After the originator product loses its exclusivity (LOE) and generics have been launched, the market price of the generic can fall very quickly. Those products with more generic licence holders tend to fall faster than those with fewer. However, where product prices fall very rapidly, licence holders can see the market price fall below a point at which they can make a profit and they may decide not to make any more. At this point the remaining stock in the market becomes more valuable as the amount available to supply pharmacies declines. The result of this is an increase in the price as the few boxes left in wholesaler warehouses increase in value.
After reaching a peak, the price starts to fall again as more stock is sourced from pre ordered manufacturing. However eventually the supply starts to dry up, availability declines and prices rise again as the decision by some license holders not to manufacture begins to bite.
In this way some generics can experience a series of price bounces. The pie above illustrates the number of products which experience price bounces (81%), and the number of bounces seen per product.
Note, the data comes from supplier price lists and invoices collected by Wavedata from pharmacies and dispensing doctors since Sept 2000.