THERE are not many parts of the private healthcare sector where thriving competition holds prices down and consumers benefit. But the generic drug market is just one such place, as pharmaceutical manufacturer Adcock Ingram yesterday revealed. CEO Jonathan Louw told investors the pharmaceutical division had been forced to slash the price of its generic anticholesterol drug, simvastatin, after rivals flooded the market with clones. Adcock's experience is a classic example of the risks and benefits of the generic field. Simvastatin was developed by MSD and sold under the brand name Zocor. When its patent expired in 2003, Adcock was first out of the starting blocks in SA with a generic version, which it sold at about a 30% discount: a 20mg prescription cost just under R100. By selling its version for less than the innovator, Adcock Ingram was able to capitalise on government regulations favouring generics over innovator medicines when they were cheaper and to grow its market share. But since then, a host of copycat products have hit the market (almost a dozen generics now), and even the innovator has dropped its price. Adcock Ingram has repeatedly had to cut prices to maintain volumes. By May last year, Adcock's competitors had cut their price to R60. In October, the price fell to R35. A month later, Adcock cut a deal with its suppliers to enable it to drop its price to just under R30 and regain market share. Now that's a tale to make both regulators and consumers smile.

Nick Wilson: The Bottom Line: Business Day, 26 May 2010