Healthcare and pharma
Loss of exclusivity (LOE)
When a drug's patents and other protections end and cheaper copies can launch.
Facts checked against sources onWhat does Loss of exclusivity (LOE) mean?
Loss of exclusivity is the point when a branded medicine loses its patent protection and any regulatory exclusivity, so generic or biosimilar competitors can enter. For simple chemical (small-molecule) drugs, sales often fall steeply within a year or two as cheap generics take over; for biologics, the fall from biosimilars is usually slower. Example: a drug selling 5 billion a year might keep only about 1 billion two years after generics arrive, if copies take most of the volume at much lower prices. A wave of upcoming LOEs is called a patent cliff, and it drives much of large pharma companies' dealmaking, because they must replace the lost sales.
Where does it come up in case interview prep?
- How pharma, biotech and medtech workLesson in Pharma, biotech and medical devices
- Revenue models, cost structure, unit economics and operationsLesson in Pharma, biotech and medical devices
- Main players, trends 2024 to 2026, regulation and casesLesson in Pharma, biotech and medical devices
- How pharmacies, drug distributors and diagnostics labs workLesson in Pharmacy and diagnostics: drugstores, drug distribution, labs and imaging
Related terms
- BiosimilarA near copy of a biologic medicine, approved as having no meaningful clinical difference.
- Net present value (NPV)Today's value of all future cash flows, minus the upfront investment.
- Due diligenceCareful checking of a target before you buy it.
- SynergyExtra value created when two businesses combine.
- DRG (diagnosis-related group)A system that pays hospitals a fixed amount per admission, based on the diagnosis and treatment.
- CapitationPaying a provider a fixed amount per person per period, whatever care they use.
- Medical loss ratio (MLR)The share of health insurance premiums spent on medical care and quality improvement.
- PMPM (per member per month)A cost or revenue figure divided by the number of members and months, used by health plans.
Learn it in context
See Loss of exclusivity (LOE) at work in a lesson from Pharma, biotech and medical devices, with checks as you go.
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