Effect of Patent Expiry on the Performance of Innovator Multinational Pharmaceutical Companies in a Low Middle Income Country

Abstract

Patent expiry or loss of exclusivity exposes innovator pharmaceutical companies to changes in the market dynamics brought about by increased production of generics by rival companies after patent expiration. This current study focused on the effect of generic products manufacturing and competitive market pressures, price changes, and changes in sales volumes and profitability of innovator multinational pharmaceutical companies after patent expiry. The methodology of this study involved a descriptive survey design and utilized both qualitative and quantitative techniques for data collection, analysis, and presentation. Primary data were collected using the key informants' in-depth interviews and survey questionnaires. The top management, including regional managers, general managers, and directors of each of the eight companies participating in this study, were interviewed to gather the qualitative data. Thirty-six respondents comprising of Product Development Managers and Business Supervising Managers responded to a survey questionnaire through purposive sampling. Findings depicted a significant effect of patent expiry on the generic production and subsequent decline in the performance of multinational innovator companies in the pharmaceutical industry. This study recommends that multinational innovator companies operating in low-income countries, such as Kenya, develop strategic policies to tap into the market by leveraging generic production through collaborative manufacturing with generic companies to share revenues.