Analytical Framework for Examining the Value of Antibacterial Products. 3.2.10 Percentage Reduction in Revenues due to Generic Competition


According to Berndt & Aitken (2010), brand name drugs lose between 5 to 45 percent of their market to generic competition within their first full calendar year after generic entry into the market.  Other reported estimates in the published literature range from 25 percent to as high as 75 percent reductions in sales revenue after generic entry into the market.  Further, depending on the therapeutic area, the generic market share increases range from 60 to as high as 96 percent within five years after market entry (Berndt & Aitken, 2010).6 For the model, we estimate the expected reduction in revenues after generic entry at 50 percent.  Because revenues in out years contribute very little to private ENPV due to discounting, we keep the generic entry market share at 50 percent for the remaining market life of the new antibacterial rather than increasing it over time.  For the sensitivity analysis, we assume that the figure has a triangular distribution with a lower bound of 25 percent and an upper bound of 75 percent.

6 The figures represent select therapeutic areas; calcium channel blockers, lipid-regulators, and anti-epileptics. Comparative figures for antibacterials are not available in the published literature.

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