Are there new pathways to profitability beyond traditional generic drug models?

In part 1, we explored 3 foundational trends reshaping the generic pharmaceutical industry. These shifts have fundamentally changed the competitive landscape. 

But understanding market dynamics is only part of the equation. In Part 2, we examine 2 operational and commercial trends that provide manufacturers with new pathways to sustainable profitability: contract manufacturing as a core competitive strategy and direct-to-patient distribution models that restore pricing power. 

1.    Contract manufacturing becomes a core competitive strategy for generic drug manufacturers

Contract manufacturing has evolved from a cost-focused outsourcing strategy into a core element of competitive strategy for generic pharmaceutical manufacturers. As portfolios expand into complex generics and biosimilars, contract manufacturing organizations (CMOs) enable scaling of specialized capabilities while preserving capital and reducing risk.

CMOs offer strategic advantages in a margin-constrained landscape. Partnering with them can: Riding The CMO/CDMO Collaboration Wave - Vistex, Inc

• Shorten time to market
• Reduce exposure to underutilized assets
• Mitigate tariff and supply chain impacts by separating API sourcing

The tradeoff is increased commercial complexity. Pricing structures, transfer pricing, and revenue recognition must be managed across multiple partners and agreements. When you use a single-source-of-truth enterprise solution platform like Vistex, you have full transparency and control over complex pricing and contracting relationships, ensuring flexibility translates into margin optimization rather than leakage. 

For manufacturers globally, the opportunity also runs in reverse. Underutilized facilities can be repositioned as contract manufacturing hubs, turning fixed costs into revenue-generating capacity and reinforcing scale as a competitive advantage. 

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2.    How direct-to-patient models redefine pricing power in generic pharmaceuticals

Europe has more fully established direct-to-patient (DTP) distribution, where service-layer models have matured within regulatory frameworks. Success in Europe stems from building structured systems that work within existing pharmacy regulations rather than bypassing them. Licensed pharmacies, operating under clear regulatory oversight, manage home delivery and patient engagement while maintaining compliance with national medicine distribution laws. This approach has created reliable pathways for patients to access medications directly, especially for chronic conditions and specialty therapies, without disrupting the foundational pharmacy-based distribution model. 

This model is gaining traction in the U.S. as manufacturers seek greater control in a market dominated by downstream intermediaries and political uncertainty. Moving beyond wholesalers, pharmacies, PBMs, and insurers allows you to engage patients more directly while improving pricing control and protecting margins. However, DTP introduces new commercial complexity. Managing patient affordability programs, copay assistance, rebates, and chargebacks across direct channels requires visibility into how each transaction affects net revenue. 

This model is especially attractive for select generics and complex therapies where traditional channel economics dilute profitability. However, direct distribution replaces one set of intermediaries with more dynamic pricing, affordability programs, and revenue processes that must be closely managed. 

This is where Vistex enterprise software becomes essential. Our platform provides the transparency and control needed to manage the full spectrum of DTP pricing dynamics, including incentives and Gross-to-Net impacts. This ensures that direct distribution strengthens margins rather than introducing new leakage points.

Looking ahead

What stands out most, beyond how much the generic pharmaceutical industry has changed, is how clearly the paths forward are emerging. The pressure on traditional models is real, yet the opportunities created by complexity are equally tangible. 

Complex generics and biosimilars offer differentiation and margin resilience, while CMOs and DTP models are reshaping how you manage risk, scale capabilities, and regain pricing control. Sustainable profitability in generic pharmaceuticals now comes from the ability to manage complexity with precision across products, partners, pricing, and revenue management. 

The future of generic pharmaceuticals will favor companies that recognize complexity not as an obstacle, but as a strategic advantage.  Those who can navigate this landscape with the right operational capabilities, commercial strategies, and enterprise systems will be positioned to capture value where others see only margin erosion. The question is no longer whether the generic pharma business remains viable. It’s whether you’re positioned to lead in its next chapter.

Strategic contract manufacturing relationships require strategic management. Access our collection of CMO/CDMO resources.