The generic injectable drug market has recently experienced numerous shortages, which impose substantial public health costs. One potential cause of these shortages is low profitability of generic injectables. This brief examines the profitability of recently launched generic injectables. In aggregate, the market achieves between zero and 42 percent return on investment (ROI) by the third year after launch, under varying cost estimates. But this aggregate profitability is driven by a small number of highly profitable outliers. 70 percent of drugs in this market do not achieve profitability by their third year after launching. Moreover, generic injectables are less profitable than generic orals, which have not experienced shortages to the same extent as injectables. The generic injectable market is also composed of fewer manufacturers per molecule than the generic oral market. Our results are consistent with the economic theory that low expected profits of generic injectables may lead to a thinner market less resilient to shortages. However, our analysis is limited by a lack of data on costs, which necessitates employing estimates that involve substantial uncertainty.
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