On Feb. 9, 2012, the FDA issued its draft guidance on biosimilar product development, starting the ball rolling on biosimilars in the U.S. The guidance is intended to establish a pathway for drugmakers to get approval for biologics based on existing drugs that have lost patent protection.
The draft guidance indicates the FDA is going to take a case-by-case approach, and will likely require some clinical data for comparability with the innovator, or reference product. And there are enough differences between the draft guidance and the EU’s pathway to indicate that companies won’t be able to port their application from the EMA to the FDA. Just because the FDA is ready to establish an approval pathway doesn’t mean that it’s going to be easy to enter the market.
One of the key issues with the FDA’s draft guidance is the lack of interchangeability; that is, pharmacists or dispensers will not be able to automatically substitute a biosimilar for an existing biologic, the way they usually can with a small molecule generic. If this component remains in the final guidance, then the biosimilars market will take on a peculiar shape.
No interchangeability — or an ambiguous case-by-case process for achieving it — means that marketers will have to convince doctors to prescribe the biosimilar for their patients. Marketers will have to build sales forces and incur the costs of promoting their products, as opposed to the cost-based equation that reigns over small molecule drugs.
And pricesaren’t expected to fall as radically as they tend to for small molecule generics, due to that need for clinical data, as well as the complexity of manufacturing biologics. Most surveys project savings of perhaps 20% to 30% from innovator prices, hardly the enormous drop that we see in standard generic launches.
Given the need for clinical trials, the lack of large savings, and the necessity of sales reps, the biosimilar market looks less like the traditional U.S. generic market and more like a hybrid between innovative drugs and the branded generics field.
Still, the U.S. market for biosimilars has enormous potential, as many lucrative biologics face patent expiry in the years ahead, including blockbusters like Rituxan, Lantus, Herceptin, Neulasta and soon-to-be top-selling drug worldwide Humira. Contract service providers across the spectrum have been assessing the opportunities and positioning themselves to assist drugmakers in this new market.
Most providers we spoke to said that much of the interest in their biosimilars-related services was coming from very large generic companies, and large pharma and biopharma. Julian Hanak, commercial director of Cobra Biologics, said, “A few years ago, it was startup companies trying to develop biosimilars themselves. As products got licensed, generics manufacturers got extremely interested. We see a lot of interest coming from the big small molecule generics companies.”
Mr. Hanak said that Cobra is seeing a lot of interest from customers in the biosimilars area, noting, “We’re investing in larger capacity to meet commercial needs, as well as cost-effective ways of developing antibodies. It’s early, so it’s difficult to gauge how much market share a client will win. As a CMO, we have to keep flexibility.” Key to that, he noted, was working with single-use bioreactors for overlapping batches. “Once commercial demand is established, we can see about tech transfer or co-building a new facility with a client.”
Vicki Wolff-Long, general manager, Cangene bioPharma, commented, “We have recently had several RFPs around biosimilars, probably representing about 10% of the total RFPs we have received. This suggests a growing opportunity for contract manufacturers.” She added that the RFPs are coming from potential new customers, not from the current customer base.
Leland Paul, Ph.D., vice president, Process Sciences at CMC Biologics, remarked, “We regard biosimilars as a highly relevant business opportunity; we’ve developed and are developing several biosimilars for customers, including ones for the U.S.” He noted that the company expects a rapid expansion of the biosimilars market in the next five to eight years, driven both by U.S. introduction and growth in China, Japan, India and South American markets.
Dr. Paul lamented the lack of true interchangeability in the FDA’s draft guidance, but commented, “It is particularly useful that FDA encourages early interaction with biosimilar sponsors and outlines when this interaction should occur and what data is needed for the first meeting.”
At Catalent, biosimilar development work is on the rise. Sven Lee, vice president, business development, Biologics at Catalent remarked, “We have already worked with a number of companies on the development of their biosimilar programs. Two approved products using our GPEx technology are biosimilars. The opportunities continue to grow in Asia, Europe and the U.S.” The company has a number of biosimilar cell lines developed for evaluation, and will have a new GMP Phase I/II facility, with 500L and 1,000L single-use bioreactors, opening early next year. Catalent also works with Toyobo Biologics for manufacturing and CEVEC for cell line technology.
Mr. Lee added, “The development of biosimilars will need to be fast with the proper characterization to compete in a market with quickly expiring patents of innovator molecules and several companies already advanced in biosimilar development. Our GPEx technology has the advantage of providing high expressing cell lines with great stability being developed in short timelines.”
Room for Improvement
Given the seeming lack of interchangeability in the FDA’s guidance, some biosimilar developers will look to improve on the reference product, going from biosimilars to biobetters. If they can find an angle for differentiation, they may find it easier to convince doctors to prescribe their drugs.
Niall Dinwoodie, head of product characterization, biopharmaceutical services at Charles River Laboratories, remarked, “Biobetters remain an extremely attractive alternative to biosimilars and we are seeing an evolution in the industry with growth in this area. These therapeutics drive innovation in industry while also providing patients with improved treatment regimes thus reducing treatment costs, which was one of the main drivers behind the biosimilars initiative.”
Edward Graham-Brown, vice president Strategic Marketing for Process Solutions at EMD Millipore, commented, “Initially, the scope for innovation in biosimilars was not considered to be very broad. But we’re learning that there are many opportunities for innovation and improving on a reference product: delivery, patient approach, formulation and more. There’s enough there to maintain profitability of that type of business. It’s been a topic of discussion at many conferences. If the price spread between a biosimilar and a reference drug is 20-30%, these improvements may be an anchor point.”
Tod Lauerman, Ph.D., Corporate Development, at Althea Technologies, noted that his company has been working with developers on biobetters, using Crystalomics, a branded technology to create new formulations for soluble protein therapies. “The technology crystallizes the native protein which is then suspended in a normal parenteral vehicle. Crystal suspensions can reach 350 mgs/ml with very little increase in viscosity compared to the vehicle alone. These high concentration formulations can convert low concentration monoclonal antibody products that must be given by intravenous infusion into self-administered subcutaneous injections. The low viscosity of the product allows narrow, hence less painful, needle use.” He noted that the company is seeing biosimilars/biobetters demand from both existing clients and new customers looking to move a formulation from intravenous to subcutaneous.
Just as developers need to differentiate, CMOs are also looking for advantages in their offerings. Cory Lewis, vice president of business development and marketing for Cook Pharmica, accents his company’s ‘One Source, One Location’ message. “In order for biosimilars to function like true generics and be offered at a lower price point, biosimilars must realize some cost reductions in manufacturing,” Mr. Lewis remarked. “Cook Pharmica effectively meets this need, as production costs can be reduced by bringing the entire manufacturing and packaging operation under a single roof. We can produce drug substance from mammalian cell culture, formulate, fill, and package the final drug product so that it is ready for distribution. Coupled with our development expertise and capabilities, we are positioned to expedite biosimilar development with the backing of a sound analytical package.”
Across the Board
Of course, it’s not just manufacturers that are going to assist biosimilar developers. CROs, analytical labs, regulatory consultants and other providers will also be critical players in this new market.
Fiona M. Greer, B.Sc. (Hons) M.Sc. Ph.D., global director, BioPharma Services Development, at SGS M-Scan, told us, “The comparability testing of biosimilar products is already a large part of our business, mainly at the physicochemical testing level. The SGS M-Scan laboratories have been working in this arena for many years and already have a global portfolio of clients. Interest is now also coming from large pharma and companies that were originally innovators and now wish to develop biosimilars to their own and other’s products.”
Dr. Greer noted that physicochemical characterization is a key area in biosimilars for SGS M-Scan, but, “Our main strength is in our ability to provide guidance on selecting an appropriate analytical strategy, which is based on our experience of these products. This is the ‘added-value’ of our service.”
Raymond Kaiser, Ph.D., global science leader and vice president Biotechnology Services at Covance, commented, “For us, biosimilars offer a market expansion of our biotechnology and associated services. This market is very closely associated with our core capabilities for support of biopharma companies. For instance, many companies see potential opportunities in copying innovator molecules that were first marketed years ago. We’re using new technologies to compare clients’ biosimilars to innovator molecules. The greatest difference between support of biosimilar products relative to marketed biological products is around comparability requirements. The compact timelines required for the development of a biosimilar require a multidisciplinary team to coordinate product development, nonclinical and clinical activities. With our range of services, we’re in a unique position of being able to form these teams to ensure that the development pathway is optimized.”
Dr. Kaiser lamented that, at present, the FDA, EMA and Japan each require reference product from their own regions, as well as clinical data. “I think biosimilar developers would appreciate a position where development performed to EMA standards was acceptable to the FDA and visa versa. Many sponsors have begun development under the European regulations because this is where the regulations have been in place, but now find that additional work may be required for submission to the FDA.”
Dr. Christine Milligan, a director of Logistics at Fisher Clinical Services (FCS), noted, “What we are currently seeing is that only a limited Phase I/III program is run for a biosimilar. However, the nature of the products, often limited supply of the IMP, cost of the comparator and global reach of the sites, as well as the volume of upcoming trials, means biosimilars do represent a potential significant bump in business for FCS. The packaging, blinding, labeling and distribution of the biosimilar IMP and comparator are all core FCS GMP services.”
Partners or Providers?
Large pharma and biopharma companies see a huge opportunity in biosimilars. Rather than dive into the market on their own, most of the majors seem interested in hedging their risks and working with partners. JVs and other partnerships include Biogen Idec and Samsung, Amgen and Watson, Hospira and Celltrion, Kyowa Hakko and Fujifilm, and Merck and Hanwha Chemical. Merck has also partnered with MedImmune for bulk manufacturing and Parexel (in a strategic services deal we covered in the March 2011 issue) as part of its biosimilars strategy.
Not all of these are going to bear fruit. Pfizer signed a deal in late 2010 to sell insulin biosimilars developed by Biocon, India’s largest biotech company, but scuttled the pact in March 2012, after paying a reported $200 million in setup costs. At the time, Pfizer’s general manager for biosimilars, Diem Nguyen, commented, “Pfizer continues to be dedicated to developing a broad portfolio of biosimilars medicines,” and a Pfizer spokeswoman said the company was focusing on biosimilars for oncology, pain and rare diseases, according to a Reuters report.
Why so much collaboration? Mr. Dinwoodie at Charles River Laboratories contended, “There are significant opportunities for collaboration in the industry. We are seeing small and large biotechs work together to improve their success rates. The complexity, costs and considerable Resources required to develop biosimilars and then, crucially, market them, are driving collaboration in the industry.”
In 2008, Teva and bio-CMO Lonza also formed a biosimilars partnership, and it looks like a move away from the traditional notion of “outsourcing partner” for Lonza. Simon Edwards, Lonza’s vice president of Formulated Products, told us, “We’ve traditionally operated as a CMO, but when we started to see inquiries about biosimilars, it occurred to us that if we looked at what happened in small molecule generics, maybe we could look to use our technology in a different way. In this new environment, we could take our technology and experience in cell line construction and manufacturing and be a strategic partner, more than a contract manufacturer.” In a sense, the alliance lets Lonza utilize capacity in an area that may be more stable than CMO activities.
Mr. Edwards said that Lonza initially looked at bio-developers in India for a partnership, but found no match. “We didn’t have common ground,” he commented. “They didn’t need us to access the Indian market, and we needed a partner with clinical trials and marketing infrastructure.” They realized that an established large-scale generics company might make a better fit. “When we spoke to Teva, we realized that we filled each other’s gaps in this market.”
Lonza and Teva are working on a portfolio of biosimilars, including a version of Rituxan. Teva already has biosimilars on the market in Europe. “From a collaboration standpoint, it’s going well. This alows us to focus on what we do best,” said Mr. Edwards.
In addition to contract service providers, manufacturers of instrumentation, bioprocessing equipment and systems and related consumables also stand to gain from a biosimilars boom. Mr. Graham-Brown at EMD Millipore remarked, “Our business is driven by volume of drugs produced. More companies developing biologics means more process development work, and that means more production equipment. It’s a beneficial trend in our part of the industry.”
Krystyna Hohenauer, director of Biotherapeutics Sales Development, Life Sciences & Technology, at Perkin Elmer, said, “We are seeing an increase in our existing customers developing biosimilars, especially the CRO and CMO community in Europe and U.S., and we are finding a higher level of inquiries from potential new customers from the Asia-Pacific region and India.” She added that the company’s LabChip GX II can help analyze proteins for biosimilars and their reference products.
Maik W. Jornitz, senior vice president, Marketing & Product Management, Bioprocess Solutions at Sartorius Stedim Biotech, commented, “The biosimilars market creates an additional, very interesting business opportunity and volume for SSB, since our focus is within the biopharma industry. This focus expresses itself in our product portfolio and support resources, available to the biopharma industry and fitting nicely into the biosimilars industry. We believe the main biosimilars developments will come from Asia, which is excellently covered by our organization.”
Opinions were mixed as to whether we’ll see biosimilars for U.S. use manufactured in India, China, and other lower-cost areas. The equipment and instrumentation companies all cited Asia as a hotbed of biomanufacturing development, generally contending that their lack of a first-generation bio-base has freed them to pursue the new generation’s more advanced processing setups without incurring legacy costs. Some CMOs, on other hand, felt that those regions have a way to go, in terms of meeting western quality standards and IP protection. Mr. Graham-Brown at EMD Millipore noted that several far east markets are growing in sophistication when it comes to biologics. “The Korean market truly stands out as well-developed,” he remarked. “They’re ready to commercialize products.”
The president of Samsung Biologics, Tae-Han Kim, told the Financial Times, “It is in Samsung’s DNA to produce products at low prices while meeting legal and industry requirements.” While biosimilars aren’t the same as flat-screens, it’ll be interesting to see if Asian developers are able to reduce the costs of biosimilars beyond the 20% to 30% savings generally projected.
Stephen Taylor, Ph.D., senior vice president and commercial director at Fujifilm Diosynth Biotechnologies, commented, “We do believe that the BRIC countries [Brazil, Russia, India, China] will be important markets for the sale of biosimilar drugs and that local manufacture will be important. However, we believe that manufacturing in emerging markets for sale in the U.S. and Europe is probably some way off.”
If there’s any group of people that could temper industry enthusiasm about biosimilars, it would be the lawyers. Just because a pathway is being set up by FDA, it doesn’t mean bio-innovators (and their lawyers) are going to sit back and welcome biosimilar competition.
Sanya Sukduang, a partner at IP law firm Finnegan, noted that the draft guidance doesn’t deal very much with IP issues. “The draft does give some indication of what the reference sponsors [holders of the original BLA applications] need to do to protect against infringement,” Mr. Sukduang remarked. “There’s going to be leeway in the structure of the biosimilar’s amino acid structure versus that of the reference product. FDA has indicated that they want to look at this amino acid structure, but allow some variability and permit the abbreviated BLA to be biosimilar. It’s going to be interesting to see how much variability FDA allows and still says, ‘It’s a biosimilar.’”
He added that patent holders may be able to file challenges against biosimilar filings in a number of areas, even if the molecule’s initial patent is expired. “There are going to be infringement issues that need to be sorted out,” Mr. Sukduang commented. “In traditional generics, the filing has to copy the branded drug’s molecule. In biosimilars, variability changes that equation. Patent-holders may not sue for a compound claim, but some downstream processes may lead to infringable claims.”
He noted, “Innovator companies should go beyond looking at amino acid sequence and into other areas, when it comes to protecting against infringement: purification processes, manufacture, method of treatment, and the like. In the small molecule market, companies wouldn’t necessarily look at such aspects until they reach lifecycle management with a molecule. In biologics, it should be one of the first things you look at. As you look new indications, you claim patents for them, not just add them to the specifications, in order to add better infringement protection. Biopharma companies need to start broadening their view of patent portfolio.”
Disheartened? Mr. Sukduang noted that the companies getting involved in developing biosimilars aren’t strangers to patent law and will be able to make assessments of which drugs are worth pursuing and which could result in too much legal risk. “There’s a real pathway for a biosimilar applicant, and there’s also a pathway for the sponsor to protect against patent infringement,” he said.
An even larger legal question about the fate of U.S. biosimilars (and the opportunities they present for contract service providers across the board) abounds this summer, when the Supreme Court rules on the Patient Protection and Affordable Care Act (better known as Obamacare). The biosimilars guidance was the result of the Biologics Price Competition and Innovation Act of 2009, which is a portion of the PPACA. If the court strikes down the entirety of Obamacare (a possibility due to an inseverability clause inserted in the legislation), then the legal impetus for biosimilars may vanish.
That ruling won’t be announced until summer. By then, FDA will be working on the final version of the biosimilars guidance. Let’s hope it’s not in vain.
Gil Y. Roth has been the editor of Contract Pharma since its debut in 1999. He can be reached at email@example.com.