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By Karen Andersen, CFA | 07-30-2009 05:59 AM

Generic Biologics Face Uphill Battle

Morningstar generic-pharmaceuticals analyst Brian Laegeler discusses the outlook for generic biologics in the U.S. given a strong branded-drug lobby and complex manufacturing processes.

Karen Andersen: I'm Karen Anderson, senior biotechnology analyst at Morningstar. We've heard quite a bit about generic competition for large pharmaceutical companies, but what about biotech companies, are they vulnerable to the same kind of competition? And do generic companies actually have an opportunity here?

With me today to discuss the topic is generic pharmaceuticals analyst Brian Laegeler. Thanks for joining me, Brian.

Brian Laegeler: Thanks for having me.

Andersen: What is going on in Washington right now? Why hasn't there been any legislation passed for generic versions of biologics?

Laegeler: I think certainly generic drug firms are facing an uphill battle in Washington, and I think the key theme there is probably we can't underestimate the power of the branded drug lobby. On one side of the aisle you've got the branded drug lobby and almost embarrassingly the number of lobbyists outnumber Congress on Capital Hill.

On the other side you have the generic drug lobby and their team of constituents, which is virtually everyone else who is for cheap medicine. You have employers, consumers, and government agencies like the FDC and the White House and their Office of Management and Budget. And despite those outnumbering them in terms of number of constituents and just people, the dollars that are involved here are so much less on the generic side of the equation. And that changes the influence in Washington.

And I think it's evidenced by earlier this month when they were able to get an amendment to broader health-care legislation through a senate committee, a vote of 16-7 to get 12 years of market exclusivity for novel biologics. Disagreements on this issue have been the major sticking point for why legislation is now almost four years behind Europe in terms of generic biologics.

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