OBJECTIVES: Reformulating existing drugs can improve patient convenience, compliance and create new uses for the product.  However, reformulations cost millions of Euros - a risky investment without guaranteed exclusivity or returns.  This study assessed whether markets reward incremental value creation through reformulation by comparing sales performance close to patent expiry for reformulated and non-reformulated products. METHODS: IMS MIDAS data was interrogated to identify 829 small molecule, non-generic products which had peak sales above €5M and lost patent protection between 2001 and 2010 in EU-5 (France, Germany, Italy, Spain and UK). Ex-manufacturer sales value (€) 2 years after patent expiry was compared with sales value 4 years earlier to calculate percentage value erosion for each of the 829 products. A subset of 133 products which launched at least 1 reformulation close to patent protection expiry (launch between 3 years before and 1 year after patent protection expiry) were analysed to assess whether value erosion varied across countries or therapy areas. RESULTS: Mean ex-manufacturer sales value erosion of reformulated products (24%) was significantly less than non-reformulated products (37%, P<0.01). Reformulated product value erosion varied with country and therapy area. Germany saw highest number of reformulations launched yet only reformulations launched in Italy showed significantly less value erosion than non-reformulated products (P<0.01). Across therapy areas, reformulations were most common in nervous system, metabolism and anti-infective categories. However, reformulated anti-infective product value erosion was pronounced while musculoskeletal and nervous system products experienced significantly less value erosion than for non-reformulated products (both P<0.05). CONCLUSIONS: Overall, reformulated products do maintain more value than non-reformulated products following loss of patent protection. Chronic disorders e.g. nervous and musculoskeletal system disorders appear to be the most promising areas for reformulating.  Future reformulation potential is tightly linked to country-specific pricing and market access policy decisions to recognise incremental value products.