Frequently Asked Questions


We have collected the most important and frequently asked question about our business. Please note that generics are subject to different legal definitions in different countries. The definition of generics used in this context does not make reference to any particular legal definition.

For further questions, please contact our Global department
Generics in General Comparability and Safety Recombinant Technologies and Biosimilars
PAGE 1 2 3 4

What are generics?

Generic medicines or "generics" are pharmaceuticals that contain the same active ingredients in the same concentration as the original – reference – medicine; they have the same dosage form and have demonstrated bioequivalence. Because they act in the same way in the human body, generics are interchangeable with reference products. Generics usually come to market after the data protection periods of the relevant reference products resp. their patents have expired.

What is the advantage of generics?

Generics offer the same efficacy as reference products at a significant discount. Lower prices make medicines available to people who might otherwise be unable to afford them. They also help to relieve financial pressure on increasingly cost-conscious public health systems.

Why am I suddenly hearing so much about generics?

Demand for medicines is increasing globally, driven by a steadily increasing life expectancy, economic growth, related lifestyle changes and technological progress worldwide and an aging population in developed countries. Consequently, healthcare costs continue to rise year after year. Governments and health professionals worldwide are realizing the importance of promoting generics and act accordingly.

Why are generics important for global health?

Medicines represent between 8% and 15% of a country's total health spending. Developed countries are struggling to control rapidly rising healthcare costs, while people in developing countries are often unable to afford live-saving medicines. Generics increase the access by reducing the costs and often help to protect lives. In addition, saving the money can unleash resources for new innovative medicines; which in turn will become the generics of the future.

How big is the market for generics?

Generics already have a greater overall market share than reference products in many countries. However, their total cost is still much lower, because they cost significantly less. For example, in 2005, generics in the U.S. accounted for 56% of total medicines sold, but only 13% of sales revenue. In Germany, they accounted for 51% of medicines sold, but only 29% of sales.

How fast is the generics market growing?

The generics industry worldwide is growing by roughly 5% per year on average. This rate is expected to continue, with some regional variations, and significantly higher than the equivalent growth rate for branded pharmaceuticals.

Why do generics cost less?

Generics are offered at significantly lower prices than reference medicines because initial basic and clinical research programs do not need to be repeated in full. These cost savings are passed on to patients.

How much less do they really cost?

The savings are significant. Generics can cost anywhere from 20% to 90% less than the price of reference medicines. Furthermore, generic competition forces reference product manufacturers to reduce their own prices after – or sometimes even before – patent expiry or expiry of the data protection period.

How are generic medicines authorized?

As with any other medicine, a generic must receive marketing authorization. This is granted after a regulatory authority, such as the FDA in the U.S.,  has scientifically evaluated the efficacy, safety and quality of the medicine. Reference medicines benefit from a legally defined period of data protection. Once this period ends, companies may apply for marketing authorization for generic versions of the medicine.

How are generic medicines identified?

This depends on the market, but certain basic principles usually apply. In the EU, for instance, a generic medicine is identified either by a company name plus its International Nonproprietary Name (INN) or by its own invented brand name.

Is the INN the same as a generic name?

International Nonproprietary Names (INNs) facilitate the identification of pharmaceutical substances or active pharmaceutical ingredients. Each INN is a unique name that is globally recognized and is public property. A nonproprietary name can be used as a generic name.

What is the Hatch Waxman Act and what does it mean for generics?

The “Drug Price Competition and Patent Term Restoration Act” of 1984 is commonly known as the Hatch Waxman Act. On the one hand, it introduced a five-year period of data exclusivity for innovative medicines in the U.S. On the other hand, it simplified the approval process for generics. In particular, it established the U.S. procedure for Abbreviated New Drug Applications (ANDAs) and was in many ways the trigger for today’s generics industry.

Is there a similar legislation in Europe like the Hatch Waxman Act?

Yes, an application for a generic medicine can be started after the end of the data protection period of eight years. However, the original – reference – medicine still has another two years of market exclusivity. This period can be extended to three years in total if, for instance, an innovative further indication has been achieved within the first eight years. Patents are handled independently from the data protection period.

What are patents and why do they expire?

Patents serve public interest by giving a temporary monopoly to inventors of new products in return for sharing their knowledge with the broader scientific community. The temporary monopoly allows inventors to recoup their costs and make a reasonable profit. Once the period of the patent is over, however, the knowledge can be used by everyone. In the pharmaceutical industry, this is when generics come in.

Can the same medicine be protected by more than one patent?

Most pharmaceutical companies will file a number of patents on any given medicine, to protect it against competition for as long as possible. Prominent examples of patents are composition of matter (the basic patent on the new chemical entity and its molecular structure), method of use (the process by which the medicine acts in the body) and formulation (how the medicine is designed to enter the body, reach relevant organs and achieve the required effect).

What is data exclusivity?

Data exclusivity is a separate and additional provision to patent protection for the reference medicine. It defines a period of time during which the generics applicant is restricted from applying for market authorization with referencing the data developed for the reference product. Consequently, generic medicines can generally only be evaluated and approved after the data exclusivity period has expired. In the EU, generics cannot be marketed until the market exclusivity has also expired.

What is market exclusivity and what does it mean for generics?

Market exclusivity means that no similar product is or may be on the market. The period of market exclusivity includes the data protection period and an additional period (e.g., two years in the EU) during which no generic version may be marketed. In the U.S. generics industry, market exclusivity also refers to the 180-day period granted to the first approved generic version of an originator product. During this period, no other generics company may launch a version of the same product.

What are ANDAs?

Abbreviated new drug applications (ANDAs) are the submission required in the U.S. to launch a generic version of an existing approved medicine. They are called abbreviated because fresh data on animal and human clinical studies are not required. Rather, the onus is on the producer to demonstrate bioequivalence to the reference product.

How long does it take to bring a generic medicine to patients?

This depends on the market and on the nature of the medicine. For example, in the EU, registration of a generic medicine usually takes one to two years, but can take longer - without taking account of initial development time. Moreover, in many EU member states, market access can be further delayed by having to wait for pricing and reimbursement status to be agreed. This is also the case for reference products.

What are authorized generics?

An authorized generic is a medicine that was originally marketed and sold as a reference (branded) product, but is relabeled and marketed under a generic product name, usually once patent protection expires. It may be marketed by the brand company itself or through a subsidiary, or the brand company may license the product to another company in return for royalties. Authorized generics are sold at lower cost and as an alternative to the branded product. They do not have to respect the 180-day market exclusivity provision granted by the Hatch Waxman Act to the first generic on the market.

Navigate within ''

PAGE 1 2 3 4

Pioneering Biosimilars

Sandoz is the pioneer and undisputed global leader in the rapidly emerging market for biosimilars. Visit our stand-alone Biosimilars website to find out more


Frequently Asked Questions

Everything you wanted to know about the generics industry. More