BIOSIMILARS: AN EMERGING DRUG CLASS TAKES FLIGHT

Biologics represent the fastest growing segment of approved pharmaceuticals. Showing an increase of 10.6% compound annual growth rate and market size of USD234 billion in 2014, these products have contributed to a healthcare-spending crisis that has threated the sustainability of healthcare systems worldwide and patient access to essential medicines. Biosimilars offer one way to reduce spending on biologics, both directly, as these products are priced below the branded equivalent, and indirectly, by driving down the price of the branded drugs through competition. Typically discounted 20-30% from the originator in regulated markets, biosimilars are expected to deliver $11 to $33 billion in savings across the European Union (EU) by 2020. In the emerging markets, the discounts from the originator will be even higher, most likely in the 50-80% range, producing even more pronounced savings.

In light of the promise of significant savings in health spending, it is no wonder emerging economies, their governments, and local pharmaceutical companies have fully embraced the biosimilar concept. This attractive growth opportunity has invigorated local pharmaceutical companies, encouraging them to pursue the development of biosimilar products or non-comparable biologics. Although non-comparable biologics are not designed to meet European Medicines Agency/US Food and Drug Administration (EMA/FDA) standards for originator therapies – they do not undergo head-to-head studies with the reference compound – these products* have shown sufficient efficacy and safety in patients to gain substantial market share in the developing regions. Despite the lack of comparability data, these treatments have achieved rapid acceptance in their respective markets. For example, Yi Sai Pu was launched in China in 2006, a year before the originator product Enbrel, and its recorded sales reached $41 million in 2012, making it the top selling anti-TNF product in China (IMS Health 2013).

The emerging-market opportunity

Given the success and the growth of the non-comparable biologics, emerging-market biosimilars may deliver more value than many realize. Major opportunities exist in Brazil, Russia, India, and China. Although standard databases in these markets do not provide accurate tracking, the estimates indicate that biosimilar and non-comparable biologics sales in these regions could reach $2 billion in sales by 2020. This value may be even higher, as the Chinese market alone may account for  $2 billion.

* Some examples of a non-comparable biologics are Reditux (rituximab), Yi Sai Pu (etanercept), and Genfaxon (interferon beta).

Non-comparable biologics also have the potential to penetrate the regulated markets after additional testing is performed and data are obtained. Indeed, it is worth noting that many of these products are already being investigated in clinical studies around the world. Along these lines, partnerships have been established between the multinationals and local companies in emerging markets to reposition the non-comparable biologics for the regulated markets. Examples of this activity abound; among them are the licensing agreement signed by Dr. Reddy and Merck KGaA and collaborations between Mylan/Biocon and Appotex/Intas Biophrama.

Despite their very high growth potential in emerging markets, biosimilars also offer a substantial opportunity in such regulated markets as the US, EU, and, to a smaller extent, Japan. To be sure, sales of the originator biologics have been highest in these regions, so the possibility for capturing considerable market share is the greatest. At the same time, penetration will be lower in the price-insensitive regions, compared with the emerging markets.

The US situation

In the US, growth is predicted to be gradual, resembling that seen for branded drugs in competitive markets. Acceptance not only from payers but also from physicians will be essential. Given this context, the price deterioration of biosimilars should not be as pronounced as in other markets. Furthermore, as physicians will be the main target of marketing efforts, statistically significant clinical data will be required to convince them that biosimilar products are safe and effective.

Sandoz offers an illustrative example. Although its recombinant human growth hormone Omnitrope was approved via the 505B(2) pathway and is not considered a biosimilar product, the company’s strong relationship with key opinion leaders enabled the drug to capture 15% of the hGH market. More important, on March 6, 2015 Sandoz’ Zarzio (filgrastim-sndz) became the FDA’s first approved biosimilar. Zarzio is licensed for the same five indications as Amgen’s Neupogen, the originator biologic.  The approval was based on a thorough review of company’s dossier, which included comparative structural and functional characterization, animal studies, human pharmacokinetic and pharmacodynamic findings, clinical immunogenicity data, and other clinical safety and effectiveness data. In the final analysis, Zarzio was determined to be highly similar to Neupogen, notwithstanding minor differences in clinically inactive components.  This approval marked a true milestone for the biosimilar sector, as it validated the functionality of the US biosimilar 351(k) pathway

Market penetration in Europe

At present, Europe represents the largest biosimilar market, having had an established regulatory pathway for seven years. The market in Europe is quite fragmented, as differences among local healthcare systems have produced a varied map of market penetration, one diifferentiated by product class, indication, and geography. The experiences of currently marketed biosimilar products in Europe, including filgrastim (G-CSF), somatropin (hGH), and erythropoietin (EPO), have been well studied and analyzed. Filgrastim, a treatment for an acute condition (neutropenia) that is prescribed in a treatment regimen characterized by frequent cycling among therapies, has achieved significant uptake across European markets. In fact, the filgrastim biosimilar has achieved 100% share of the accessible market in Croatia, Czech Republic, Hungary, and Romania (IMS).

In contrast, somatropin, a product that is used to treat a chronic condition (short stature or growth failure) has penetrated only a limited market, relative to filgrastim. The most likely reasons for the difference are somatropin requires infrequent cycling and has a pediatric indication. Most European countries showed Somatropin market share below 12%; only three approached 20-30%. Poland was an outlier at 99% penetration (IMS).

A number of factors seem to influence the price for each drug class following the entry of a biosimilar into the market. The initial consideration is price, both of the originator and biosimilar. A second driver is the product mix between the two, while a third is the number of new competing products in the same class. For example, the EPO market was affected by all three of these factors. The entry of the long-acting version of EPO (continuous erythropoietin receptor activator, or CERA) led to market deterioration for both the originator and its biosimilar in price-insensitive markets once CERA’s superiority was established. Today, second-generation molecules have been used in 96% of all treatment days in Denmark, but only in 17% in Poland.

Since 2006, EPO’s price has fallen by 81% in Croatia, 4% in Denmark, and 12% in Italy, with a median reduction in listed price of 35% (2006-2013). On the positive side, the decrease in price has been accompanied by an increase in consumption in G-CSF and hGH biosimilars.

An expanding universe

In sum, the biosimilar market has been steadily expanding since the introduction of new products, albeit at a slower pace than was originally speculated. While the overall market size is predicted to grow in the future, the extent of the growth will depend on the number of new biosimilar launches and the strength of sales in the US, the largest market in the world. In 2012, there were 263 biosimilars in development and 80 in clinical studies; this base should provide a sufficient number of products to expand the market. Indeed, the following year,, biosimilar sales reached $1.2 billion, according to an analysis by Frost & Sullivan; other reports reported even higher value when non-comparable biologics were included (2.4 billion in 2012, IMS 2013). Thus, the future looks quite bright, as more new products are introduced and join older biosimilars in penetrating the several regulated and emerging markets: forecasts call for $3.7 billion in sales in 2015 and $10-25 billion by 2019 (IMS, 2012).

Magdalena Leszczyniecka, PH.D., CEO STC Biologics, Cambridge (MA), USA