The full version of this biosimilars feature can be read in the August issue of our digital magazine: http://www.pharmtech.com/ptedigital0810
A Strengths (S), Weaknesses (W), Opportunities (O) and Threats (T) analysis of the biosimilars market follows.STRENGTHS
Lower cost structure
Price may be the key differentiator between a biosimilar and the originator drug, so biosimilars manufacturers' cost structures need to be submitted to this argument from early development through to marketing. The resulting difference depends on the research and development starting points of each product. The originator industry is a researchdriven environment; there is no certain return on each dollar invested because the research target may prove unfeasible. The biosimilars industry on the other hand is a development-driven environment, where a dollar is invested in an overall development target that has already proven its feasibility.
Development is a more calculable venture than research on new drug leads
Biosimilars are a reality
Since the launch of the first biosimilars in Europe in 2006, industry's view of this emerging new class of drugs has changed. Whereas initially the talk was about whether the similarity idea might lead to the establishment of a new class of drugs, today the talk is much more about when and how such biosimilars will threaten revenues of originator drugs. The industry is still in the process of establishing itself; even in the most advanced regulatory environment of Europe, there are still only a handful of biosimilars on the market. The high number of originator biotech drugs coming off patent in the near future will, however, pull a continuous string of biosimilars onto the market.
Favourable pricing and reimbursement policies
In highly regulated and therefore expensive (but also financially attractive) markets, healthcare payers exert continuously mounting pressure on the life sciences industry to produce therapies at a lower cost to the patient. As biosimilars are biotechnology-derived drugs and therefore much more costly to develop and produce than small molecule chemically-synthetic generics, a price difference in the smaller twodigit percentage range will still amount to substantial cost saving per therapy compared with the originator. In less regulated markets, where the consumer base will have even less purchasing power, the pricing argument in favour of biosimilars may be even more attractive.
Driving further innovation
A biosimilar needs to be equivalent to the originator mainly in its efficacy and safety profile in order to obtain authority approval; such equivalence needs to be clearly demonstrated. However, it may prove difficult to sell an all-too-similar product to the prescriber. In order to present a convincing case, the biosimilar needs to be positively differentiated from its originator. The first positive differentiator will certainly be pricing, but once a second biosimilar enters the market, competition on price alone will erode margins for all supply side participants, eventually to a non-sustainable end. Therefore, it is in the interest of the biosimilars industry to positively differentiate their products in additional ways. This might play out as a powerful innovation driver because companies will look for innovative differentiations, such as optimised formulations, delivery modes, packaging variants, size and service aspects of their product offering.
Continued growth of immature, non-saturated markets
Pricing and reimbursement policies present an important growth opportunity for the biosimilars market, especially for mature and saturated markets. However, it may also be interesting for the biosimilars industry to look to the less regulated, developing and non-saturated pharma markets of emerging economies. The game there will be different. Whereas highly regulated mature markets of western economies are "squeezed", the markets in emerging economies are growing. Their emerging middle classes earn good salaries giving them sound purchasing power and they want to spend their money on state of the art goods and services, including medical services and supplies. These emerging middle classes as a new and growing consumer base will soon outnumber the consumer base of western economies.