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The proposed Generic Drug User Fee Act (GDUFA) still needs Congressional approval, but both the generic drug industry and the Food and Drug Administration appear close to a deal.

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Typically, only branded-drug makers had to pay to accelerate approval processes at the FDA. Passage of the GDUFA will change that and require generic drug manufacturers to pay as well. Since getting generics to market is already time sensitive, drug makers will likely have little choice but to pay for quicker timetables.

Initially, it seems that fees will have a negative impact and only eat at margins. While this is true, generics should be able to pass along some of the costs to consumers because all drug makers in the market will be subject to the same fees. The fees may actually have a positive influence on competition. Smaller companies may now be hesitant to compete over a drug with multiple companies already producing a generic version of it.

Moving forward, investors in established, leading generic drug manufacturers like Teva Pharmaceutical Industries Ltd. and Forest Laboratories Inc. will want to track the status of the GDUFA. www.SignalWatcher.com gives traders a unique insight about Teva Pharmaceutical Industries Limited and Forest Laboratories Inc. by registering now at

http://signalwatcher.com/TEVA/September072011.php or

http://signalwatcher.com/FRX/September072011.php.

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