“Patent cliff” threatens profitability of pharmaceutical industry

Big Australian pharmaceutical companies are exposed to a “patent cliff”, according to a new PriceWaterhouseCoopers report.

According to PWC research, patent expirations will strip $148 billion out of the top 500 pharmaceutical companies’ earnings over the next five years.

"There are a number of drugs that are large revenue generators which will come off patent and be subject to generic competition in the next five-year period,’’ PWC’s John Cannings told Fairfax Media.

‘‘We are not immune to that.’’

Last month IBISWorld released its  Pharmaceutical Product Manufacturing Market Research Report, predicting the industry would shrink by 2.1 per cent for 2012-13. It also cited the ending of patent protection for popular drugs in 2011-2015 would soften profitability.

PWC put the cliff down to a boom in drug manufacturing two decades ago.

‘‘It was a lot easier to discover and find new medications for various diseases,’’ he said.