In 2025, the life sciences industry has been characterized by a lower investor risk tolerance for novel, pre-market drug candidates coupled with a historic patent cliff for blockbuster branded drugs. This combination has spurred investor interest in manufacturers of generics, complex generics, and reformulated 505(B)2 drugs that can capitalize on a branded drug’s loss of exclusivity while mitigating the regulatory risk that comes with a novel drug. Private Equity investors that typically invest in pharma services have shown a particularly keen interest in these types of drug manufacturers given their relative aversion to FDA risk and preference for predictable revenue streams.

Generic drugs play a vital role in the U.S. healthcare system, accounting for over 90% of all prescriptions filled—yet they represent less than 18% of total drug spending, according to the Association for Accessible Medicines. This cost-efficiency is enabled by the Hatch-Waxman Amendments of 1984, which were designed to accelerate the availability of generics and reduce healthcare costs. This whitepaper provides an overview of the U.S. generic drug market, covering key regulatory and legal frameworks, the typical lifecycle of a generic product, critical success factors for market entry, and strategic implications for investors and stakeholders across the pharmaceutical value chain. success in the next phase of the market.