This document discusses the biosimilar drug market and opportunities for biosimilar drug developers. It notes that as biologic drug patents expire, biosimilar drugs that are comparable in efficacy and safety to reference biologics at a lower cost represent a major market opportunity. However, biosimilar market uptake faces challenges from regulatory uncertainty, physician concerns about switching patients, and efforts by innovator companies to defend their biologic drugs. The document estimates that biosimilars may not achieve critical mass adoption until 2023-2025.

1. 30
Market Focus: Biosimilars
October 2015
Window of Opportunity
With the patent cliff on the horizon, the robust adoption
and uptake of biosimilars is widely anticipated, due to their
comparable efficacy and safety to reference biologics, and
their meaningful pharmacoeconomic benefits to patients,
payers and healthcare systems
David Alderman at
Molekule Consulting
Many genericised small molecule
pharmaceuticals are considered
therapeutically equivalent,relative to
their reference-listed drug.In these
instances,both the reference product
and its generic counterpart are
bioequivalent and pharmaceutically
equivalent.Generally,bioequivalent
generic molecules can be substituted
at the dispensing pharmacy level; in the
US,therapeutically equivalent generic
assets are given an AB rating by the FDA.
Large molecules – also known as
biologic pharmaceuticals – are
differentiated from small molecules,as
no two large molecule assets are exactly
the same.Given the impossibility of
having two identical biologic drugs,
therapeutically equivalent large
molecules are called biosimilars
(see Figure 1).
Regulatory Policy
On the whole,many countries
do not have official regulatory
recommendations for large molecule
interchangeability.However,in the
US, an official interchangeability
designation is allowed for
large molecule therapeutically
interchangeable biologics.These
requirements are distinct from
biosimilar guidance.It is postulated
that methodical and rigorous clinical
study will be required to confer the
designation.
Furthermore,different biosimilar
regulatory schema and rigours are applied
by the EMA and FDA (see Figure 2).
However,despite distinct regulatory
pathways for the approval of biosimilars,
the overall scouting and development
Cross reference
Europe – EMA
Decisions on substitutions are made at national level. In many EU
countries, automatic substitution of biologics is officially prohibited
or not recommended.
WHO
The WHO does not define standards on interchangeability for
biologic medicines. It recognises that a number of issues associated
with the use of biologics should be defined by national authorities.
Figure 1: Substitution and
interchangeability – at a glance
Figure 2: Due to
the varied nature of
biotechnology products
and their potential
risks, manufacturers of
both innovator biologic
medicines and biosimilars
are required to submit
pharmacovigilance and
risk management plans as
part of their application
US – FDA
The FDA can designate a biosimilar as an interchangeable
biologic when the following criteria are met:
1. The biologic product is biosimilar to the reference product; and
2. It can be expected to produce the same clinical results as the
reference product in any given patient; and
3. For a biological product that is administered more than once
to an individual, the risk in terms of safety of diminished efficacy
or alternating or switching between use of the biological product
and the reference product is not greater than the risk of using
the reference product without such alteration or switch
US
EU
Key:
S&E – Safety and efficacy
Clinical pharma – Pharmacokinetics/
Pharmacodynamics
Originator
Clinical S&E
Clinical pharma
Non-clinical
Quality
Originator
Clinical
Non-clinical
Quality
Biosimilar
Clinical S&E
Clinical pharma
Non-clinical
Quality
Biosimilar
Clinical
Non-clinical
Comparability data
Quality

2. www.samedanltd.com32
the financial commitment to developing
an originator large molecule is greater
than $800 million,whereas a biosimilar
development programme costs
approximately $100-200 million.
Biosimilar developers and marketers
argue that their respective assets offer
comparable efficacy and safety to the
reference-listed innovator biologic at a
relatively reduced cost burden to patients,
payers and the overall healthcare system.
This value proposition is predicated on
health/pharma economic considerations
correlating with key regulatory wins
and data extrapolation in select global
biosimilar scenarios.
Player Competition
Pharma players have a relatively reduced
cost of goods sold for their respective
biosimilar assets,compared with
innovater reference-listed biologics.
As such,from a commercial and marketing
standpoint,a significantly competitive
field is emerging – both biosimilar versus
biosimilar competition and biosimilar
versus innovator competition.Developers
must assert aggressive and potentially
asymmetric marketing,contracting and
manufacturing strategies,in addition
to tactics and initiatives to win in this
emerging space.
On top of this,innovator companies must
be prepared to aggressively defend their
respective proprietary large molecule
biologics against impending biosimilars.
Irrespective of whether it is a biosimilar
or ethical biologic marketer,key success
factors (KSFs) must be established
to align positive outcomes in light
of competing biosimilar entries.The
approach to commercial success will vary
depending on the product,country and
channel sought,both from an offensive –
biosimilar go-to-market – and defensive
– ethical biopharmaceutical market
defence – perspective (see Figure 5).
On the Market
In the biosimilars space,there is a robust
and increasing opportunity for high-
quality biopharma players to develop
and enter newly charted waters.Between
2016 and 2018,some $37 billion worth of
process remains highly similar across
most regulated global markets (see
Figure 3).
Cost Savings
Currently,the biosimilar opportunity
represents a core,future-orientated
growth driver among traditional pharma
players,as well as multinational ethical
biopharma parties.Citing significantly
lower R&D costs,and an expedited
clinical development timeline to
potential marketability,biosimilar
developers are keen to invest heavily
in the biosimilarisation of blockbuster
large molecule biologics (see Figure 4).
The cost savings can be substantial;
Proprietarybiologicbrand
Approach for commercial success varies significantly by product, country and channel sought
Need to focus resources on highest impact areas, given typically lower investments than originator biologic molecules
Successful commercial model can range from tender management to a fully branded approach
KSFs Country X/Product X Country Y/Product Y
Promotional activities (for example, materials, field representatives)
Key account management
Tender management
Market access
Medical science liaisons
Patient kits/training
Key:
Not a major KSF Major KSF
Figure 3: The value chain journey from biosimilar asset opportunity
scouting to go-to-market launch is rigorous and methodical
Figure 4: An expedited R&D pathway; biosimilar development
juxtaposed with reference biologic development
Figure 5: KSFs for commercialisation activities should be employed
to maximise biosimilar penetration on a global scope and scale
Revenue
Source: Molekule Consulting, 2015
Biosimilar
1 2 3 4 5 6 7 8 9 10 11 12
Biosimilar player targets proprietary
product for development
Reference biologic >$800 million
From cell to biosimilar product
Biosimilar: $100-200 million
Discovery Preclinical Phase 1 Phase 2 Phase 3Dev
Dev Preclinical Phase 1 Phase 3
Ethical biological
agent’s patent expiry
Biosimilar player files
regulatory dossiers in support
of biosimilar assets
Biosimilar competitors launch
biosimilar equivalent of branded
biologic asset
Time

3. www.samedanltd.com34
Biosimilar players needing to expand
and upgrade their technical and
manufacturing operations and
facilities in order to sufficiently meet
market demand and avoid early-stage
product stockouts
In conclusion,the biosimilar opportunity
is robust,growing and sustainable.
However,given multiple market factors
– including a lack of consumer and
prosumer biosimilar knowledge,fierce
competition and innovator companies’
desire to defend their proprietary biologic
assets – biosimilar market uptake and
adoption may be slow and irregular
until a critical mass effect is achieved.
drugs will lose their intellectual property
protection and these assets will be open
to immediate biosimilarisation (see
Figure 6).Nonetheless,despite these
massive potential revenue streams,
it is postulated that biosimilars will
not achieve a critical mass and market
uptake until 2023-2025.
In March 2015,Sandoz,the generics and
biosimilars arm of Novartis,received
FDA regulatory approval for Zarxio,a
biosimilar version of Amgen’s Neupogen.
However,pursuant to legal proceedings
and injunctions filed by Amgen,there
was a six-month delay to Zarxio’s US
market launch.Four additional regulatory
applications have been filed with the
FDA this year,indicating the critical pace
and strategic importance of biosimilars
to the market,as well as their respective
developers and marketers.
Slow Steps
A number of factors,including the Zarxio
legal precedent,may temper biosimilar
market adoption and growth until a true
understanding and prescriber buy-in
is achieved.Specifically,market factors
impacting and potentially limiting
biosimilar adoption include:
Patient,physician and payer-level
pause and concern regarding
switching established biologics
patients to biosimilars,with possible
substituting and conversion issues
Global regulatory uncertainty
regarding biosimilar
interchangeability
Slow response from prescriber
and payer-level early adopters for
bio-naïve patients
Innovator biologics companies
aggressively defending their
intellectual property and large
molecule biologic assets via strategic
and tactical blocking and tackling
of biosimilars
David Alderman is President of Molekule Consulting, a global
competitive intelligence-focused management consultancy.
Recognised as a biopharma subject-matter expert with an
in-depth understanding of biosimilars and generics, as well as
multiple disease states, current and future market players, and
developmental pipeline compounds, David provides actionable
strategic advice to leaders in the sector. He has completed further
education in Genetics and Molecular Biology and did his academic and research
training at Columbia University College of Physicians and Surgeons, and Emory
School of Medicine, US. Email: dalderman@molekuleconsulting.com
About the author
Figure 6: Estimated sales of products losing US patent protection during the year prior to patent expiry in US $ billions
Past Present Forward looking
Asset class 2013 2014 2015 2016 2017 2018 Total
Biologics 10 7 25 14 3 20 79
Inhalers 0 5 2 7 1 4 19
Injectables 3 3 8 1 5 1 21
Ophthalmics 1 3 1 5
Transmucosals 1 1 2
Topicals 0.5 0.1 0.2 0.1 1
Intranasals 1 0.2 1
Transdermals 1 1
Oral solids 14 16 22 15 11 10 88
Total 29 36 59 37 20 36 217
Binary
opportunities
Missed
opportunities (if not
currently invested)
Steady
opportunities
Source: Evaluate, 2013; McKinsey Analysis, 2013
Market value opportunity
Low High