Why is Generic Medicine Cheaper?

Generic medicine is defined as a substitute or a bioequivalent of a branded medicine with respect to pharmacokinetic and pharmacodynamic properties. Why is it sold cheaper than the brand name medicines? Let's find it out.

The primary reason for cheaper price of generic medicine is that their manufacturing companies don’t have much overhead cost. Therefore they can offer these medicines at cheaper price and still maintain their profitability.

Let's look at why generic medicine manufacturers are able to sell their product cheaper than the brand name companies. 

1. Brand name companies invest lot of money in research and development of any new medicine.
2. Money is also spent in getting the medicine approved by the government as safe and effective.
3. Once approved by the government, lot of money is spent on marketing the product through all kinds of media (print, television, internet etc).

A generic medicine manufacturer has enough information from the studies done by the brand manufacturing company, so they don’t have to spend money on research work. By claiming their drug as a bioequivalent, they don’t have to spend money to put their medicine on clinical trials. Also, due to extensive marketing of the innovator brand, they just claim their product to be equivalent to it and benefit from the market value of the brand name medicine.

Since generic medicine manufacturers don’t incur much cost in the whole process of manufacturing, they are able to sell it off at much lower cost than brand name medicines.

Now the question arises, if the brand name companies invest so much money in creating these medicines, why don’t they protect their rights or why don’t they make it patent. How can generic medicines be produced?

Generic medicines can be legally produced in the following conditions

1. If the patent of the brand manufacturer has expired. 
2. For drugs which never held patents. 
3. If the generic medicine manufacturing company certifies the brand companies patents are invalid or unenforceable or will not be breached.
4. In countries where patents are not enforceable.