Utility patents do not last forever. In fact, they last exactly twenty years, with few exceptions under the Hatch-Waxman Act. Pharmaceutical companies which enjoy monopoly pricing from patented drugs will one day face generic competition and lower profit margins. In 2012 alone, drugs which account for $63 billion in revenues are expected to lose patent protection, of which $33 billion in sales is forecast to be lost to generic competition and lower prices, according to EvaluatePharma.com. Which pharmaceutical companies will be hit the hardest? Will any firms see their prescription revenues grow between now and 2016?
Pfizer, Inc. (PFE) lost patent protection on Lipitor and Protonix in 2011 and is expected to lose its patent on Geodon in 2012. A whopping 68% of Pfizer’s 2010 pharmaceutical sales will be exposed to patent expiry risk by 2013. In 2010, PFE had the world’s highest prescription drug revenue in 2010 and is forecast to be number one in 2016. However, note that even such forecasts with happy endings are predicting a bumpy ride for Pfizer.
Eli Lilly and Company (LLY) is expected to fare worse than Pfizer in the long term. It lost patent protection for Zyprexa in 2011. Eli Lilly is expected to find 66% of its 2010 pharmaceutical sales exposed to patent expiry risk by 2013. Eli Lilly is forecast to lose revenues in the coming years: its 2010 $20.8 billion sales number will decline to $16.8 billion by 2016.To continue reading, click here.