A meta-analysis review of clinical studies published in peer-reviewed journals was featured today in The Journal of the American Medical Association (JAMA) and concluded that cost-saving generics used to treat a variety of cardiovascular conditions produced equivalent clinical outcomes to higher cost brand name drugs. Despite this clinical evidence, the review notes that a majority (53%) of the 43 editorials analyzed had a negative opinion on generic substitution.

While there are currently no ETFs on the market which feature generic drug companies, the ETF Innovators (ETFI) Global Healthcare Cost Containment Index of 64 companies with market caps of $150M-$60B profiled in the accompanying table includes about 67% which derive the majority of their revenue in the generic drug industry and 77 companies if those below the $150M market cap are included.

Also, only 25 of the 77 companies maintain U.S. listings for their stocks, making the index global in nature with the following distribution based on where each company is based: United States (21, 27%), Europe (12, 16%), India (21, 27%), China (14, 18%), and Japan (5, 6%).

Momenta Pharma (MNTA) is also included in the index and represents a pure play on the future of biogenerics for those who believe legislation could come next year to ease the path for lower cost, generic equivalents to biotech products – including the CEO of MedcoHealth Solutions (MHS) – which is another component in the index as a pharmacy benefit manager focused on reducing overall healthcare costs and encouraging generic substitution.

The market cap leaders for generic versions of prescription and over-the-counter drug products are also included in the Top 10, Teva Pharma (TEVA) and Perrigo (PRGO), respectively. A generic drug company which is expected to resume trading again shortly is Impax Labs (formerly IPXL), which had net cash of $73M and trailing 12-month GAAP sales of $309M as of 2Q08, according to a recent presentation available at their website. I have also written recently about generic drug value plays such as Caraco Pharma (CPD), Hi-Tech Pharmacal (HITK), and Home Diagnostics (HDIX).