Opportunities in the Biosimilars Market

March 2, 2010
Patricia Van Arnum

Patricia Van Arnum was executive editor of Pharmaceutical Technology.

Pharmaceutical Technology, Pharmaceutical Technology-03-02-2010, Volume 34, Issue 3

Analysis of the opportunities and challenges in the biosimilars market.

Biosimilars, as commonly phrased in Europe, or follow-on biologics, as used in the United States, represent a niche, but a potentially important, segment of the pharmaceutical industry. Their potential, however, depends on a myriad of issues, including market, regulatory, and technical considerations that are unique compared with chemically synthesized small-molecule generic drugs. The establishment of a regulatory pathway for biosimilars in the United States, drug-reimbursement practices for biosimilars, and the cost and time of clinical and process development of a biosimilar are some crucial considerations in assessing the financial viability of such products.

A macro view

The US now lacks a regulatory pathway for biosimilars. However, as that issue is resolved, the market opportunities are significant because healthcare expenditures, including prescription-drug sales, are expected to increase, and biologic-based drugs are expected to assume a greater role in those expenditures. US healthcare spending is projected to account for roughly 15% of US gross domestic product by 2015, and prescription pharmaceuticals in 2015 are projected to account for approximately $446 billion or more than 10% of total healthcare expenditures, according to data from the Center for Medicare and Medicaid Services, as presented by Patricia Seymour, senior consultant with BioProcess Technology Consultants. Seymour spoke in December 2009 at the Biosimilars Manufacturing and Sourcing Dynamics conference, which was organized by the Drug, Chemical, and Associated Technologies Association (DCAT). Biologic drugs account for approximately 14% of current pharmaceutical spending, and more than 33% of all drugs in development are biologics, she noted. By 2015, the market for biosimilars is projected to reach $20 billion.

Risks and rewards of biosimilars

Despite the market potential, the risks and rewards for competing in the biosimilars market are different compared with participation in the market for chemically synthesized small-molecule generic drugs. Seymour offered some statistics to illustrate those differences. There are key differences in the cost and time to develop a biosimilar product compared with a traditional generic drug. The average time to develop a traditional generic drug is short, approximately three to four years. Some industry estimates say that the development time for a biosimilar product would be longer, approximately 8 to 10 years. Given greater complexity in clinical and process development of biosimilars, the cost of developing a biosimilar product is estimated between $100 million and $200 million compared with less than $5 million for traditional generic drugs, pointed out Seymour. Although the clinical and process development time may be greater for a biosimilar than for a traditional generic drug, in assessing the development of a biosimilar, the key comparision is between the biosimilar and the innovator biologic, pointed out Gillian R. Woollett, chief scientist at the law firm Engel & Novittt LLP in Washington DC. Woollett also spoke at the DCAT biosimilar conference in December. "Is the delta for a generic drug to its innovator reference necessarily that much less than a biosimilar to its biologic reference," said Woollett.

Given the higher cost structure and greater technical and capital barriers to entry in the biosimilars market, the potential reward is higher. Traditional generic drugs are more commoditized with little or no product differentiation, but biosimilars would be a more valued-added product with some differentiation. The operating profit margin of traditional generic drugs is roughly 20%, but depending on the biosimilar product, profit margins have the potential to be somewhat higher, as much as 30%, said Seymour.

In assessing the market potential of biosimilars, however, there are certain unknowns, particularly reimbursement strategies. "The payor role in the utilization of biosimilars is not yet clear," said Woollett. A crucial consideration will be whether a biosimilar would be deemed to be interchangeable with the reference product. "An FDA designation of interchangeability can give options for automatic substitution with the reference product, similar to the current generic-drug model," said Woollett. "However, the absence of an interchangeability designation may give greater or fewer choices for payors, and this will depend on the reimbursement infrastructure," she said. Options could include copayment incentives for patients under a tiering approach, prior authorization requirements for physicians, and step therapy and/or switching. She added that the role of government payors, and their related purchasing power, will also be very influential in determining the market viability of biosimilars.

The regulatory landscape

Unlike the US, where a clear regulatory pathway for biosimilars is under legislative and regulatory consideration, Europe already has revised its statues, issued guidelines, and approved select biosimilars, noted Woollett. The EU has approved three different active ingredients (somatropin, epoetin alfa, and filgrastim) based on six different data sets to four reference products, which resulted in 13 approved biosimilar products.

EU regulatory authorities have taken the approach that a biosimilar product be sufficiently similar to a reference product already licensed in the EU so that it can be used for the same indication at the same dose, said Seymour. Additional clinical studies are required to demonstrate that the biosimilar product has the same efficacy in patients as the reference product. "These clinical studies must be done in comparison to the reference product; however, the clinical development program can be shorter and less costly than trials for an innovator product because proof of concept has already been demonstrated, but this will still be a significant cost," says Seymour. "The benefit in a biosimilar-development program is that the risk of failure is reduced because the target and mode of action of the molecule have been well demonstrated through the years of marketed use of the reference product," says Seymour. "However, there is still a clinical and regulatory risk of failure due to small changes in the biosimilar product that might impact clinical efficacy."

The choice of the reference product and indication and the related process chosen to manufacture the biosimilar is crucial. "One of the most significant challenges in developing a biosimilar product is designing the manufacturing process to achieve comparability to the reference product," said Seymour. These challenges are in the manufacturing process itself as well as in the analytical testing methods used in the process and for testing the biosimilar product.

Manufacturing and testing choices

A key challenge for biosimilar developers is to decide what manufacturing process to pursue. "Biologics manufacturing has evolved and improved substantially since the first biologic-based products were approved," said Carl Lawton, director of the Massachusetts Biomanufacturing Center at the University of Massachusetts Lowell. Lawton also spoke at the DCAT biosimilars conference in December. "Refined manufacturing technologies are available for the development of biosimilars that were not available 10–15 years ago," he said. So a decision has to be made: does a biosimilar developer use an older manufacturing process or an improved one? In choosing an improved process, consideration has to be given to how that newer process would affect the biosimilar product.

On the plus side, a newer process affords the opportunity to develop a more efficient manufacturing process as well as develop a biosimilar with better quality attributes although testing the product does not come without challenges. "Biosimilars will have to utilize the same array of analysis tools, including potency assays, that innovator biologics require," said Lawton. "Current technology is not sufficiently advanced to characterize quality attributes of all potential biosimilars by physiochemical analysis," said Lawton. "Similarity will have to be demonstrated in terms of quality, efficacy, safety, and pharmacokinetic and pharmacodynamic data utilizing preclinical and clinical data. Immunogenicity that can arise from slight structural changes, process alterations, or contaminating host-cell proteins will need to be evaluated."

In choosing a manufacturing route, biosimilar developers also need to take into consideration the biomanufacturing improvements made since the innovator product was initially improved. In downstream processing, for example, in 1989, expression systems would typically have product yields of 0.05 g/L using stack chromatography columns and by duplicating laboratory-scale conditions to achieve scale-up, pointed out Margit Holzer, director of research and development and technology at Novasep (Pompey, France). Holzer spoke at the DCAT biosimilars conference in December. Current expression systems using mammalian cell culture, however, can yield up to 4 g/L using real scale-up and high-performance and packing-in-place columns, she said. Future expression system for mammalian cell culture, relying on semicontinuous and continuous chromatography systems, may be able to yield up to 10 g/L. Such systems would benefit from the use of simulation tools to optimize the process and would use completed closed production systems.

Analytical testing methods have improved as well and will continue to get better. "There are faster, automated methods, with higher precision, throughput, sensitivity, reliability, and much easier implementation and setup for existing technologies and methods as well as new developments playing a key role," said Holzer. For example, advances in analytical-methods development and in corresponding instrumentation allow for a more rapid and precise determination of the primary, secondary, and tertiary structures of biologics as well as their activity and impurity levels, she said. An example of the primary structure determination is the combination of peptide-mapping ultra-performance liquid chromatography–mass spectrometry or sodium dodecyl sulfate polyacrylamide gel electrophoresis/capillary electrophoresis–mass spectrometry. Progress has also been made in nuclear magnetic resonance analysis, which can help in the understanding of secondary and tertiary structures.

Holzer further pointed out that advances in the development and standardization of immunoassays, enzyme-linked immunosorbent assay-based or related (e.g., meso scale or gyros) or using the surface plasmon resonance principle (e.g., Biacore, Sweden) as well as advanced fluorescence-activated cell-sorter-based methods allow for a more precise evaluation of a biological structure and activity and can help build a greater understanding of the interaction mechanisms between the drug and the receptors. Process-related impurities can be measured more precisely and accurately with low limits of quantification by applying these technologies for the quantification of host-cell proteins, endotoxin, residual protein-A or other leachables, as well as residual DNA by ultra-sensitive polymerase chain-reaction methods.

Seymour sums up the difficult choices for a biosimilar developer. "The biosimilar-development dilemma is whether to focus on matching the innovator's process or on creating so-called biobetter molecules (replacement molecules for current therapeutics that have improved properties), where development can rely on the scientific advances of the past 10 to 20 years to design products that have better characteristics, such as lower immunogenicity, greater efficacy, improved formulations, or other properties leading to less frequent dosing. Molecules with significant changes that lead to these properties would probably not be approved under current or proposed biosimilar regulations, but would be an improvement for the patients and may enable companies to obtain a larger market share of the intended patient population."