GENERIC DRUGS MARKET OVERVIEW AND DEFINITION

The global generic drugs market is undergoing rapid expansion, driven by rising healthcare costs, increasing chronic disease burden, and greater global demand for affordable medicines. Generic drugs are pharmaceutical products that are equivalent to branded medicines in dosage, safety, strength, quality, performance, and intended use, but are typically sold at significantly lower prices once the original drug's patent expires.

This cost advantage has made generic medicines a key tool in expanding access to treatment, especially in low- and middle-income countries. For example, in India, where nearly 70% of out-of-pocket healthcare spending goes toward medicines, government-led initiatives like PMBJP are enabling wide-scale distribution of generic alternatives at prices 80–90% lower than branded versions. Meanwhile, countries like the United States, where generics account for over 90% of all prescriptions, continue to save billions annually through generic substitution.

Moreover, advancements in drug delivery systems, growing trust in complex generics, and the rise of e-pharmacy platforms are transforming how generic medicines are produced, distributed, and consumed globally. As patent cliffs continue and health systems strive to cut costs without compromising on care quality, the generic drugs market is expected to remain a critical segment of the pharmaceutical industry.

MARKET DYNAMICS

Market Drivers

Patented Medicines Are Losing Protection

One of the biggest reasons for the growth of the generic drugs market is the regular expiry of patents for high-cost branded medicines. When a drug loses its patent protection, other pharmaceutical companies are allowed to manufacture and sell generic versions at a much lower price. This increases competition and makes treatment more affordable for patients. For example, the popular blood thinner Xarelto (Rivaroxaban) lost its U.S. patent in 2024, opening the market to generics. Similarly, Symbicort, a commonly used inhaler for asthma and COPD, saw its first generic version launch in 2022, with wider availability in 2023 and 2024.

Generic Drugs Help Cut Healthcare Costs

Governments and healthcare providers worldwide are under pressure to reduce medical expenses. Generic drugs are much cheaper than branded drugs but work just as well. In countries like the United States, generic drugs make up more than 90% of all prescriptions, but they account for only around 13.1% of the money spent on medicines. According to the Association for Accessible Medicines (AAM), the U.S. healthcare system saved about USD 330 billion in 2022 alone by using generics. Because they are so cost-effective, generic drugs are now a key part of healthcare systems globally. In 2023, the use of generic medicines significantly reduced prescription costs for patients across several critical health conditions. Patients with heart disease saved approximately $118.1 billion, while those managing mental health conditions like anxiety and depression benefited from savings of nearly $76.4 billion.

Market Restraint

Manufacturing Risks and Pricing Pressure

To reduce costs and stay profitable, many generic drug companies outsource production to countries like India and China. However, this strategy comes with risks. Between 2018 and 2019, nearly half of the FDA’s warning letters and over 60% of compliance notices from the EMA were issued to facilities in these two countries. Such quality issues can disrupt supply chains, especially in key markets like the U.S. and Europe. At the same time, competition from Indian and Chinese manufacturers is intensifying. In 2019 alone, they were responsible for more than half of all ANDAs, with Indian firms securing 45% of total approvals. This global competition has led to significant price drops, making it less attractive for companies to launch new generics, even after receiving regulatory approval.

Market Opportunity

Rise of Complex Generics

 The rising trends in the healthcare industry for novel drugs have encouraged pharmaceutical companies to focus on the production of generic versions of novel treatments, like nanotechnology, liposomal drugs, controlled release formulations, etc. This is an emerging market opportunity for the industry.  On July 6, 2023, the FDA approved the first generic Vivitrol (naltrexone for extended-release injectable suspension), 380 mg/vial, single-dose vial. This instance shows the rise of complex generics as booming opportunity.

Rising Demand in Emerging Economies

Emerging markets such as India, Brazil, South Africa, and Southeast Asian nations are witnessing a surge in demand for affordable medications. This is mainly driven by growing populations, expanding healthcare coverage, and increased incidence of chronic diseases like diabetes and cardiovascular disorders. In countries like India, nearly 70% of out-of-pocket health spending goes toward medicines, making cost-effective generics a necessity. Government schemes such as Pradhan Mantri Bhartiya Janaushadhi Pariyojana (PMBJP) in India are actively promoting generic drug distribution by offering essential medicines at up to 80–90% lower prices than branded equivalents.

Market Trends

Focus on Sustainable and Local Manufacturing

During the COVID-19 pandemic, many countries realised they were depending too much on a few countries, mainly India and China, for the supply of important drug ingredients and generic medicines. When borders closed and shipments were delayed, it caused shortages. As a result, governments now want to make more medicines within their own countries.

For example, the Indian government launched the PLI Scheme to encourage companies to manufacture APIs and generic drugs locally. The United States has also funded local drug production through initiatives like BARDA (Biomedical Advanced Research and Development Authority). At the same time, there’s also growing interest in making drug manufacturing more eco-friendly using sustainable practices.

SEGMENTATION ANALYSIS

By Type

Branded Generics are generic drugs that are sold under a brand name by the manufacturing company. They are chemically the same as the original branded drug, but the company uses marketing to build trust and brand recognition. In countries like India and Russia, branded generics dominate the market. Unbranded Generics are sold using the drug’s generic name without any branding or marketing. They are more common in countries like the U.S

By Route of Administration

Oral Generics like tablets and capsules are the most common form of generic drugs. They are easy to manufacture and widely accepted by patients. Over 60% of all generics sold globally are oral formulations. Injectable Generics are sterile liquid or powder drugs given through injection. They’re used in hospitals for faster drug action, especially in critical care. However, due to higher production costs, fewer companies manufacture them, often leading to shortages. Inhalers and Topical Generics like generic versions of asthma inhalers and skin creams are becoming more common, especially with advancements in delivery technologies.

REGIONAL INSIGHTS

The use of generic drugs is growing all over the world, but how much and how fast it’s growing depends on the region. In North America, especially the United States, generic drugs are a huge part of the healthcare system. Around 9 out of 10 prescriptions filled in the U.S. are for generics, which shows how widely they are accepted. Even though they make up most prescriptions, they only account for about 13.1% of total drug spending, which proves how cost-effective they are.

In Europe, generic use is also common, especially in countries like Germany, the UK, and the Netherlands, where governments actively promote them to reduce healthcare costs. However, not all European countries use generics equally, some still prefer branded medicines due to doctor or patient habits.

In Asia, the story is quite different. Countries like India and China are not just big consumers of generics, they’re also two of the biggest producers. India, in particular, supplies about 20% of the world’s generic medicines and exports to over 200 countries. The Indian government’s Jan Aushadhi Scheme helps provide low-cost generic medicines to people across the country. China, on the other hand, has started a national program to encourage hospitals to use more generics and ensure their quality.

In Latin America and Africa, the demand for affordable medicines is growing, but these regions face challenges like weaker manufacturing systems and less consistent regulations. Still, as more people gain access to healthcare, the use of generics in these regions is expected to rise steadily.

KEY INDUSTRY DEVELOPMENTS

On 17 Jan 2025, Delhi’s Chief Minister, Rekha Gupta, inaugurated 17 new Jan Aushadhi Kendras to offer medicines and supplies at flat 50-80% lower prices than the market rates, to provide affordable healthcare options for the patients. By April 2025, Civica Rx managed to manufacture and supply around 210 million essential generic injectables to US hospitals, followed by its investment of 124.5 Mn USD in the development of the Petersburg plant, representing its mission of manufacturing supplies domestically rather than relying on other markets.

In 2024, FDA approved the first generics for Tiglutik (Riluzole) Oral Suspension, Ingrezza (Valbenazine) Capsules, Slynd (Drospirenone Tablets), among others, for different indications, increasing competition for brand drugs. In addition, Hikma gained generic approval for Victoza (liraglutide), a once-daily injection for type 2 diabetes, following Teva’s earlier authorised generic launch in 2024.

GENERIC DRUGS MARKET REPORT SCOPE & SEGMENTATION

MARKET ACTIVE PLAYERS

• Teva Pharmaceuticals Industries Ltd.
• Sandoz
• Viatris
• Sun Pharmaceutical Industries
• Aurobindo Pharma
• Lupin
• Cipla
• Dr. Reddy’s Laboratories
• Biocon
• Amneal Pharmaceuticals
• Hikma Pharmaceuticals
• Aspen Pharmacare
• Apotex
• Natco Pharma
• Intas Pharmaceuticals