Health care research company IMS Health expects generic drug sales
to grow 14% to 17% annually in the next five years, 9 percentage
points ahead of its forecast for the overall drug industry. If you're
interested in chasing that growth, the accompanying table presents
a few generic drug stocks that look interesting.
Why the rosy outlook for generics? Consultants
at Bain & Company calculate that by 2008, $78 billion in annual
revenues for prescription
drugs will be at risk of competition from generics. For example,
antidepressants like GlaxoSmithKline's (nyse: GSK - news - people
) Wellbutrin XL and Pfizer's (nyse: PFE - news - people ) Zoloft
are expected to lose patent protection this year. Other brand name
drugs up for patent expiration are Merck's (nyse: MRK - news - people
) Zocor, used to treat heart disease, and migraine medication Imitrex,
which is made by GlaxoSmithKline.
Even the feds are banking on a surge in generics.
Because of greater than expected use of generic
drugs among People, the Centers for Medicare and Medicaid
Services recently reduced its 2006 estimated cost of the new Medicare
drug benefit from $38.1 billion to $30.5 billion.
