14 January 2016 - - US-based money manager Van Eck Global has launched the Market Vectors Generic Drugs ETF (NASDAQ: GNRX), the first and only Exchange-Traded Fund to target global manufacturers of generic drugs and biosimilars, similar copies of existing but difficult to replicate biological drugs, the firm said.

According to the Generic Pharmaceutical Association, 88% of the drugs dispensed in the US are generics.

Expiring patents on various brand name drugs and the development of biosimilars are among the main factors driving returns in the generic pharmaceuticals space.

Significant investment in research and development is still required, which reduces competition, but time to market can be quicker than brand name drugs, allowing companies to price their drugs at a significant discount.

As a percentage of drugs distributed globally, spending on generics is expected to increase from 40% in 2013 to 46% in 2018.

GNRX seeks to replicate as closely as possible, before fees and expenses, the price and yield performance of the Indxx Global Generics and New Pharma Index.

To be included in the Index, companies must derive a significant proportion of their revenues (or have the potential to derive a significant proportion of their revenues) from the generic drug industry or have a primary business focus on the generic drug industry.

Constituents must also meet market capitalisation, daily trading volume, and daily trading activity requirements.

As of December 31 2015, 39% of the constituents in GNRX's underlying index were domiciled in the United States, with India, Israel, South Korea and Japan, having the next largest country weightings, respectively.

Approximately 76% of the Index's constituents were large cap companies, those with market caps of more than USD 6bn, while 24% were mid-caps (market caps between USD 1.5bn and USD 6bn).

Van Eck notes that an investment in GNRX incurs risks which include those associated with investments in the pharmaceutical and biotechnology sectors as well as foreign and emerging markets investments, particularly those concentrated in India and Ireland.

GNRX has a gross expense ratio of 0.63% and net expense ratio of 0.55%, which is capped contractually until February 1, 20172. GNRX joins Van Eck Global's family of healthcare-focused industry ETFs, which also includes Market Vectors Biotech ETF (NYSE: BBH) and Market Vectors Pharmaceutical ETF (NYSE: PPH).