The pharmaceutical enterprise is a diverse industry involved in discovery, development, production, and marketing of pharmaceutical drugs for use as medications. Pharmaceutical companies deal both in generic or brand medications and medical devices. These pharmaceutical companies are subject to a variety of laws and regulations that govern the patenting, testing, safety, efficacy and marketing of drugs in their respective organizations.
**Patents and Generics**
Depending on several considerations, a pharmaceutical company may apply for and be granted a patent for a certain drug, or the process of producing the drug. This patent may be granted with exclusivity rights usually for about 20 years. This patent is awarded only after rigorous study and testing, which usually takes about 10 to 15 years.
Patent protection enables the drug owner of the patent to recover the costs of research and development through high profit margins for the branded drug. When the patent protection for the drug expires, a generic drug is usually developed and sold by a competing pharmaceutical company.
Since the development and approval of generics is less expensive, it allows competing pharmaceutical companies to sell the drugs at a lower price. Often the drug owner of the branded product will introduce a generic version before the patent expires in order to get a head start in the generic market. Restructuring has therefore become routine, driven by the patent expiration of products launched during the industry’s “golden era” in the 1990s and companies’ failure to develop sufficient new blockbuster products to replace lost revenues.