Market Strengths and Weaknesses in Biosimilars

An examination of the current and projected market for biosimilars, development costs for biosimilars compared with small-molecule generic drug, and partnerships in biosimilars. This article is part of a special issue on outsourcing.
Aug 01, 2012
Volume 2012 Supplement, Issue 4

Biosimilars represent a niche segment in the global biopharmaceutical market, but their potential is engendering interest from a mix of traditional generic-drug companies, innovator biopharmaceutical companies, new players to the market, and contract service providers. As a second-generation wave of biosimilars, inclusive of monoclonal antibodies, is scheduled to come off patent during the next several years, opportunities exist, but it is unclear as to what the true potential of the biosimilars market will be given differing regulatory issues, technical requirements, and developmental costs compared with traditional small-molecule generic drugs.

Assessing the opportunity

Although the market for biosimilars is growing at a rate higher than the global prescription-drug market, it is still a relatively small market. The global market for prescription drugs is expected to reach $1.2 trillion by 2016, increasing at a compound average growth rate (CAGR) of 3% to 6%, according to 2012 estimates by the IMS Institute for Healthcare Informatics. Global sales of biosimilars, estimated at $693 million in 2011, are expected to reach $4 billion to $6 billion by 2016, representing 2% of biologic-based drug spending.

BCC Research projects a slightly stronger market. It estimates that the global demand for biosimilars (inclusive of low-molecular weight heparin) totaled nearly $2.5 billion in 2011 and should reach $3.6 billion in 2016, a CAGR of 7.7% over the five-year period. BCC breaks the biosimilars market into four regions: APAC (Asia Pacific), the United States, Europe, and the rest of the world. The APAC region accounted for $683 million in 2011 and should reach $1.1 billion in 2016, a CAGR of 10.3%, according to BCC. The US accounted for nearly $1.1 billion of the biosimilars market in 2011 and should increase at a CAGR of 4.1% to reach $1.3 billion in 2016. Europe, worth $377 million in 2011, should reach $625 million in 2016, increasing at a CAGR of 10.6%. The rest of the world accounted for $335 million in 2011 and in 2016 should total $522 million, a CAGR of 9.3%.

Looking at global biosimilar demand by value and product type in 2011, low-molecular weight heparin accounted for 44% of the market, according to BCC. Epoetins held the next highest share at 19%, followed by recombinant human growth hormone (11%), granulocyte colony-stimulating factors (7%), interferons (6%), insulins (5%), and other products (8%).

Interest in the biosimilars market is spurred by a number of top-selling biologics slated to come off patent during the next five years, including Herceptin (trastuzumab), Enbrel (etanercept), Humalog (insulin lispro recombinant), MabThera/Rituxan (rituximab), Remicade (infliximab), and Aranesp (darbepoetin alfa) (1). Unlike manufacturers of small-molecule generic drugs, however, manufacturers of biosimilars face a different path based on developmental costs, regulatory issues, and technical requirements to bring a biosimilar to market as well as greater uncertainty as to payer, physician, and patient acceptance of a biosimilar product (1).

The establishment of a regulatory pathway for biosimilars through the passage of the Patient Protection and Affordable Care Act in 2010 and the recent upholding by the Supreme Court of that law as well as recently issued FDA draft guidance on biosimilar development is moving the establishment of a regulatory pathway for biosimilars in the United States (1–4). The recently enacted Biosimilar User Fee Act on July 9, 2012, established a new user-fee program for biosimilars to support the review of marketing applications for biosimilar biological products, further enabling US regulatory implementation of a biosimilars pathway.

Although the US is considered a potentially strong market for biosimilars, the true test for biosimilars to date has been in the European Union, which represents the most advanced market for biosimilars, accounting for 80% of global spending (1). Despite an established regulatory pathway, only a few manufacturers have launched biosimilars in the EU, which include Sandoz (the generic-drug business of Novartis), Stada, Hospira, Medice and Ratiopharma (part of Teva Pharmaceutical) (1). According to a recent IMS analysis, biosimilar market penetration varies by EU country. Germany and France account for half of the biosimilars market by value with a respective 34% and 17% share (1). On a product basis, granulocyte colony-stimulating factors have generally achieved the highest penetration by value (25%) and human growth hormone the lowest (4%)in the EU (1). In its analysis, IMS points out that the first generation of biosimilars has been met with limited uptake compared to small-molecule generic drugs mainly due to the limited price reductions of biosimilars. Average list (ex-manufacturer) price cuts in the EU of 30% are considerably less than those for traditional generic drugs, which are 70–80% (1).

The costs and opportunities in biosimilars
A recent study by the IGES Institute, based in Berlin, and commissioned by Sandoz, projects that by 2020, eight EU countries could save a cumulative total of between EUR 11.8 billion ($14.5 billion) and EUR 33.4 billion ($41.0 billion) through the use of biosimilar medicines (5). The study calculated the amount of expected savings from introducing biosimilars to eight EU countries: Germany, France, the UK, Italy, Spain, Sweden, Poland, and Romania. The IGES study was limited to three classes of biologics: erythropoetin alfa and granulocyte colony-stimulating factors, for which biosimilars already exist, as well as monoclonal antibodies, considered an emerging opportunity with several drugs coming off patent. The study team at IGES developed different scenarios based on possible developments of market share, pricing, and the time period for market entry of biosimilars after patent expiration. A typical biosimilar takes seven to eight years to develop, at a cost of between $100 million and $250 million, which includes additional clinical trials (5) (see sidebar, "The Costs and Opportunities in Biosimilars").

According to the IMS analysis, the immediate opportunity for biosimilars will be in emerging markets although longer term, the US is positioned to be the leading market. It estimates that the US biosimilars market could reach between $11 billion and $25 billion in 2020, respectively representing a 4% and 10% share of the total biologics market subject to certain market, technical, and regulatory conditions (1). Part of this growth will also be tied to more complex biologics, such as monoclonal antibodies, assuming their position in the market.

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