Michael Turner and Magnus Franzen, Life Sciences Experts, PA Consulting Group03.01.18
The biosimilars market, while not having fully lived up to the initial expectations, may be on the brink of considerable and rapid change. The limited performance to date has largely been due to a complex and costly development process, a high regulatory hurdle, and much more challenging obstacles to sales than faced by generics.
Price is not enough
Experience to date suggests that although price is still the most important competitive advantage for a biosimilar company, the discount rates currently being experienced by the category are not enough to automatically convince key stakeholders of a biosimilar’s value.
For example, while generics can often see price decreases of up to 80-90%, biosimilars have been introduced with a price discount usually in the 20-30% range. Some markets discounts have been as low as 10%.
Since the price lever is not as strong as for generics, biosimilar companies have had to ‘earn the right to play’ by adding value and/or differentiating in three areas:
· Improving the customer experience
· Producing additional evidence to support the product
· Creating valuable engagement with key stakeholders
Improving the customer experience
Some biosimilar companies have found a way of overcoming the dilemma of differentiating from the originator, while at the same time remaining similar from a regulatory point of view. By focusing on improving the healthcare professional and patient experience with their products, they have in some cases been able to create a competitive advantage without actually changing the way the drug is administered or works in the body.
We have found two ways in which biosimilar companies are aiming to improve the experience of using their drug: value-added services and improvements in the delivery device or mode of administration.
However, the biosimilar company is often forced to work ‘beyond the drug’ just to gain entry to the market. For example, value-added services are an important part of many originator companies’ strategies to build brand loyalty and differentiate in the market place. Therefore, biosimilar companies are often confronted with filling the gap that may appear from the loss of these services if prescribers were to switch to the biosimilar.
Improvements in the delivery device offer some potential for the biosimilar company. And some high-profile cases have already shown how powerful this can be. While the service programs of originators may sometimes be hard to match, the devices have often been neglected by the originator company as the drug is reaching the end of its lifecycle.
In addition, there may be still be untapped opportunity in leveraging Internet of Things and connectivity in these kinds of devices to achieve further differentiation and competitive advantage.
Presenting additional evidence
A biosimilar receives marketing approval with more limited evidence requirements than an originator drug. Nonetheless, there are two important factors that the biosimilar company needs to take into consideration.
First, even though the regulator may accept limited evidence, the biosimilar company will still need to convince healthcare professionals.
Second, the FDA recently published long-awaited guidance for substitution of biosimilars which states that the company would likely have to prove its biosimilar produces "the same clinical result as the reference product in any given patient," and in all the approved indications.
Both these factors highlight the need for additional evidence. This means companies will often need to continue evidence generation even after receiving marketing approval.
The company can strengthen its case in the market by generating real world evidence of the safety and efficacy of their drug, for example in relation to switching. Since originator companies often have a wealth of data from years of product use, which they may use to defend their position in the market, biosimilar companies may need to reach a certain minimum level of evidence to break through with some physicians and payers.
Creating valuable engagement
The final area of differentiation is in the creation of meaningful relationships with key stakeholders and customers. As mentioned above, healthcare professionals will have to be engaged to communicate the value, safety and efficacy of the biosimilar.
It is also important to create relationships with payers and other institutional customers, such as pharmacists at larger hospitals. These relationships are important to drive market share against the originator, but also to assert the position of early biosimilars against latecomers who may be more likely to go into the market at a lower price point and with a more ‘hands-off’ approach.
Although the commercial setup to bring biosimilars to customers often looks different for each company and the models are clearly evolving, we see a trend towards models based on Medical Science Liaisons and Key Account Managers. However, this model will vary across global geographic markets, depending largely on the opportunity, level of competition and reimbursement environment.
Interestingly, companies have yet to fully recognize the power of the patient as a driver for biosimilar adoption. Often patient engagement is used to ensure tacit approval. But rarely are patients and patient groups leveraged in a more direct, strategic way. Biosimilars can leverage cost savings and other innovative ways of differentiation to reach patients and encourage switching and product use.
Moving forward
Bringing a biosimilar from early development to market is a risky endeavor full of challenges. Although a firm financial commitment is a key starting point for success in biosimilars, the challenges will not be resolved by simply throwing more resources at them.
In a competitive marketplace where price alone may not be enough to convince payers, physicians and patients to switch from originator drugs, and where more than one biosimilar is competing for share, companies will have to find ways of differentiating and creating a competitive edge beyond dropping the price and focusing on share of voice.
Turner of PA Consulting
Michael Turner is a life sciences expert at PA Consulting Group, with over 17 years of commercial strategy experience. Michael partners with clients to address strategic product and portfolio challenges and implement strategies to maximize asset value.
Franzen of PA Consulting
Magnus Franzen is a life sciences expert at PA Consulting Group. With a background in strategic and market research, Magnus leverages a deep knowledge of the dynamics of commercializing pharmaceuticals in a changing healthcare environment to support clients in key strategic areas, such as customer engagement, multichannel marketing and value beyond the pill.
Price is not enough
Experience to date suggests that although price is still the most important competitive advantage for a biosimilar company, the discount rates currently being experienced by the category are not enough to automatically convince key stakeholders of a biosimilar’s value.
For example, while generics can often see price decreases of up to 80-90%, biosimilars have been introduced with a price discount usually in the 20-30% range. Some markets discounts have been as low as 10%.
Since the price lever is not as strong as for generics, biosimilar companies have had to ‘earn the right to play’ by adding value and/or differentiating in three areas:
· Improving the customer experience
· Producing additional evidence to support the product
· Creating valuable engagement with key stakeholders
Improving the customer experience
Some biosimilar companies have found a way of overcoming the dilemma of differentiating from the originator, while at the same time remaining similar from a regulatory point of view. By focusing on improving the healthcare professional and patient experience with their products, they have in some cases been able to create a competitive advantage without actually changing the way the drug is administered or works in the body.
We have found two ways in which biosimilar companies are aiming to improve the experience of using their drug: value-added services and improvements in the delivery device or mode of administration.
However, the biosimilar company is often forced to work ‘beyond the drug’ just to gain entry to the market. For example, value-added services are an important part of many originator companies’ strategies to build brand loyalty and differentiate in the market place. Therefore, biosimilar companies are often confronted with filling the gap that may appear from the loss of these services if prescribers were to switch to the biosimilar.
Improvements in the delivery device offer some potential for the biosimilar company. And some high-profile cases have already shown how powerful this can be. While the service programs of originators may sometimes be hard to match, the devices have often been neglected by the originator company as the drug is reaching the end of its lifecycle.
In addition, there may be still be untapped opportunity in leveraging Internet of Things and connectivity in these kinds of devices to achieve further differentiation and competitive advantage.
Presenting additional evidence
A biosimilar receives marketing approval with more limited evidence requirements than an originator drug. Nonetheless, there are two important factors that the biosimilar company needs to take into consideration.
First, even though the regulator may accept limited evidence, the biosimilar company will still need to convince healthcare professionals.
Second, the FDA recently published long-awaited guidance for substitution of biosimilars which states that the company would likely have to prove its biosimilar produces "the same clinical result as the reference product in any given patient," and in all the approved indications.
Both these factors highlight the need for additional evidence. This means companies will often need to continue evidence generation even after receiving marketing approval.
The company can strengthen its case in the market by generating real world evidence of the safety and efficacy of their drug, for example in relation to switching. Since originator companies often have a wealth of data from years of product use, which they may use to defend their position in the market, biosimilar companies may need to reach a certain minimum level of evidence to break through with some physicians and payers.
Creating valuable engagement
The final area of differentiation is in the creation of meaningful relationships with key stakeholders and customers. As mentioned above, healthcare professionals will have to be engaged to communicate the value, safety and efficacy of the biosimilar.
It is also important to create relationships with payers and other institutional customers, such as pharmacists at larger hospitals. These relationships are important to drive market share against the originator, but also to assert the position of early biosimilars against latecomers who may be more likely to go into the market at a lower price point and with a more ‘hands-off’ approach.
Although the commercial setup to bring biosimilars to customers often looks different for each company and the models are clearly evolving, we see a trend towards models based on Medical Science Liaisons and Key Account Managers. However, this model will vary across global geographic markets, depending largely on the opportunity, level of competition and reimbursement environment.
Interestingly, companies have yet to fully recognize the power of the patient as a driver for biosimilar adoption. Often patient engagement is used to ensure tacit approval. But rarely are patients and patient groups leveraged in a more direct, strategic way. Biosimilars can leverage cost savings and other innovative ways of differentiation to reach patients and encourage switching and product use.
Moving forward
Bringing a biosimilar from early development to market is a risky endeavor full of challenges. Although a firm financial commitment is a key starting point for success in biosimilars, the challenges will not be resolved by simply throwing more resources at them.
In a competitive marketplace where price alone may not be enough to convince payers, physicians and patients to switch from originator drugs, and where more than one biosimilar is competing for share, companies will have to find ways of differentiating and creating a competitive edge beyond dropping the price and focusing on share of voice.
Turner of PA Consulting
Franzen of PA Consulting
