Generic Competition

Published by MBA Skool Team, Last Updated: January 22, 2018

What is Generic Competition?

It is the competition among different products that solve the same purpose.


For example, competition between ‘Fevistick’ and ‘Gluestick’ would be brand competition and not generic competition as those are different brands selling the same product, i.e. adhesive stick.


But competition between tape and glue would be generic competition as both are solving the same purpose/ have the same benefit/utility.


This is a serious problem in the pharmaceutical market where the market shares of brands drop quickly once a generic competitor is in the market. In the pharmaceutical industry the original brand’s product is generally priced higher to recover the cost incurred in R&D along with manufacturing etc. The generic drug on the other hand is more or less a reproduction of the formula using different agents which may also be indigenously produced and procured, hence cutting cost and available cheaper than the branded drug.


The only way to deal with generic competition is to cut costs really low or take the company producing the generic product to the court to get exclusive production and distribution rights.


For example, an Indian court ruled against German drug manufacturer Bayer’s appeal of not allowing manufacture of generic drugs that compete with its Nexavar, an extremely expensive drug for cancer treatment. The Indian government allowed a local pharmaceutical company Natco Pharma to produce a similar drug.

 

This article has been researched & authored by the Business Concepts Team. It has been reviewed & published by the MBA Skool Team. The content on MBA Skool has been created for educational & academic purpose only.

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