Generics get ready as Viagra hits 'patent cliff'

Chinese generic drug makers are now preparing for a possible big payday when the patent on Pfizer's blockbuster drug Viagra expires in China next July.

While good news for patients seeking cheaper alternatives and companies making generic versions, it means a serious financial hit for Pfizer, according to a report in the Securities Times.

China had a potential market of more than 20 billion yuan ($3.25 billion) for drugs treating erectile dysfunction in 2012. Viagra sales accounted for about 5 percent of the total market.

But how many clients the company can keep when the market is flooded with diverse and cheaper generic drugs is a serious question.

In 2011, Pfizer lost the patent for its best-seller Lipitor used to treat high cholesterol. The drug brought hundreds of billion dollars a year to the company, but sales took a serious plunge worldwide as the patent lapsed, according to the International Business Times.

Pfizer's Chinese subsidiary has not made a public announcement about its plans for Viagra, but published reports say the pharmaceutical giant is about to release its own cut-price drug under the name Sildenafil Pfizer to sell in parallel with Viagra in countries where its patent expires.

Experts say it is also a prime example of the so-called patent cliff - when globally innovative drugs enter the public domain and profits for the inventor plummet.

At least 400 patents on original drugs will expire by 2015, including 15 this year.

"The patent cliff is a huge opportunity for generic drug makers and it is possible their products will have an equal market share around the globe with the original drugs during the coming round of patent expirations," said a researcher at China Merchant Securities cited by Securities Times.

In China, 90 percent of drugs are generic, he noted, a market expected to reach 500 billion yuan in 2015.

Some Chinese people misunderstand generic drugs, thinking they are counterfeit and possibly ineffective.

But generic drugs are not just copycats with rough manufacturing and inferior quality, the researcher said. Without a good research and production, companies cannot succeed, he added.

Government agencies also have strict requirements on generic products, he noted.

According to the Securities Times report, many large Chinese generic drug producers are making plans for products to treat cancer, hepatitis, diabetes and asthma, all highly profitable but also more intensely competitive.