60%. increase in their ‘Integrity Pays’ hotline calls, resulting in a direct reduction in inventory loss," Kapp reported.

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