Profit from America's pill poppers

Americans have taken to cheap drugs in a big way, with 81% of them preferring generic medicines to brand-name equivalents. All good news for the industry's middlemen, says Eoin Gleeson. Here, he looks at the market and picks the best bet in the sector.

Nobody wants to take a chance with their health. So the idea of taking generic rather than branded drugs doesn't appeal much to those who fear they'll be exposed to cheap, knock-off medication. Even some doctors remain sceptical, particularly in France and Spain, which have the lowest penetration of generic drugs in the world.

There are few such fears in America. Americans have taken to cheap drugs in a big way. Last week, a poll conducted by Harris Interactive found that 81% of American consumers prefer generic prescriptions to the brand-name equivalents an increase of 13% since October 2006. And the way they shop for drugs is changing too. Instead of popping to the local pharmacy or drug chain, they are picking up cheaper drugs at Wal-Mart, or ordering them through the post.

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Eoin came to MoneyWeek in 2006 having graduated with a MLitt in economics from Trinity College, Dublin. He taught economic history for two years at Trinity, while researching a thesis on how herd behaviour destroys financial markets.