Healthy Skepticism Library item: 15434

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Publication type: Journal Article

Timonen J, Karttunen P, Bengtström M, Ahonen R.
The impact of generic substitution on the turnover and gross margin of pharmaceutical companies a survey 1 year and 5 years after the introduction of generic substitution in Finland.
Health Policy 2009 Apr 3;
http://www.sciencedirect.com/science?_ob=ArticleURL&_udi=B6V8X-4W0R3B1-5&_user=10&_rdoc=1&_fmt=&_orig=search&_sort=d&view=c&_acct=C000050221&_version=1&_urlVersion=0&_userid=10&md5=818c9e5bd18f9c2613a6ce2e2821ac9e

Abstract:

OBJECTIVES: To explore and compare the impact of generic substitution (GS) on the turnover and gross margin per cent of pharmaceutical companies representing mainly original or generic products in Finland.

METHODS: A mail survey to pharmaceutical companies with an office in Finland and substitutable medicines in the Finnish pharmaceutical market 1 year (2004) and nearly 5 years (2008) after GS. The questionnaire were answered by 16 original and 7 generic product companies in 2004 (response rate 56%, n=41) and by 16 original and 6 generic product companies in 2008 (response rate 56%, n=39).

RESULTS: Turnover had decreased in the original product companies and increased in the generic product companies. The gross margin per cent had decreased in the original and generic product companies, and the companies had also compensated for it in many ways.

CONCLUSIONS: The study suggests that GS has promoted the sales of generic product companies in Finland. However, price competition caused by GS has generally decreased the proportion of profit from turnover in the original and generic product companies. The companies have also compensated for their decreased gross margin, which suggests that the profit in euros has not been sufficient to cover fixed costs in the companies.