The WSJ gives a good recap of the major generic producers and analysts views of the relative attractiveness of the emerging biosimilars market. World-wide sales of all biological drugs reached $130 billion in 2009, according IMS Health, and are expected to grow much faster than conventional drugs. The market is considered attractive due to the large number of big biologics coming off patent but is challenging from a regulatory/quality perspective to mimic the reference biologic - and pricing is uncertain at the moment.
In the U.S. and European market , biologics drugs with more than $60 billion in annual sales will lose patent protection by 2015, according to Datamonitor. Should the market develop as predicted, biosimilar copies of these complex drugs alone could make up 50% of the expected $10 billion biosimilars market by 2016, according to Capgemini Consulting. The rest will come from simpler biosimilars of insulin and human growth hormone.
Patents due to expire soon are Roche's Rituxan (aka MabThera), Remicade, co-marketed by Merck and J&J, and Amgen's and Pfizer's Enbrel. Each drug had more than $5 billion in annual peak sales. Roche's Rituxan will expire in Europe in 2014. Three generic players have started copies - Sandoz started midstage trials, following similar steps by U.S.-based Spectrum Pharmaceuticals, in early January and Israel-based Teva Pharmaceuticals last year.
Sandoz, with a roughly 50% market share, ahead of Teva and U.S.-based Hospira, expects the entire biosimilars business could reach more than $20 billion by 2020, up from a current $250 million. Lonza, teaming up with Teva in its biosimilars venture, expects solid growth because patients, insurance companies and governments want drugs to be cheaper.
The generics companies base their argument on the high price of many complex biological medicines. But some experts question the generics companies' pricing rationale, saying the current constraints could even force larger generic producers such as Sandoz or Teva to rethink their operating models. Much will depend on how the price of these drugs will develop.
Prices for biosimilars could be just 30% lower than the prices of the originals, because only a couple of generics firms will compete against an original drug. The main risk, analysts say, is that if prices don't come down much, original drug producers will be able to retain a large market share. On the other hand, if prices fall too fast, generics firms' margins could suffer.
Industry insiders are also concerned the market may need longer than expected to establish itself, as R&D for these complex drugs is difficult and costly. One of the difficulties with biosimilar of complex biological drugs is that, unlike simple-to-produce chemical generics, which are identical to the originator product, biosimilars aren't exact copies. The are produced in genetically engineered cells. At best, a biosimilar can only be similar to the original protein - thus the name. And, because biosimilars aren't identical copies, biotech and big pharma are looking to check the movement by raising bioequivalence and quality-control issues.
The EMA has so far approved 13 simpler biosimilar drugs. In the U.S., the FDA is currently working to establish how intensive testing for biosimilars needs to be and how the traditional three-phase drug-approval process can be abbreviated. A key concern is to make sure that biosimilar drugs are safe and effective.
It may cost too much time and money for a number of small to midsized generics manufacturers to survive in biosimilars production. Specific processes, data, research and experience are needed to ensure that a biosimilar has the same profile, efficacy and safety as the originator product. Some doctors and patients may be reluctant to use biosimilars as a new class of products with no track record in terms of safety and benefits.
Time will tell. In the meantime, the Big 3 Generics producers and many other Big Pharma companies are not only eye-balling this market but have announced their intentions to enter. Not too mention all the Asia Pacific competitors who are gearing up to serve local and global markets.
Posted by Bruce Lehr Jan 31st 2011.