Is the VPAS Scheme doing more harm than good? Part Two…….

Feb 7, 2023 | Generics, UK Brands

VPAS continues to be one of the top priorities for the UK Pharma Industry. A week or so ago, we undertook some analysis on Originator Brands, assessing profitability and UK market attractiveness. If the rebate is unsustainable, and results in loss making products for manufacturers, we could see withdrawal from the market, driving supply challenges and increases in market pricing.

Today we have looked at 352 Branded Generics, and whilst the manufacturing costs are unknown, a sensible substitute is the minimum price for equivalent generic products.

What do the numbers tell us?
– 153 (43%) of the 352 Branded Generics analysed have an estimated profitability of LESS THAN 26.5%
– A further 20 (7%) have an estimated profitability 26.5% to 35% offering very small margins once the VPAS rebate is applied.
– This gives us a total of 172 (49%) of Branded Generics that potentially have insufficient profitability to survive the VPAS rebate.

At a time when market stability is vital for all stakeholders – manufacturers, distributors, dispensers and patients – we could be in for a rocky ride.

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