S&P: U.S. generic drug industry entering more challenging period; Alpharma, Mylan, Teva, Watson at risk

By Ronda Fears

Nashville, July 19 - New entrants into the generic drug market, such as India-based generic players and Big Pharma itself, will increase already fierce competition in the industry, Standard & Poor's credit analysts said in a report Tuesday.

After a five-year period in which the U.S. generic drug industry has benefited from a period of record number patent expirations of brand name drugs and strengthening operating performances, the industry is now entering a more challenging period, S&P analysts said in the report, "Tougher Times Ahead For U.S. Generic Drug Industry."

S&P said the next several years will hold less generic drug exclusivity opportunities and will be marked by greater competition. This period will also see generic drug companies retrench and re-evaluate their specialty pharmaceutical ambitions.

"Given these developments, we expect pressure on the credit ratings of generic drug companies in the near term," said S&P credit analyst Arthur Wong.

S&P currently rates four U.S. generic drug companies: Alpharma Inc. (B/negative), Mylan Laboratories Inc. (BBB-/stable), Teva Pharmaceutical Industries Ltd. (BBB/stable) and Watson Pharmaceuticals Inc. (BBB-/negative).

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