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Why the cost-only playbook is breaking
Greater generic competition is associated with lower prices. A 2019 FDA analysis found that prices with six or more generic competitors were more than 95% below the brand’s price before generic entry. Purchasing power is concentrated as well. In a May 2024 submission to FTC and HHS, AAM reported that three buying groups accounted for nearly 80% of U.S. generic purchases in the retail market.
Heavy reliance on offshore API and finished-dose suppliers adds risk. FDA has identified weak incentives to manufacture less profitable drugs as a root cause of shortages. Those shortages impose costs on hospitals through substitute treatments, delays and additional staff work. A Vizient analysis published in June 2025 estimated nearly $900 million in annual U.S. hospital labor costs to manage shortages, based on a survey covering 2023.
From patent cliffs to value cliffs
A growing share of upcoming patent expiries involves biologics, specialty medicines and complex formulations: an IQVIA analysis counted 118 biologics losing U.S. patent protection during 2025–2034, a $232 billion opportunity for biosimilars. Small-molecule oral solids still offer openings, but crowded markets and fast price erosion make many of them unattractive. Inhalation therapies, long-acting injectables, ophthalmics and biosimilars require specialized capability, which limits the number of competitors and slows price decline.
Timing matters more as well. Many of the decade’s major expiries fall in cardiometabolic, immunology, respiratory and oncology products and Dr. Reddy’s is tracking several of them, including abatacept (Orencia) in immunology and daratumumab (Darzalex) in oncology. Regulatory, supply and commercial readiness on day one largely sets how much share a manufacturer wins in the first months after launch.
Value-added medicines, sometimes called “super generics,” offer a third route: abuse-deterrent formulations, drug-device combinations and modified-release versions that meet a patient or provider need. Read this way, a loss-of-exclusivity calendar maps value as well as volume. It shows where a manufacturer can combine regulatory clarity, technical capability and reliable supply.
Four pillars of a value advantage
Complex products. Depot injections, inhalers, nasal sprays, liposomal formulations, ophthalmic inserts and drug-device combinations require formulation science, device engineering and advanced analytical methods. FDA’s Pre-ANDA program for complex generic products offers product-specific guidance, development meetings and research supporting bioequivalence assessment to help applicants clarify requirements before filing. Companies that master these requirements face fewer competitors and slower price decline. Dr. Reddy’s is investing in complex biologics: in December 2025 we submitted what we believe is the first BLA for an abatacept biosimilar, which FDA accepted for review in February 2026.
Reliability as a product feature. Supply-assurance programs make dependable supply part of what health systems buy. Premier’s ProvideGx program, for example, requires sourcing diversity and visibility into finished-dose manufacturing sites and API sources. Manufacturers that report quality maturity indicators, service-level commitments and risk-mitigation plans can move the conversation from unit price to total system cost.
Pharma 4.0 as a margin engine. Continuous manufacturing, advanced process control, digital twins, predictive analytics and real-time release testing reduce variability, shorten cycle times and lower deviation rates. Plants that adopt them run with fewer disruptions, which supports both supply reliability and cost. They also give regulators and buyers measurable evidence of quality. At Dr. Reddy’s Bachupally site, deploying digital twins, advanced analytics and industrial IoT under Project OpsNext coincided with a 30% reduction in production lead time, and review-by-exception batch release has since cut turnaround time by around 20%.
Payer-aligned contracting. Coverage barriers can slow uptake of first generics. AAM’s 2025 savings report found that, across first generics launched in 2024, an average of 24% of Medicare Part D plans covered them in 2025. AAM also identifies brand-drug rebate incentives as a barrier to generic adoption. Manufacturers can respond with real-world savings models, data on patient out-of-pocket costs, adherence and substitution support, and channel-specific plans for hospital-administered products. Some payers will consider arrangements that tie reimbursement to reliability or outcomes.
Policy and resilience
FDA is encouraging investment in manufacturing quality and technology. Its Quality Management Maturity program aims to strengthen quality practices and reduce risks to product availability. Its Advanced Manufacturing Technologies Designation Program supports adoption of technologies that can improve manufacturing reliability, product quality and drug supply. These programs give manufacturers concrete areas to consider when planning resilience investments.
Biosimilars
Biosimilars saved the U.S. healthcare system $25.4 billion in 2025 and $81.6 billion since their first U.S. market entry in 2015, according to the Biosimilars Council’s summary of the 2026 AAM report. Adoption varies by molecule and channel. Non-340B clinics have shown higher biosimilar uptake than 340B clinics, according to IQVIA, while in pharmacy channels rebate-driven formulary design has held back adoption: the Biosimilars Council reported that adalimumab biosimilars captured only 2% market share in their first year even though some list prices were more than 80% below Humira’s. IQVIA’s February 2025 analysis projected that 118 biologics would lose U.S. patent protection during 2025–2034. As of June 2024, only 12 of those molecules had biosimilars in development. Success depends on channel-specific launches, payer and provider education, inventory assurance and clear communication on clinical equivalence. Dr. Reddy’s biologics portfolio includes seven biosimilar products and one novel biologic marketed across multiple countries. One lesson as we prepare for U.S. launch: medical-benefit and pharmacy-benefit channels price and reimburse differently, so each product needs its own channel strategy.
A roadmap for the next 12 to 18 months
- Rank portfolio opportunities on defensibility, regulatory clarity, supply resilience and payer receptivity alongside market size.
- Build a dedicated complex-generics team that engages FDA early.
- Publish reliability data: product fact sheets, dual-sourcing disclosures and service metrics such as on-time-in-full delivery.
- Use process analytical technology, digital twins and predictive analytics to clear manufacturing bottlenecks.
- Prepare day-one coverage packages and payer-ready savings data for first generics.
- Where the fit is strong, pilot value-based agreements tied to reliability, site-of-care efficiency or substitution rates.
Rahul Mittal
Price as a tactic, value as a strategy
Price will remain a lever in generics. The manufacturers best placed to last pair it with complex products, dependable supply, digital manufacturing and payer-ready evidence. Dr. Reddy’s has committed to reaching 1.5 billion patients by 2030, and we intend to do it by pairing first-to-file biosimilars such as abatacept with the reliability and digital-manufacturing capabilities described above.
Rahul Mittal is head of strategy and innovation, Dr. Reddy’s Laboratories where he oversees strategic growth, portfolio expansion and business transformation.
Filed Under: Biologics, Commercialization
