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Executive Summary

Bolar's sales of generic Dyazide reached $30 mil. during the product's first four months on the market and made up over 30% of the company's 1987 sales volume, President Robert Schulman reported at a March 24 analyst meeting sponsored by the Swergold Chefitz & Sinsabaugh investment firm. "We sold approximately $30 mil. of [generic] Dyazide from Aug. 21 to the end of the year," Schulman remarked. "We shipped over 400 mil. capsules." The Bolar exec estimated Smith-Kline's annual production of Dyazide at about 4 bil. capsules. As the first to have its generic triamterene/hydrochlorothiazide approved via an ANDA, Bolar has had the market to itself for almost six months. In February, however, FDA cleared Vitarine's ANDA. The race for "exclusive" generic positions is increasingly difficult, Schulman observed, in part because of a trend at the FDA toward grouping ANDAs. Some generic firms believe FDA slows down the leading generic manufacturer's application while speeding up the review of competitors to assure multiple generic competition. "If we are in a group approval situation with somebody, we don't sell the item," Schulman said. "We don't dare because we can't really make the money from selling that type of item anyway when it gets down to the commodity level." The exec noted, however, the necessity of having some commodity business in order to generate sales and create exposure. "You have to have a broad enough line of some of these commodity items, but that is not really where the money is made," he commented. "It is really in trying to pick the right products." Estimating short-term growth in the generic industry at about 25% in terms of units produced, Schulman identified improved distribution as the next major industry challenge. "All the generic drug companies are very good on manufacturing, but the weakest link in the . . . generic industry I feel is distribution," he stated. "You can find an Eli Lilly or an Upjohn product at every wholesaler and every drugstore in the country. You can't with most major generic companies." Schulman explained the importance of distribution with the example of a pharmacist with 40 tablets left in a bottle and a prescription order for 50. Schulman noted that the pharmacist wants to take the next bottle from the shelf and know that it is going to look like the previous generic he dispensed. "To us, this manifests itself in having to give good services to wholesalers," he said, "always having the [products] there so the drugstore will say give me Bolar." Bolar is looking to upgrade its marketing group, either "through a joint venture with a company that is primarily in distribution" or through internal growth. The company now has eight reps selling to distribution chains. "I think the biggest part of it is to get out there with our products in every drugstore," he said. Schulman's views on marketing were echoed by Purdue University researcher Stephen Schondelmeyer, PharmD/PhD, in his assessment of the generic industry. Schondelmeyer is serving as a consultant to the Senate Finance Committee on the Medicare drug bill. "I think this is something that will have to come because if we don't . . . the therapeutic alternatives that are single source are going to be out there marketing their products and physicians will quit prescribing the product that could be used in the multisource category," Schondelmeyer said. "At some point, the generic industry is going to have to deal with the issue of promoting the broad generic chemical entities.

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