Biosimilars represent an emerging niche in the biopharmaceutical market, but how strong is their true potential?
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, and new players to the market. 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 biosimilar 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 estimated to reach $1.1 trillion by 2015, increasing at a compound average growth rate (CAGR) of 3% to 6%, according to 2011 estimates by the IMS Institute for Healthcare Informatics. IMS estimates that sales of biosimilars are expected to reach $1.9 to $2.6 billion by 2015 (1).
BCC Research projects a slightly stronger market. It estimates that the global demand for biosimilars 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 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%, according to BCC.
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 of the biosimilars market in 2011 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, the 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, establishes a new user fee program for biosimilars to support the review of marketing applications for biosimilar biological products, further enabling regulatory implementation of a biosimilars pathway.
While the US is considered potentially a strong market for biosimilars, the true test for biosimilars to date is 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, Medicie and Ratiopharma (part of Teva Pharmaceutical) (1). According to a recent IMS analysis, biosimilar market penetration varies by region in the EU. Germany and France account for half of the biosimilars market by value with a 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 (4%) the lowest (1). In its analysis, IMS points out that the first generation of biosimilars has 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%.
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 and $250 million, which includes additional clinical trials (5)
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.
Strategic partnerships in biosimilars
The biosimilars market has engendered several strategic partnerships among innovator biopharmaceutical companies, traditional generic-drug companies, new players to the biopharmaceutical market, and contract service providers. For example, in February 2012, Biogen Idec and Samsung formed a joint venture, Samsung Bioepis to develop, manufacture, and market biosimilars in keeping with their agreement announced in December 2011. Under the agreement, Samsung is contributing $255 million of the $300 million for an 85% stake, and Biogen Idec is contributing $45 million for a 15% stake in the joint venture. The joint venture, which will be based in Korea, will contract with Biogen Idec and Samsung Biologics for technical development and manufacturing services. Samsung Biologics is a Samsung business formed in April 2011 to specialize in biopharmaceutical manufacturing. The joint venture will not pursue biosimilars of Biogen Idec's proprietary products.
Also in February 2012, Samsung Electronics entered into a strategic partnership with the CRO Quintiles as part of Samsung’s entry into the biopharmaceuticals market. The companies formed a new joint-venture company to provide biopharmaceutical contract manufacturing services in South Korea, with Samsung owning 90% and Quintiles 10%. At the time of the announcement in February, Samsung said it plans to commercialize biosimilars by 2016 and to expand into innovative biologics in the future. The joint-venture company plans to construct a biopharmaceutical manufacturing plant in South Korea with the goal of beginning full-scale operations in April 2013.
Fujfilm has been building its biosimilars business beginning with several deals in 2011. In November 2011, it agreed to form a 50–50 joint venture for biosimilars with the biopharmaceutical company Kyowa Hakko Kiron. The joint venture was expected to begin in April 2012. In April 2011, Fujifilm completed its acquisition of the former Merck Biomanufacturing Network, which provides contract biologics manufacturing. The acquisition included facilities in Research Triangle Park, North Carolina, and Billingham, United Kingdom. Merck & Co. had acquired the Billingham facilities through its 2009 acquisition of the contract manufacturer Avecia and the Research Triangle Park facilities as part of its acquisition of Schering-Plough in 2009. Diosynth was the former contract manufacturing activities of Organon, the pharmaceutical business of the Dutch chemical company Akzo Nobel. Schering-Plough acquired Organon in 2007, and Merck & Co. acquired Schering-Plough in 2009. Merck combined the UK and US contract biologic activities into the Merck Biomanufacturing Network, which was acquired by Fujifilm in 2011, and later named Fujifilm Diosynth Biotechnologies. Also in 2011, Fujifilm formed a partnership with Mutsubishi for contract biologics manufacturing under which Mitsubishi took a 20% equity interest in FujiFilm Diosynth Biotechnologies.