Although currently small and narrowly focussed on a few disease areas and countries, the Biosimilars landscape is set to expand as patents expire on leading biologics, US legislation comes into effect, vision for pharma emerging markets and payers push for their wider adoption to manage burgeoning costs.
The signs are visible, but questions remain. How will the commercial prospects play out? Which region holds the most potential? What will be the optimal go-to –market model for new entrants? Research organisations and pharmaceutical forums world over are all set to make the most of the upcoming markets of biosimilars. What is necessary therefore is well chalked out strategies, high levels of commitment and the spirit to cross formidable hurdles, more so in the short run, so that they can maximise returns on investment. The changing outlook for Biosimilars comes at a time when the global pharmaceutical industry is feeling the combined impact of two key events – a period of unprecedented patent expirations on many of the world’s largest pharma brands, and a financial crisis that has required healthcare systems to make significant and sustained cost reductions.
Emerging Markets vis-a-vis Old Players
Biosimilars are at different stages of evolution across the globe. Due to variable guidelines and diverse regulations practiced all over, definitions of biosimilars vary as well, across countries and regions. The market of biosimilars and biologics geographically can be categorised into three distinct clusters: the US, the other regulated markets (Europe, Japan & Canada) and the emerging pharma markets namely China, Brazil, India, Russia, Korea & Mexico. Europe is the most advanced and progressive accounting for majority of the global spending. In spite of a strong legislation, there are very few manufacturers who have come up with biosimilars in the region, till today (1). The most notable players in EU are Sandoz/Novartis, Stada, Hospira, Medice and Teva. Biosimilars are established in three therapy areas in Europe: EPOs for treatment anaemia caused by renal dialysis, G-CSFs for lowered white blood cell counts after chemotherapy and HGH. Germany and France account for half of the market in EU and other major nations like Spain, UK, Italy and Holland have to catch-up. The emerging economies like China, India, Brazil and Mexico have developed their own regulatory pathways to manage the approval of biosimilars. These emerging markets have kept lower barriers for clinical trial requirements as well as regulatory control vis-a-vis the EU. Lesser stringent structures have given way to modified biologics in the oncology as well as EPO markets especially in countries like China. Similar trends are being followed in India and Mexico. Ever increasing flow of new patients in the emerging economies would necessitate the growth of biosimilars market in the short run. However, in the years to come the US would undoubtedly be the key global market for biosimilars.
Challenges for New Entrants
For new entrants, biosimilars pose very different challenges to those presented by small molecule generics, with more demanding requirements in terms of clinical development, market access, manufacturing and sales and marketing capabilities. These can be enumerated as below:
• High development cost: Developing a biosimilar is not a simple process but one that requires significant investment, technical capability and clinical trial expertise. Average cost estimates range from US$ 100 to 250 million (various industry sources) if plant development is included (or US$ 20 to 100 million for non-plant cost). (2)
• Fledgling regulatory framework: In most markets apart from Europe, the regulatory framework for biosimilars is generally still very new compared to the well- established approval process for NCEs and small-molecule generics; in some cases it is non-existent, making global investments risky. (3)
• Manufacturing issues: Barriers to developing a biosimilars manufacturing capability are not prohibitive, but the development of biosimilars involves sophisticated technologies and processes, raising the risk of the investment.
• Branded mentality: Winning the trust of stakeholders will call for many of the skills, resources and branded mentality of a conventional innovative pharmaceutical company—potentially involving changes to commercial models. Initiatives to allay safety concerns among physicians and patients will be particularly important, supported by sales teams with deeper medical and technical knowledge. This would necessitate investments in the sales and marketing segment to start with, which can be done through internal sources or via other branded companies. Two other key elements would be investment in pricing followed by market access. Notably, post marketing surveillance has been made mandatory in Europe. The US would soon follow suit.
Thus, unlocking the potentials of biosimilars will require a focussed strategy along the whole value chain, from optimising the clinical development program through developing the most suitable strategy for commercialisation. What is required is to balance trade-offs between in-house investments vis-a-vis strategic alliances for the achievement of cost effective outputs. Time-to-market would also be minimised, further tailoring of geography would help cope up with heterogeneous landscapes. Entry into pharma emerging markets, for example, will be strongly governed by partnerships with strong local players.
Experiences with biosimilars have been limited, which means they hold huge potentials in the years to come. However, a number of barriers would come in the way of its success. While development of biosimilars is varied across continents, they will probably take different paths too in their process of evolution. Thus, from among the heterogeneous mix of entrants and potential players, there may be an ultimately small set of winners.
Companies looking to take advantage of the biosimilars opportunity will need to be clear of their strategic relevance within the organisation, in terms of portfolio fit, financial suitability and synergies within the value chain, bearing in mind that this may be an established or emerging markets’ play. A full understanding of the financial upsides and risks of the investment will be critical, based on realistic scenarios of the size of the potential, the therapy areas where it will be found, and whether collaboration and alliances are required to access strategy will be vital for successful entry. Most importantly, companies should be committed in the long run. Despite tremendous prospects biosimilars might take quite some time to be called a success story.