New Brands May Help Offset Generic Competition

Antipsychotic medications are big business in the United States. With annual sales in 2005 reaching $10.5 billion, antipsychotics ranked third, surpassed only by statins ($16 billion in 2005 sales) and proton pump inhibitors ($12.9 billion). The five branded antipsychotic medications still enjoying patent protection from generic competition account for over 92% of all antipsychotic sales. However, as patents expire and generic formulations enter the market, branded sales will drop precipitously, forcing drug manufacturers to find new branded products to replace their blockbusters and reverse declining revenues.

With more than 40 drugs in the antipsychotic pipeline, the pharmaceutical industry's interest in bringing new options to physicians' prescription pads is obvious. While new options are clearly needed, the economics of bringing them to market are more difficult to understand.