The generic pharmaceutical world saw a lot of ups and downs in the last decade, with the beginning of the decade starting low as a result of the subprime crises, improvement towards the mid of the decade with multi billion dollars M&A fueling the strong trend. Going forward towards the end of the decade the US government was scrutinizing towards lower drugs prices, opioids lawsuit and increase competition driving the generic stocks in to decade low share prices, with somehow low generic market empathy.

The good news is I believe the trendy wave is about to change in the favor of the generic companies, mainly thanks to the Covid-19 pandemic that illuminate the importance of essential affordable drugs. Governments understands now more than ever that essential drugs stream are of vital important and that scrutinizing the generic companies as a path to perform budget savings is not the most beneficial way to comply with their goals. The stability and strength of a country is measured by their ability to provide to her citizens safe and on time medical support when they are in need, a fact that seems to be obvious prior to the last Covid-19 pandemic that reviled otherwise. Essential drugs as Propofol, Azithromycin, Lopi/Rito, midazolam, dopamine and even depression agents become limited to get if at all, where most countries globally were competing on securing some safety stock that could address the country mounting needs. Unfortunately, those products were scarce due to continues price scrutinization by governments, a fact that made some of the products as non-economical to be produce, hence in limited amount that lead to global shortages.

I truly believe that generic companies can and are benefiting from the current pandemic in the short and long term by the increase demand for essential generic drugs and a change in government perception over price scrutinization, towards a fair market price. Nationalization of the generic production will be of a great importance, with upcoming propose incentives towards localization of generic drugs manufacturer. I strongly believe that global companies should be ready to invest in manufacturing facilitation in the market of interest, initiative that will enjoy an increase support from government bodies.

A more constructive discussion can take place at this point of time between governments and pharmaceutical companies around prices and supply, supported by the Covid-19 pandemic that seems to strike waves in health bodies around the globe. As mentioned in my previous articles the companies that will and should pay the price will be innovative companies, that enjoy from high margins that be heavily scrutinize by the payers globally. A budget needs to be allocated somehow and I believe US increasing debt by quantitative easing won’t contribute to the country long term goals, hence the US will seek for alternative sources.

It will be interesting to see the dynamic in the pharmaceutical market with a predicted pattern toward the sun-rising of the generic companies in the next 4 years. This trend will mainly be fueled by the pandemic increase essential drug’s needs in the next 2 years. Additionally, blockbuster impending patent cliff of 2022, where major diabetics, anti-coagulant and biosimilars will go off patent will fuel the continues generic expenditure. Be ready for a generic positive session and adjust your investment accordingly.