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2 Jul 2016

What is the meaning of Patent cliff? How to do sales forecast after patent expiry?

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The term patent cliff refers expiration of the patent protection and following that decrease in sales of the research brand, due to market introduction of the generic drugs.

Case Study: Lipitor Sales Decrease pattern with patent cliff

Year TOTAL SALES
2002 8
2003 9.2
2004 10.9
2005 11.2
2006 12.9
2007 12.7
2008 12.4
2009 11.5
2010 10.7
2011 9.6
2012 4
2013 3.09
2014 2.76

 

Lipitor Decreased Sales due to patent cliff

 

Is there any approximation how much sales will decrease after patent cliff?

Decreasing sales after patent cliff –
Sales = SP/YR
SP= Max. Peak Sales value before patent expiration
YR=  No. of years from the expiry of patent
So, if peak sale is 12.9 billion.
At the end of 4th year of patent expiry it will be 12.9/4 = 3.2 billion
In above example you can find peak sale is 12.9 billion and year of patent expiry is 2011. by 2014 (2011,12,13,14 – total four years) sales should be around 3.2 Billion.
In actual sales was 2.76 Bn.
But there are various factors which affect the sales post patent expiration.
Few of them are –
1. Entry of generics.
2. Strategy or brand plan adopted by research molecule after patent expiry.
3. Evergreening strategy
4. Branded Generics tactical planning etc.

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