After many years in the slow lane, biosimilars are attracting greater interest, given important changes that will enable accelerated growth over the next decade and beyond. Although today’s biosimilars market is currently small and narrowly focused on a few disease areas and countries, the landscape is set to expand, as patents expire on leading biologics, U.S. legislation comes into effect, as a vision emerges for pharma emerging markets, and as payers push for wider adoption of biosimilars to manage burgeoning costs.

The signs of change are visible, but questions remain. How will the commercial prospects play out? Which region holds the most potential? What will be the optimal go-to-market model for new entrants?

Analysis by business research and pharmaceutical forums globally seeks to take advantage of evolving new markets. Success in biosimilars will require carefully planned strategies, strong commitment and the resilience to overcome some formidable barriers, especially in the short term, to maximize returns on investment. The changing outlook for biosimilars comes at a time when the global pharmaceutical industry is feeling the combined impact of two key events; a period of unprecedented patent expirations on many of the world’s largest pharma brands, and a financial crisis thathas required healthcare systems to make significant and sustained cost reductions.    

The biosimilars sector has reached very different stages of evolution around the world. The clarity of guidelines is variable and regulatory pathways diverse, leading to various definitions of biosimilars across countries and regions. The market of biosimilars & biologics geographically can be categorized into three distinct clusters: the U.S., the other regulated markets (Europe, Japan & Canada) and the pharma emerging markets namely (China, Brazil, India, Russia, Korea & Mexico).

Europe is the Most Advanced and Progressive Market So Far
Europe is the most advanced and progressive, accounting for majority of the global spending. However, despite a strong legislative foundation, to date only a few manufacturers have launched biosimilars in the region. The most notable players in EU are Sandoz/Novartis, Stada, Hospira, Medice and Teva. Biosimilars are established in three therapy areas in Europe: EPOs for treatment anemia caused by renal dialysis, G-CSFs for lowered white blood cell counts after chemotherapy, and HGH. Germany and France account for half the market in the EU and other major nations like Spain, UK, Italy and Holland have to catch-up.

The emerging economies, such as China, India, Brazil and Mexico, have developed their own regulatory pathways to manage the approval of biosimilars. As compared to EU they have set a lower barrier in terms of clinical trial requirements and regulatory control. A looser structure has already fuelled the launch of modified biologics within the oncology and EPO markets, especially in China. Similar trends are being followed in India & Mexico. The immediate value will be sourced from the emerging economies, spurred by the anticipated flow of new patients. However, in the long run, the U.S. will be the cornerstone of the global biosimilar market.   

Challenges Very Different From Those for Small-Molecule Generics                   
For new entrants, biosimilars pose very different challenges to those presented by small molecule generics, with more demanding requirements in terms of clinical development, market access, manufacturing and sales and marketing capabilities.

• High Development Cost: Developing a biosimilar is not a simple process but one that requires significant investment, technical capability and clinical trial expertise. Average cost estimates range from $100-250 million (various industry sources) if plant development is included (or $20-100 million for non-plant cost).
• Fledgling Regulatory Framework: In most markets apart from Europe, the regulatory framework for biosimilars is generally still very new compared to the well-established approval process for NCEs and small-molecule generics; in some cases it is non-existent, making global investments risky.
• Manufacturing Issues: Barriers to developing a biosimilars manufacturing capability are not prohibitive, but the development of biosimilars involves sophisticated technologies and processes, raising the risk of the investment.
• Branded Mentality: Winning the trust of stakeholders will call for many of the skills, resources and branded mentality of a conventional innovative pharmaceutical company—potentially involving changes to commercial models. Initiatives to allay safety concerns among physicians and patients will be particularly important, supported by sales teams with deeper medical and technical knowledge. This will mean significant investment in sales and marketing, initially at least, using either internal commercial capabilities or by sourcing these from branded companies. Investment in pricing and market access will also be increasingly important: post marketing surveillance is already mandatory in Europe and the U.S. is likely to follow.

A Focused Strategy is Needed
Thus, unlocking the potential of biosimilars will require a focused strategy along the whole value chain, from optimizing the clinical development program through developing the most suitable strategy for commercialization. Balancing the trade-off between in-house versus strategic alliances will be essential for achieving cost efficiencies and speeding up time to market, with further tailoring by geography to cope with a heterogeneous landscape. Entry into pharma emerging markets, for example, will be strongly governed by partnerships with strong local players.

To date, limited experience with biosimilars captures only a small portion of their anticipated future potential, as powerful economic pressures increase their appeal to payers in mature and emerging markets. Nevertheless, there are major barriers in place which mean that it may be challenging to be successful. The biosimilars sector is also at very different stages in each of the major regions and will likely take a different course. Ultimately, from the heterogeneous group of biosimilars entrants and would-be players, the number of winners may be small.

Companies looking to take advantage of the biosimilars opportunity will need to be clear about biosimilars’ strategic relevance within the organization, in terms of portfolio fit, financial suitability and synergies within the value chain, bearing in mind that this may be an established or pharmerging markets play.

A full understanding of the financial upsides and risks of the investment will be critical, based on realistic scenarios of the size of the potential, the therapy areas where it will be found, and whether collaboration and alliances are required to access strategy will be vital for successful entry. Above all, companies will need commitment: the prospects are good and growing but biosimilars will likely be a long-term game.

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Gurpreet Sandhu
Reva Pharmaceuticals

Dr. Gurpreet Sandhu, is Managing Director of Reva Pharma (India). He can be reached at gsandhu@revapharma.com

Gurpreet Sandhu has over 26 years of experience in pharmaceuticals, chemicals and agro commodities, and is now the managing director of Reva Pharma, based in India. The company focuses on contract manufacturing and generic drugs API and Formulation. Dr. Sandhu holds two MBAs (with specialization in Marketing Management & International Business) from Cardiff University, UK. He also has a Ph.D. in Economics. He has served in diverse management positions in multinational corporations. In his early years, Dr. Sandhu worked with the TATA group & Global Traders. He then worked at Matrix (Mylan), followed by eight years as a director of the global API business in Ranbaxy (Daiichi Sankyo).  He is also the co-founder & chairman of meriwealth.com which is a finance & reality organization. Dr. Sandhu has worked in and has a close understanding of key markets, including Japan, Europe, China, India and other emerging markets. Over his career, Dr. Sandhu has developed skills in general management, international business, mergers & acquisition, procurement and vendor development. Apart from his passion to travel and dedication to work, Dr. Sandhu takes interest in collecting modern art. He also enjoys reading within this discipline, and is an industry spokesperson.