A five-year analysis of market share and sales growth for original drugs after patent expiration in Korea

doi:10.21203/rs.3.rs-4905775/v1

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Research Article

A five-year analysis of market share and sales growth for original drugs after patent expiration in Korea

https://doi.org/10.21203/rs.3.rs-4905775/v1

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Introduction: The sales patterns of original drugs after patent expiration in Korea differ from those in other countries. This study investigates how they differ.

Methods: Using data from the Ministry of Food and Drug Safety, original drugs whose patents expired in 2012–2018 were divided into two groups depending on the generic drug approval. The differences in the attributes of each variable were analyzed. Additionally, we used IQVIA data to determine the market share and growth rate of 48 original drugs over five years from the launch of the first generic drug.

Results: The average sales before the patent expiration of original drugs without a generic drug and the average sales before the first generic drug launch of original drugs with generic drugs were KRW 2.9 and 22.6 billion, respectively. The sales volume of off-patent original drugs in the fifth year had an average growth rate of 150.6% compared with that before the first generic drug launch, indicating a different trend from other countries. The average market share of off-patent original drugs in the same molecule market in the fifth year was 70.6%, which was higher than previously reported research results in Korea and other countries.

Conclusion: This study analyzed the trend of original drugs’ sales volume, value, growth, and market share after the launch of a first generic drug. Furthermore, it demonstrated different patterns from those of other countries.

Off-patent original drug

Market share

Sales growth

Anatomical therapeutic chemical classification

Generic competition

Therapeutic market size

The sales patterns of original drugs after patent expiration in Korea are different from those of other countries, such as the United States (US) and Europe. Additionally, some products continue to grow and even have greater sales than those of overseas countries, which originally developed [1-6]. In the global market, if an original drug’s patent expires, the generic drug can be produced and the value of the original drug is plummeted. These generic drugs are sold at a cheaper price in the market. Pharmaceutical companies that sell original drugs are making follow-up pipeline drugs to defend market share, and off-patent original drugs are disappearing slowly due to a decrease in market share [3, 7-9]. However, in Korea, the price of an original drug is lowered by the launch of a generic drug following the expiration of the patent. After a year, it becomes the same as that of the generic drug, and the sales of the original drug are rarely deprived by the generic drug. Since 2013, the launch of generic drugs has soared, especially about 100 generic drugs for products with high sales, and in terms of quantity, it is reported that the size of the same molecule market tends to be larger than before the launch of generic drugs [10-11]. Thus, multinational pharmaceutical companies that enter the Korean market continue to sell even if the patent for drugs expires, which contrasts with ending promotion activities after the expiration of the patent in the global market [2-3].

Although a few studies in Korea have analyzed the sales pattern of off-patent original drugs they examined the relevant factors that affect the market share in a single year [12], the analysis of the ingredient group rather than individual products [13], and the time of generic entry rather than market share or sales growth [14]. In addition, in Korea, there have mainly been studies on the effects of the regulation such as permission, listing and price, post-drug price adjustment, the generic drug use activation system [1-6,15-17], and generic drug entry [18-23]. In overseas countries, studies were conducted on the sales pattern of original drugs after patent expiration [24-29] and an impact assessment of the market entry of generic drugs [7, 8, 30-34].

In particular, studies that have analyzed sales patterns according to the continuous period of original drugs after patent expiration with empirical sales data after the drug price system [35] and patent-approval linkage system [36] were implemented in 2012 are not enough in Korea.

Unlike previous studies, this study analyzes how sales patterns, including the market share and growth rate of original drugs from the first to the fifth year since the first generic drug was launched, differ from those of other countries: What about the sales trend of the original drug before and after the launch of generic drugs? Whether the volume growth rate will continue while the market share is decreasing? Do they have different patterns depending on attributes such as products, generic competition, and market attractiveness?

Data collecting

To analyze the sales patterns of an original drug whose patent expired after the patent-approval linkage system and new drug price system was implemented in 2012, especially the sales trend until the fifth year, drug list and data were extracted for original drugs whose patents expired from 2012 to 2018 in the K-Orange Book of the Korea Ministry of Food and Drug Safety (MFDS) [37]. Individual drugs were classified into 256 products by grouping based on product name, patent registration holder, active ingredient, sales company, and administration route. We excluded 11 products without IQVIA sales data [38] for the entire research period. The drugs were classified into 130 groups without generic drugs and 115 groups with one or more generic drugs to compare the attributes of product, generic competition, and market attractiveness.

Afterwards, we extracted drugs whose data on sales value and volume and related market’s sales value from one year before to five years after the launch of the first generic drug could be observed in IQVIA national sales audit data (combined) [38]. Furthermore, we analyzed market share and sales growth rate over time, focusing on differences in three attributes of 48 original drugs whose patents expired for the first time in 2012–2018 among the same molecules.

Definition of an original drug

An original drug, also called a brand name drug, is a drug that has been approved as a new drug, has its price listed, and has exclusive market rights. If a patent expires, a generic drug with the same dosage, content, and formulation can be launched [39-40]. Therefore, after a patent expires, generic drugs with the same safety and efficacy as the original drug are released into the market and compete [41].

Although the definition of an original drug is not clear in Korea, in this study, the definition of an original drug is applied under the assumption that it is a drug that is registered through New Drug Application (NDA) or non-NDA and has a unique patent and thus exclusive rights. A generic drug is assumed to have the same ingredients, content, and route of administration as the original drug, launched by a company different from the original manufacturer, and does not hold a patent.

Variables

Market share and Growth rate

In this study, the variables used to check the sales pattern are the market share of the original drug based on the sales value in the same molecule market up to the quarter (Q20) corresponding to the fifth year after the launch of the first generic drug to explore the competition with generic drugs. The quarterly sales growth rate of the original drug until the fifth-year quarter (Q20) after the first generic drug was launched compared with the sales in the corresponding quarter (Q−4), 1 year before the first generic drug was launched, to observe the sales trend over time. The sales value and volume of off-patent original drugs and the sales value of the same molecule market were collected based on IQVIA’s National Sales Audit data (combined) in 2009–2023, which provides sales data for pharmaceuticals. To avoid the impact of price changes, only product volume growth rate was measured in the analysis by attributes, and standard unit data were used for this.

The three attributes

Product

The European Pharmaceutical Market Research Association (EphMRA) Anatomical Therapeutic Chemical (ATC) classification [42] is a standard created by the EphMRA. It comprises 4 levels from Levels 1 to 4, and there are 16 types in Level 1 (from A to V). In this study, ATC Levels 1 and 4 were applied using the EphMRA classification used by IQVIA.

Subsequently, the formulation information of each original drug was collected from the Korea MFDS’s integrated drug information system [37], and the New Formulation Code (NFC) [43], which is the administration route classification standard of EphMRA and IQVIA, was used to determine oral drugs (tablet, capsule, granule, and powder), injections (vial, ampule, syringe, prefilled syringe, and pen), and topicals (cream, ointment, patch, and spray).

Generic competition

Variables corresponding to the attributes of generic competition in the market are mainly related to the approval date, launch date, number of generic drugs and the approval date, and patent expiry date of original drugs; thus, relevant data referred to the product information search of the Korea MFDS’s integrated information system [37] and the Health Insurance Review and Assessment Service (HIRA) [44].

The period during which the original drug was sold alone was calculated as the period in months between the approval of the original drug and the first generic drug in the group with generic drugs. In group without generic drugs, the period in months between the approval and patent expiry of the original drug was applied. The period between the patent expiry date of the original drug and the approval and launch date of the generic drug was also measured in months.

The number of generic drugs was calculated by examining the number of generic drugs with the same active ingredient, content, and route of administration listed on the HIRA drug benefit list until five years after the first generic drug was released into the market.

Market attractiveness

Market attractiveness was assumed based on the larger the sales of the drug, and the larger the market size, the higher the market attractiveness. First, the sales of the drug are the annual sales value of the original drug based on IQVIA data. Second, the market size is defined as the annual sales of the market, including research drugs with the same pharmacological mechanism but different individual chemical ingredient names corresponding to Level 4 in the ATC classification from IQVIA data. When collecting data on the sales amount of the original drug and the market size, for the group without generic drugs, the sales in the year before patent expiry were applied, and for the group with generic drugs, the sales in the year before the first generic drug was launched were applied.

Measurement and statistical method

Original drugs were divided into groups with or without generic drugs. The composition ratio, mean, median, and standard deviation were calculated to observe differences by attributes.

The overall market share and growth rate for 48 original drugs over time were measured for five years after launching the first generic drug. Additionally, the significance of the difference for the linear regression line of the market share and volume growth rate from Q−4 to Q20 was tested for each category of individual independent variables.

Attributes of off-patent original drugs

The composition ratio of ATC classification in the group without generic drugs and the group with generic drugs is presented in Table 1. In the analysis of the administration route, the composition ratio of oral drugs is the highest in the group with generic drugs at 71%; the composition ratio of injections in the group with generic drugs is 17%, which is numerically lower than the 43% in the group without generic drugs; and the composition ratio of topicals is the same in both groups.

In the analysis of the generic competition, the average time from the approval of the original drug to patent expiry in the group without generic drugs is 119.9 months. In the group with generic drugs, the average time between the approval of the original drug and the first generic drug is 103.7 months. Based on the time of patent expiry, on average, the first generic drug is approved 14.6 months before and the launch takes place 2.4 months later, with an average of 24.7 generic drugs launched per original drug until the fifth year.

In the market attractiveness analysis, the average sales of original drugs in the group without generic drugs is KRW 2.9 billion, and that of the group with generic drugs is KRW 22.6 billion, which is about 7.8 times larger. On average, the pharmaceutical market size (ATC Level 4) of the group without generic drugs is KRW 60.8 billion, and that of the group with generic drugs is KRW 116.5 billion, which is about 1.9 times larger.

Table 1. Analysis of the attributes of off-patent original drugs

	Without generic drug		With generic drug
Product attributes	N = 130	%	N = 107*	%
ATC code
A. Alimentary tract and metabolism	13	10.0	8	7.5
B. Blood and blood forming organs	11	8.5	1	0.9
C. Cardiovascular system	9	6.9	13	12.1
D. Dermatologicals	4	3.1	4	3.7
G. Genito urinary system and sex hormones	11	8.5	9	8.4
H. Systemic hormonal preparations (excluding sex hormones)	6	4.6	2	1.9
J. General anti-infectives systemic	30	23.1	12	11.2
K. Hospital solutions	1	0.8	0	0.0
L. Antineoplastic and immunomodulating agents	7	5.4	19	17.8
M. Musculo-skeletal system	6	4.6	8	7.5
N. Nervous system	15	11.5	17	15.9
P. Parasitology	1	0.8	0	0.0
R. Respiratory system	6	4.6	5	4.7
S. Sensory organs	5	3.8	7	6.5
T. Diagnostic agents	3	2.3	0	0.0
V. Various	2	1.5	2	1.9
Rout of Administration by formulation
Oral	58	44.6	76	71.0
Injection	56	43.1	18	16.8
Topical	16	12.3	13	12.1
Generic competition
Mean (Median/S.D.), month	Time from original drug approval to patent expiry (N = 130)		Time from original drug approval to first generic drug approval (N = 107*)
	119.9 (118.0/62.2)		103.7 (91.0/55.7)
Mean (Median/S.D.), month			Time from patent expiry to first generic drug approval (N = 107*)
			−14.6 (−6.0/56.5)
Mean (Median/S.D.), month			Time from patent expiry to first generic drug launch (N = 85†)
			2.4 (0.0/40.4)
Mean (Median/S.D.)			Number of generic drugs launched until the fifth year after the launch of the first generic drug (N = 70‡)
			24.7 (12.0/30.0)
Market attractiveness	One year before patent expiry, value (N = 130)		One year before the first generic drug launch, value (N = 85†)
Mean (Median/S.D.), Local currency, billion KRW	Original drug’s sales		Original drug’s sales
	2.9 (1.3/5.0)		22.6 (13.0/28.6)
Mean (Median/S.D.), Local currency, billion KRW	Therapeutic market size (ATC Level 4)		Therapeutic market size (ATC Level 4)
	60.8 (27.0/77.2)		116.5 (77.9/111.0)
* 107 of the 115 original drugs with generic drugs, excluding 8 drugs whose generic drugs were approved before the original drug was approved. † 85: Products whose first generic drug launched period was within the IQVIA data collecting period (2009–2023) ‡ 70: Products whose fifth year since the first generic drug was launched is within the IQVIA data collecting period (2009–2023)

Sales trends from a year before the generic drug launched to five years after

Market share and growth rate of 48 original drugs

The market share of 48 original drugs, whose patent expired for the first time in 2012–2018 decreased the most in the first year after the launch of the first generic drug, averaging 89.4% in Q4, 81.5% in Q8, 77.7% in Q12, 74.3% in Q16, and 70.6% in Q20, as depicted in Graph 1. As depicted in Graph 2, the value growth rate is maintained at an average of 98.3% in Q20 compared to sales of Q−4, and the volume growth rate continued to grow, with an average of 150.6% in Q20, even after the generic drug was launched.

As presented in Table 2, 25.0% of original drugs have a market share of over 90% in Q20. There are 31.3% of original drugs with a value growth rate of more than 100%; 52.1% of original drugs with a volume growth rate of more than 100%; and even 25.0% of products with a volume growth rate of more than 200%.

Table 2. Market share and growth rate sub analysis of 48 off-patent original drugs

Market share in Q20	Mean (Median/S.D.)		Less than 50%	More than 50% to less than 70%	More than 70% to less than 90%	More than 90%
	70.6 (75.6/23.5)	N	10	11	15	12
	70.6 (75.6/23.5)	%	20.8	22.9	31.3	25.0
Growth rate in Q20	Mean (Median/S.D.)		Less than 50%	More than 50% to less than 100%	More than 100% to less than 150%	More than 150% to less than 200%	More than 200%
Value
	98.3 (66.9/108.7)	N	18	15	9	2	4
	98.3 (66.9/108.7)	%	37.5	31.3	18.8	4.2	8.3
Volume
	150.6 (100.4/133.9)	N	6	17	9	4	12
	150.6 (100.4/133.9)	%	12.5	35.4	18.8	8.3	25.0

Analysis of difference by attribute

The market share and volume growth rate trend were observed up to five years after the first generic drug launched for 48 off-patent original drugs based on each category of product, generic competition, and market attractiveness attributes. Further, the significance of the slope of the linear regression line from Q−4 to Q20 was analyzed to observe the difference in the sales trend of each category.

In the analysis results based on the ATC code, the market share of the original drug for the J and L groups in Q20 is 91.8% and 85.2%, respectively. Conversely, the A and G groups have the lowest market share at 50.2% and 45.6%, respectively.

The market share of oral drugs and injections in Q20 is 72.6% and 58.4%, respectively. The growth rate of sales volume in Q20 is 159.4% for oral drugs and 99.2% for injections. Injections have a significantly lower growth trend (p-value = 2.93e−08) from Q−4 to Q20, as presented in Table 3.

In the analysis by the number of generic drugs, the market share in Q20 of the group with more than 40 generic drugs is 56.4%, as depicted in Graph 3. The slope is significantly lower than that of the group with 1 to less than 10 generic drugs (p-value = 0.000771). Except for the group with 20 to 30 generic drugs, it is not statistically significant in the other two groups, but the slope of market share tends to be lower compared with that of the group with 1 to less than 10 generic drugs.

As an analysis result by sales of original drugs, except for the group with KRW 15 to less than 20 billion, in groups with large sales, the slope of the market share tends to be lower. However, it is not statistically significant when compared with the group with less than KRW 5 billion.

In the analysis by the sales size of the therapeutic market (ATC Level 4), although it is not statistically significant, the decline in market share in the group exceeding KRW 100 billion is steep from the first year. Compared with the group with sales of less than KRW 50 billion, the slope of market share tends to be low in the KRW 50 to 100 billion group and the KRW 100 billion or more group.

Table 3. The trend difference analysis of market share and growth rate of 48 off-patent original drugs by attributes

	Original drug’s market share in the same molecule market (Value)			Original drug’s sales growth rate (Volume)
Product attributes	N	Estimate	Pr(>\|t\|)	Estimate	Pr(>\|t\|)
ATC code
A. Alimentary tract and metabolism	2	Reference		Reference
C. Cardiovascular system	9	0.08428	0.016650 *	0.49463	1.42e−05 ***
G. Genito urinary system and sex hormones	6	−0.04861	0.165522	0.10271	0.358008
H. Systemic hormonal preparations (excluding sex hormones)	2	0.08229	0.019362 *	0.55458	1.29e−06 ***
J. General anti-infectives systemic	4	0.22802	4.27e−10 ***	0.4976	1.27e−05 ***
L. Antineoplastic and immunomodulating agents	10	0.19988	3.30e−08 ***	0.40333	0.000367 ***
M. Musculo-skeletal system	4	0.06187	0.077928	2.1851	<2e−16 ***
N. Nervous system	9	0.10613	0.002662 **	0.42125	0.000202 ***
R. Respiratory system	1	0.12937	0.000267 ***	0.10125	0.364862
V. Various	1	0.08646	0.014074 *	0.16833	0.132546
Rout of Administration by formulation
Oral	41	Reference		Reference
Injection	7	−0.04354	0.241	−0.27301	2.93e−08 ***
Generic competition		Estimate	Pr(>\|t\|)	Estimate	Pr(>\|t\|)
Number of generic drugs launched in the fifth year after the first generic drug was launched
More than 1 to less than 10	22	Reference		Reference
More than 10 to less than 20	8	−0.02799	0.328669	−0.05644	0.56109
More than 20 to less than 30	2	0.03456	0.228196	−0.26316	0.00759 **
More than 30 to less than 40	3	−0.0246	0.390313	0.99621	<2e−16 ***
More than 40	13	−0.09858	0.000771 ***	−0.13927	0.15307
Market attractiveness		Estimate	Pr(>\|t\|)	Estimate	Pr(>\|t\|)
Original drug’s sales (One year before the first generic drug was launched, value) Local currency, billion KRW
Less than 5	8	Reference		Reference
More than 5 to less than 10	6	−4.87E−02	0.10659	−1.12894	<2e−16 ***
More than 10 to less than 15	5	−3.74E−02	0.21459	−1.05359	<2e−16 ***
More than 15 to less than 20	4	1.13E−01	0.00025 ***	−0.79099	8.18e−15 ***
More than 20	25	−1.46E−05	0.99961	−0.92019	<2e−16 ***
Therapeutic market size (ATC Level 4) (One year before the first generic drug was launched, value) Local currency, billion KRW
Less than 50	19	Reference		Reference
More than 50 to less than 100	10	−0.03223	0.3	−0.3174	1.34e−09 ***
More than 100	19	−0.05083	0.104	−0.10132	0.0287 *
48 drugs: Drugs whose patent expired for the first time in 2012–2018, and drugs for which IQVIA sales data from Y−1 to Y5 are available within 2009 to 2023 The significance of the difference for the linear regression line of the market share and growth rate from Q−4 to Q20 was tested for each category of individual independent variables. Q1 = the quarter the first generic drug was launched Significance codes: * P < 0.001 P < 0.01 * P < 0.05

Interpretation of research results

This study analyzes how sales patterns in Korea differ from those in other countries, including the market share and growth rate of original drugs, from the first to the fifth year after the first generic drug is launched.

First, it is observed that generic drugs are actively challenging oral drugs. The period between the approval of the original drug and the first generic drug in the group with generic drugs tends to be shorter than the average of 47.1 quarters (141 months) in the study conducted in Korea [22] and 12.9 years [27] and 13.6 years [28] in the study conducted in the US. This implies that generic drugs prepare to enter the market as quickly as possible to take the lead, considering the patent expiration time of the original drug.

An average of 24.7 generic drugs were approved per original drug, and there was an original drug with even 142 generic drugs launched. Compared with that of previous research, which reported an average of 20 generics launched in Germany [33] and an average of 15.2 in Korea [23], the number of generic drugs launched indicates a higher result. This is similar to the results of a study [26] that reported that the number of blockbuster drugs first exposed to generic competition in the US has increased several times since 2002. In addition, according to a report [10] that used data from HIRA, the number of drugs covered by insurance increased by 44.5% from June 2013 to June 2016 after the new drug price system was introduced in 2012, and the number of generic drugs for high-selling off-patent original drugs has increased by two to even ten times compared with that of in 2012. This trend in Korea aligns with the increasing trend in the number of generic drugs launched for this study drugs.

Moreover, the product sales and market size of the group with generic drugs are larger than those of the group without generic drugs. This finding is similar to a study about the US [26], which stated that the main reason for the absence of generic competition is economic factors (small sales of branded products in the year immediately before patent expiration). In this study, if the product sales and the market size are larger, it implies that the launch of generic drugs is active.

Second, the market share of 48 original drugs fell the most at 89% in Q4, as the price is reduced to 70% in the first year of generic drugs launched under Korea’s drug price system [35]. When three or more generic drugs are launched, the price is lowered to 53.55%—the same as that of generic drugs in the second year. The decline began to slow slightly from the third year. Research about drugs that experienced the first generic entry in 2011-2012 and 2013-2014 in the US revealed that brand sales decreased sharply after generic entry, with the average brand share in the first year being 16% [27] and 12% [28], respectively. In European countries, the market share of generic drugs ranged from 17% in Switzerland to 83% in the United Kingdom, and in the US, the usage rate of generic drugs was as high as 84% in 2013 [7]. The market share of the 48 drugs in this study differs from that of overseas countries.

A review of studies [22, 23] on Korea revealed that the market share of generic drugs is mainly reported; therefore, the market share of the original drug must be inferred from these data. Further, the market share of generic drugs would converge to an average of 53% [22] and 39.35% [23] in the long run. Based on these results, the market share of original drugs is 47% and 60.65%; thus, the market share of the 48 study drugs in Q20 is higher than theirs. Existing studies [22, 23] used function estimation results to infer long-term market share, but this study measured market share over consecutive periods using empirical data. In the previous study [23], the first- and second-year market shares of original drugs, which were measured using actual data, were 78.98% and 69.53%, respectively. Therefore, the market share of the 48 study drugs is higher than that reported by previous research.

Despite the price cut, the value growth rate was maintained, and continuous growth in volume was observed, demonstrating a different pattern from that in overseas countries, where original drugs whose patents have expired are gradually disappearing from the market. Comparisons are difficult as there are no existing studies on the growth rate of individual products, but these results indicate that Korea’s off-patent original drugs are experiencing considerable growth.

Third, we analyzed the difference between the categories for three attributes of 48 original drugs. The market share of the J and L groups was consistently high without experiencing a sharp decrease for five years. It is similar to the research results [23] which reported that the market share of generic drugs is estimated to converge to 65.30% and 9.08% in the long run for ATC codes C (cardiovascular system) and L (antitumor drugs and immunomodulators), respectively, and in case of ATC code C, the use of generic drugs is active and market competition is fierce, but in case of ATC code L the proportion of new patients using generic drugs or replacing existing original drugs with generic drugs is quite low.

The market share of injections experienced a gradual decline for up to two years but had a rapid decline in the fifth year. This is consistent with research which found that difficulties in production techniques act as an entry barrier for injections [13] and that the timing of entry of generic drugs for injections is delayed compared with oral drugs [14].

In the analysis by the number of generic drugs, the slope of the market share tends to be lower than that of groups with 1 to less than 10 generic drugs, except for 1 group. Although the purposes of the analysis are different, to some extent, this aligns with research which revealed that in the US, the market share of an original drug is inversely proportional to the number of generic drugs [30]. Additionally, research has revealed that the greater the number of generic drugs in Korea, the higher the market share of generic drugs [20]. Another research reported that the greater the number of generic drugs, the significantly lower the market share of the first listed drugs in Korea [12].

In the analysis by sales value of original drugs, compared with the group with less than KRW 5 billion (the smallest sales group), the slope of the market share tends to be lower in groups with large sales except for one group, although it is not significant. However, there is still insufficient evidence that the market share of original drugs is small in groups with large sales of original drugs before the launch of generic drugs, which is similar to research about Korea [19].

In the analysis by market size, compared with the group with sales of less than KRW 50 billion, the slope of the market share tends to be numerically low in the groups with larger market size, but it is not significant. In the two studies about Korea, it was found that the larger the market size, the more intense the market competition in the third year, but there was no statistically significant difference [13]. Additionally, the larger the market size, the more likely the production scale of generic drugs will be large, but the market share was not affected by the market size [20]. In Korea, there is still insufficient evidence that when the market size before the launch of a generic drug is large, the market share of the original drug will be small due to active competition from generic drugs.

Background on sales patterns of off-patent original drugs in Korea

The main reasons why the sales pattern of off-patent original drugs in Korea differs from that of other countries are the drug price system [2-5] and policies [1, 6, 15-17], such as the generic drug prescription activation system, where it is currently not mandatory to prescribe drugs by their generic name in Korea.

First, according to the drug price system that has been implemented in Korea since 2012, the same price is given to drugs with the same ingredient in principle, and after one year, the price of the original drug become 53.55% of the price before the launch of the generic drug and is the same as that of the generic drugs [35]. However, the prices of generic drugs are set lower than those of original drugs in European countries, and, generally, generic drugs adopt a cost advantage strategy [33]. However, in Korea, there are cases where the price of the original drug is even lower [19], the cost advantage strategy is rather implemented by the original drug as it has been on the market for many years and can guarantee quality.

A study analyzing the impact of the new drug price policy introduced in Korea in 2012 found that the system was more favorable to original drugs than generic drugs [16]. It reported that although they successfully responded to Korea’s ever-increasing drug costs, the impact was temporary and the policy effect was inefficient and unsustainable due to a lack of demand-side measures [17].

In addition, many countries encourage the use of generic drugs to achieve cost savings by using cheaper generic drugs compared with original drugs [7]. However, the annual savings from using generic drugs in Korea are very low because the price difference between original and generic drugs is small; the price difference among generic drugs is large; and high-priced generic drugs are preferred in the market [19]. Korea also has a policy to encourage alternative preparations, but a report indicates that the replacement rate for low-cost drugs is only 0.2% [1].

In Korea, both off-patent original drugs and generic drugs are growing simultaneously under the current system, so it cannot be said that the prescription of generic drugs is being encouraged. Therefore, the sales pattern of original drugs differs and continues to grow even after patent expiration, depending on how they are promoted to doctors who can prescribe them.

Pharmaceutical companies that sell original drugs sometimes adopt differentiation strategies, including ways to improve efficacy, safety, and stability or by developing new substances, new formulations, combination drugs, and new indications [9,45-46]. In particular, multinational pharmaceutical companies in Korea engage in patent litigation as a defense strategy [9,45-49], and they actively conduct clinical trials even for off-patent drugs to develop promotional messages.

Limitations of this study and future research

The limitation of this study is that the individual drug price changes of original drugs, the results of patent disputes, and the promotion activities of original drugs during the research period were not analyzed as influential factors on sales patterns. Future research should consider the following: First, competition should be analyzed with original drugs containing different ingredients in the ATC Level 4 market after patent expiration. Second, analysis should be conducted according to the product strategy type and ratio of promotional activity costs. Third, sales patterns should be analyzed according to the share of the sales of off-patent original drugs in a company.

This study analyzes how the sales patterns of original drugs from the first to the fifth year since the first generic drug launch in Korea differ from those in other countries. This includes the sales trend of an original drug before and after the launch of generic drugs and the sales patterns by the attributes of products, generic competition, and market attractiveness.

When classifying the original drug into groups with or without generic drugs, there is a huge difference in the sales value of the original drug before the patent expiry or before the launch of the first generic drug. Although the 48 original drugs in this study cannot represent all off-patent original drugs in Korea from 2012 to 2018, they reveal the sales pattern of original drugs immediately after the launch of a generic drug for the first time. Additionally, in this study, the sales of original drugs after patent expiration in Korea continue to grow in volume, which is different from that of other countries, and the market share is higher than that reported by the research about Korea and other countries.

Moreover, different aspects are observed depending on the product, generic competition, and market attractiveness, which can be partly inferred from the results of previous studies.

The results of this study contribute to existing studies in the following two aspects. First, it evaluated not only the sales value trend of original drugs after patent expiration but also the sales volume trends. Second, it observed not only the changes in market share due to market erosion caused by competition with generic drugs but also the changes in the growth scale of the original drugs.

Additionally, these findings can serve as an empirical reference when establishing strategies for products nearing patent expiration.

Funding statement

No funding

Conflict of Interest statement

No conflict of interest

Author Contributions

Minyoung Bae and Sang-Won Lee devised the research project and the main conceptual ideas and outlined the proof. Minyoung Bae contributed to the technical details and performed the analysis, drafted the manuscript, designed the figures, and acquired the data. Sung Ryul Shim contributed to the management for the statistical analysis. Dong-Wook Yang contributed to the interpretation of research results logically compared with those reported previously, and Kyung-Bok Son checked the structure of the whole analysis design and revised it critically. All authors reviewed and approved the final version of the manuscript.

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No competing interests reported.

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A five-year analysis of market share and sales growth for original drugs after patent expiration in Korea

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