- Novartis AG expects biosimilars to eventually become a multi-billion dollar business, even as the copycat biologics continue to struggle to gain a foothold in the U.S. due to legal hurdles and a challenging payer environment.
- "[The U.S.] is a healthcare system that desperately needs biosimilars to be successful to create fiscal space for new medicines," explained Vas Narasimhan, who takes over as CEO Feb. 1, on an earnings call. "We have a dynamic where we know eventually there is going to be a significant uptake for these medicines."
- Through its Sandoz arm, Novartis markets five biosimilars in Europe. In the U.S., by contrast, the company has secured approval for two of the drugs, yet only one is currently available.
Falling prices for generic drugs has squeezed manufacturers across the industry, Sandoz included. Last year, topline sales for the unit fell by 1%, as price erosion more than offset volume growth.
The pain for generic makers is particularly acute in the U.S. Greater competition is one culprit, boosted by a Food and Drug Administration focused on approving generics at a faster clip.
Novartis doesn't see the picture improving any time soon. Biosimilars and complex generics, however, could offer a way out of the current malaise — or at least hold out the opportunity for higher margins.
"We anticipate 2018 the pricing pressure in the US market to continue," said Richard Francis, head of Novartis' Sandoz unit, in a Jan. 24 call with analysts. "Beyond that, we start to see that our portfolio mix starts to play a role as we move the portfolio far more toward the biosimilars which we have coming through, and the differentiated specialty products."
Last year, global sales of Sandoz' biopharmaceuticals grew 12% to $1.1 billion. Much of that growth, however, has taken place in Europe, where biosimilars have a longer history.
"It is really a tale of two worlds," Narasimhan said. "In Europe, we are seeing very strong uptake."
By contrast, biosimilar uptake in the U.S. is slowed by patent hurdles and contracting that remains favorable to branded products. "We do have to overcome first the complexity of the patent hurdles in the U.S. and we have to overcome the complexity of the payer dynamic in the U.S.," explained Narasimhan.
Novartis has had some success with Zarxio (filgastim-sndz), which was the first biosimilar approved in the U.S. Sales of the copycat biologic grew by double digits in the U.S. last year.
The company's biosimilar of Enbrel (etanercept), however, still has not launched due to patent litigation with Amgen Inc. It's a fate shared by five other biosimilars approved by the FDA , which have been impeded by the strong patent portfolios in place for top-selling branded biologics.
Novartis has two other biosimilars under review by the FDA and hopes to resubmit its copy of Amgen's Neulasta in 2019.
The pharma's pipeline of copycat biologics will benefit too from a recent deal with Indian drugmaker Biocon Ltd. to collaborate on a number of biosimilars in immunology and oncology.
Still, Novartis plans to continue its efforts to reshape Sandoz's business as price erosion continues to bite for oral solids.