Innovation on Expired Patent Medicines in the Brazilian Pharmaceutical Industry

A representative percentage of the medicines manufactured in Brazil is based on expired patent drugs. As the generic drugs market is becoming more competitive and less profitable, incremental innovation is a strategic alternative to survive long term. Our purpose was to identify factors that influence the investment in innovation on patent-expired medicines (PEM) by pharmaceutical laboratories installed in Brazil. We also aimed to propose a theoretical model that would be helpful to understand the innovation process on PEM, main components, influencing factors and their relationships. Data from the market were collected by interviewing experts and executives from the pharmaceutical companies installed in Brazil. The empirical data were analyzed in respect to the proposed theoretical model. We found out that in order to invest in incremental innovations on expired patent drugs it is necessary to develop an appropriate business model to market the new product, which is quite different from the former structure used to generic drugs. We also identified that one of the main difficulties is related to the required professional capabilities for producing the innovations. A case of success is presented as an example of investment in incremental innovation on PEM in Brazil.