Generic pharmaceutical price decay

For many easy-to-manufacture solid dose tablets and capsules the manufacturing is done in India and China as the costs of production in these countries is significantly lower than in the US or Europe.

However, in most cases more than one company will release stock at launch and they will compete for market share with other manufacturers and license holders.

On Thursday 14 October, the UK's Department of Health announced that it would not be proceeding with the proposals to implement generic substitution.

[24] Bounces happen when the average selling price falls below a license holder's manufacturing cost, making the product unprofitable.

License holders and manufacturers then withdraw from the market, reducing the amount of competition and allowing the price to rise.

Additionally the product's expiry date might mean that it could not be stored until market prices recovered.

The pricing trends of some products are believed to be affected by disease patterns, such as the hay fever season in May and winter flu in November.

This means that an originator may offer an advantageous price to undercut the generic or parallel import.

Wholesalers gets a price and supply guarantee in exchange for taking the risk that they may be paying too much in the long term.