A generic drug is a drug which is bioequivalent to a brand name drug with respect to pharmacokinetic and pharmacodynamic properties, but is normally sold for a lower price. Generic medicines must contain the same active ingredient at the same strength as the "innovator" brand, be bioequivalent, and are required to meet the same pharmacopoeial requirements for the preparation. By extension, therefore, generics are identical in dose, strength, route of administration, safety, efficacy, and intended use.

The principal reason for the reduced cost of generic medicines is that these are manufacturered by smaller pharmaceutical companies which do not invest in research and development into new drugs. Since the research and development costs incurred by the large pharmaceutical companies in bringing a new drug to the market is often the main cost component of new agents, generic manufacturers who do not incur these costs are able to charge significantly less than the "innovator" brand.

Generics can be legally produced for drugs where: 1) the patent has expired, 2) the generic company certifies the brand companies patents are either invalid, unenforceable or will not be infringed, 3) for drugs which have never held patents, or 4) in countries where a patent(s) is/are not in force. It is also becoming popular for the large pharmaceutical companies to preempt the expiry of their patent by producing their own generic product, or licence their own product to be branded by generic companies. Thus, in some cases, the "generic" product is actually the brand product but inside a different box.

Many drugs do not have generics available (at least legally in countries where the patents are enforceable) because their patent has not expired. About half of the current drugs have a generic equivalent.

All text is available under the terms of the GNU Free Documentation License (GFDL).