In the United States, when a product’s patent expiration comes after 20 years, there is a sudden decrease in a particular company’s annual income.
[1][2] The abrupt drop in sales expected after the date of patent expiration can be estimated with the following formula:[2]
For example, Plavix, Singulair, Diovan and Lipitor are all chemical blockbuster drugs discovered in the early 1990s, with patent expiration date falling between 2011 and 2015; and Rituxan, Humira, Novolog and Avastin are biologic blockbuster drugs discovered in the late 1990s, with patent expiration date between 2014 and 2019.
[2] Thus, the revenue obtained through the sales of these products is at risk of falling drastically within the years of the patent cliff, which is often seen as an opportunity for other companies to generate revenue from selling generic or similar products.
Pharmaceutical companies expend significant resources in seeking routes to patent extensions.