As home to much of Europe’s innovative medicine output and as one of its wealthiest nations per capita, Switzerland has not traditionally been a generic-friendly market. Generics prices are relatively high in a European context and only accounted for 14 percent of total drug sales in 2022. Nevertheless, in recent years the Swiss health authorities have increasingly recognised the value of generics in controlling expenses and have launched several strategic initiatives aimed at boosting their market share.
Switzerland does though remain a complex and challenging market for generics players. “One of Switzerland’s distinct challenges is the regulatory requirement that generics must mirror the exact specifications of the original products, including dosage forms, packaging sizes, and strengths,” explains Hans Peter Borger, general manager of Spirig HealthCare, a locally focused player, now part of STADA group and active in the generics, consumer healthcare, and specialty segments. “In a market as small as Switzerland, where demand for generics can be significantly lower than for original products, this requirement often leads to inefficiencies and higher costs. For instance, if an originator sells 100 units of a product, we are obligated to match their packaging, even if our sales volume is a fraction of that, which isn’t always economically viable.”
Moreover, ever-expanding government cost containment measures are putting the squeeze on these companies leading them to move out of the country, potentially to the detriment of Switzerland’s health security. “While this strategy has been effective in controlling costs, it has led to challenges, particularly in drug supply,” says Lucas Schalch, managing director of industry association Intergenerika. “The pressure to lower prices has compelled many manufacturers to relocate production to countries like India and China to sustain profitability. This shift has exposed vulnerabilities in the supply chain, which became evident during the pandemic when export restrictions disrupted access to critical drugs.”
Aiming to boost generic penetration, the Swiss government has rolled out a reform which adjusts distribution margins to eliminate financial disincentives for prescribing lower-cost drugs. The Federal Office of Public Health predicts this could lead to savings of CHF 250 million (EUR 268 million). As Schalch points out, this is “a crucial step given that self-dispensing physicians—who account for about a third of Swiss healthcare professionals—previously benefited from prescribing more expensive medications. Additionally, the policy now allows pharmacists to switch from original drugs to generics and biosimilars more freely.”
Borger agrees. “Measures like equalising the markup for generics and original products and requiring higher copayments from those who choose brand-name drugs when a generic is available, mark a significant shift,” he notes. “Previously, the markup was calculated as a percentage of the product’s price, but with the new uniform markup, we anticipate positive developments in the generics market.”
Off-patent drugs are also getting a boost in the hospital sector. “In hospitals, we have observed a significant shift from originators to biosimilars, especially within the last year,” explains Michele Genini, CEO and general manager at iQone Healthcare, which now has seven biosimilars on the market in Switzerland. “Traditionally, Swiss hospitals maintained both originators and biosimilars, with a preference for originators. However, this trend has started to reverse, driven by strong hospital purchasing groups and mounting economic pressures that compel cost-cutting measures.”
Nevertheless, these reforms are not a panacea for Switzerland’s healthcare spending or access to medicine issues. For example, Schalch notes that they may not lead to the expected cost savings. “While some savings will be realised, there is a significant downside,” he states. “Low-cost drugs with an ex-factory price below CHF 15 (EUR 16), which make up 40-50 percent of generics, have seen a dramatic increase in public prices. This is particularly concerning because it adds to the already substantial price pressure on generics. Alarmingly, it seems that the Swiss health authorities did not fully assess the impact of this reform.”
“Our analysis shows that the price increase in the low-cost drug segment could lead to an additional CHF 200 million (EUR 215 million) in expenses, far exceeding the modest savings anticipated from the reform. The authorities had projected savings of around CHF 60 million (EUR 64 million) from this new model, but our calculations indicate that the actual savings are likely closer to CHF 40 million (EUR 43 million) at best.”
For Martine Ruggli, president of pharmacists’ association PharmaSuisse, it is the generics sector itself that needs to rethink its pricing strategies. “Swiss generics are still more expensive than elsewhere in Europe, despite the fact that most are not produced domestically. This has led to ongoing debates, especially in the context of the current global medicine shortages, about the sustainability and fairness of the pricing model.” Schalch pushes back, stating that “Despite the perception that drugs produced abroad should be cheaper, the costs associated with local distribution, quality control, and compliance with regulations mean that prices here cannot be aligned with those of other countries.”
Whether Switzerland can maintain its reputation as a global leader in healthcare while ensuring that its system remains accessible and sustainable for future generations is still unclear. Yet if the country can strike a balance between lowering drug price costs and creating a welcoming environment for investment, including from the generic medicines industry, hope will not be lost.
