Why biosimilars could be market disruptors
This feature is part of a series focused exclusively on biosimilars. To view other posts in the series, check out the spotlight page.
Just as generic drugs revolutionized the small molecule space, biosimilars are poised to have a major impact on the development and commercialization of biologics. These highly similar, but not necessarily interchangeable drugs, have been part of the European drug market for years, but are just starting to emerge in the U.S. While still early days, the developing biosimilars market is one to watch.
Generics are generally 85% cheaper than the originator drug, and their presence on the market has driven down the prices of their branded counterparts. As blockbuster biologics begin to mature and lose their patent protection, the availability and effectiveness of these drugs, as well as the pressure that higher costs are putting on the healthcare system has led to companies with experience in biologics dabbling in the biosimilar space. So far, however, biosimilars have not been priced at nearly the discount seen in the generics market.
From biologics to biosimilars
Innovative biologic drugs, which are made from living cells instead of by chemical synthesis, have made a huge difference to patients, especially in inflammatory disease and cancer with medicines like AbbVie’s Humira (adalimumab) and Roche’s Avastin (bevacizumab) changing treatment paradigms.
At the same time, the Food and Drug Administration has approved more biologics than ever before. There were about three biologics approved each year between 2004 and 2008, increasing to roughly six per year between 2009 and 2013, and rising to 11 and 12 in 2014 and 2015, respectively. The percentage of new approvals that are biologics has risen from 14% in 2004 to 27% of new approvals in 2015.
That growth is expected to continue. According to Transparency Market Research, the global biologics market is expected to grow by at a compounded annual growth rate of 10.9% between 2016 and 2024, becoming worth $479.8 billion by 2024. And the IMS Institute for Healthcare Informatics predicts biologics will make up around 28% by value of the total healthcare market by 2020.
The development landscape
Biosimilars are inevitably going to capture some of that pie. The FDA's definition of a biosimilar is "a biological product that is approved based on a showing that it is highly similar to an FDA-approved biological product, known as a reference product, and has no clinically meaningful differences in terms of safety and effectiveness from the reference product."
With that in place and further guidance that clarifies interchangeability and naming conventions, the agency is cementing the regulatory framework around biosimilar applications.
The U.S. statute governing biosimilars became law in 2010, with the first guidance from the FDA appearing in 2012. The first biosimilar arrived on the U.S. market in March 2015, with the approval of Sandoz's Zarxio (filgrastim-sndz), a biosimilar form of Amgen's Neupogen.
In contrast, the first biosimilar approved in Europe was Sandoz's Omnitrope (somatropin), approved in April 2006, and there are now currently 22 biosimilars approved in Europe, including seven different filgrastim biosimilars. Worldwide, there are almost 50 different biosimilars in development.
After Zarxio, three other biosimilars were approved in the U.S. last year: Pfizer and Celltrion’s Remicade biosimilar Inflectra (infliximab-dyyb), Amgen’s Humira copycat Amjevita (adalimumab-atto) and Sandoz’s Enbrel biosimilar Erelzi (etanercept-szzs). So far, only Zarxio and Inflectra have launched. The others are tied up in legal battles that have kept them off the market.
(Eli Lilly’s Basaglar is a copycat of Sanofi’s blockbuster insulin Lantus, but was not approved through the biosimilar pathway. The so-called "follow-on biologic" launched in December.)
The development landscape for biosimilars is a broad one and several companies are making waves in the space. Samsung Bioepis, a joint venture between Samsung BioLogics and Biogen, was founded in 2012 with a focus on biosimilars. It has 13 candidates in its pipeline in immunology, oncology and diabetes, and those in what it describes as the 'first wave' include copies of Enbrel, Remicade, Humira and others.
“When we started out in 2012, we chose to develop biosimilars, as we saw them as a good entry point into the biopharmaceutical industry. At the time, biosimilars were more or less new to everyone, and we had the confidence that our platform and engineers could capitalize on the level playing field, thereby allowing us to compete from the start and eventually capture pole position," says Klaus Falk, vice president at Samsung Bioepis.
Meanwhile, biologics heavyweight Amgen has five disclosed projects and has spent more than $1 billion on developing biosimilars.
Pfizer, on the other hand, has been dipping its finger into many pools. The big pharma has a tie-up with Celltrion and recently ended two other biosimilar deals. The divestitures came after Pfizer acquired Hospira in 2015, giving the pharma giant a pipeline of the copycat products.
While biosimilars are not going to be priced at the same steep discounts as generics due to the complexity of development and the difficulty of manufacturing, they do offer the opportunity for price reductions.
Biosimilar savings aren't likely to be as significant – the Tufts Center for the Study of Drug Development estimates savings of 25-30%. (Pfizer priced Inflectra at only a 15% discount to Remicade, a similar level first seen with Zarxio.)
However, IMS believes that even these smaller reductions can still translate to savings across five major EU markets and the U.S. by as much as €100 billion ($104.6 billion) by 2021.
In Europe, biosimilar competition has driven down prices across epoetins, G-CSF, human growth hormone and anti-TNF agents, according to a 2016 report from IMS Health (now QuintilesIMS). The increase in competition reduced the price across the whole class, not just the reference product itself, with reductions in costs of up to 60% in some European countries. These price reductions have increased patient access in countries where the initial use levels were low.
Despite the promise biosimilars offer to lower costs and increased options for patients, there are plenty of obstacles to market.
"We see the biggest challenge as information and education, and avoiding misinformation. Education is key for physicians, and dialogue must include the totality of evidence," says Diem Nguyen, regional president, North America, Pfizer Essential Health, which includes the biosimilar franchise. "Biosimilars are still relatively new, so there is a lot of learning. We believe that once physicians gain comfort in using biosimilars, there will be a growing degree of acceptance."
Pfizer is using what it has described as a 'hybrid model' to market its biosimilars. This involves using field reps, account managers and advisory boards, as well as printed and digital information, to educate healthcare providers.
Beyond just educating patients and physicians, biosimilar developers face a swath of challenges. Already, all of the biosimilars approved in the U.S. so far are facing litigation from the reference product manufacturer. Pharma companies have become highly skilled in the art of patent litigation over the last two decades and lawsuits could keep some of these products off the market for years.
Despite the challenges, the growing investment and attention to the space attests to its potential for disruption.
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