Investors once loved generic drug producers, but a recent Federal Drug Administration move to increase competition has reduced profit margins. Yet a potentially imminent recession could prove to be beneficial, OZY reports: While economic downturns usually kill off struggling industries, generic drugs are expected to get a boost, since newly unemployed patients demand cheaper options. That’s welcome news for firms like Teva and Novartis, which laid off thousands of workers last year.
What headwinds are they facing? Since more than 50 percent of drug sales for major generic firms are outside of the U.S., punitive tariffs could play a big role, while poverty could drive many patients to forego treatment completely.