Generic drugmakers could thrive in a recession, Moody's says

In the event of an economic downturn, the generic pharmaceutical industry would likely thrive because demand for cheaper alternatives would remain strong or even grow, according to a new report by Moody's Investors Service.

While a recession would moderately slow the overall pharmaceutical spending growth, cost-conscious payers, physicians and patients would likely opt for the use of generic drugs over brand-name drugs more so than in a booming economy.

"When patients lose their jobs or medical coverage, doctors and patients may be more likely to use generic alternatives to more expensive branded drugs," said Morris Borenstein, Moody's vice president and senior analyst. "Additionally, makers of generic drugs have low exposure to patients who pay for pharmaceutical drugs without medical insurance."

Brand-name drug manufacturers wouldn't need to worry much about an economic slowdown, according to Moody's. The branded drug industry remains relatively protected from an economic recession due to the "medical necessity of many drugs, as well as pharma company programs to provide financial assistance for deductibles and coinsurance," according to the report.

The larger risk to pharma companies is the potential of regulatory or legislative actions related to drug pricing, according to the report.

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