Patent cliff can turn Indian pharma stocks into investor’s goldmine
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Over the past few months, the market witnessed a sharp rally in pharma sector stocks, one of the key drivers behind this surge is ‘Patent Cliff.’ A Patent cliff occurs when a significant number of drug patents expire and other companies are allowed to manufacture similar drug. Typically, the patent of a drug lasts for 20 years, during which the innovator company enjoys a monopoly in the market and hence commands the premium on that drug's pricing. This period of exclusivity allows companies to maximize their revenues, profits, and overall growth. Upon patent expiry, the other generic drug manufacturers step into the game and they are allowed to produce and sell the same drug under a different brand name. Due to the sudden influx of manufacturers, the volumes of the drug skyrocket for production ultimately leading to lower cost of manufacturing and lower pricing of the end medicine. The Impact on Pharmaceutical Industry This industry r...