Forecasting the potential of the biosimilars market

Dr. Markus Hauser, associate director, commercial operations, Biogen Idec International, on the promise and problems of biosimilars

Dr. Markus Hauser, associate director, commercial operations, Biogen Idec International, on the promise and problems of biosimilars

Biotech drugs represent the fastest-growing and best-performing sector of the pharmaceutical market.

With many of the older biotech drugs nearing patent expiry, its no surprise the number of generic manufacturers interested in biosimilars is quickly growing.

Dr. Markus Hauser, associate director, commercial operations, Biogen Idec International, likens the growing interest to the California gold rush.

Starting in 1849, an under-populated state was flooded with speculation, investors, and marketing campaigns to fill it with zealous miners.

With [biosimilars] the question is still open: Who will strike gold and how rich will those that start digging actually get? Hauser said at the Pharma Forecasting Excellence Summit in Zurich.

Experience will say from back then that a few are going to get very rich, and most that try to get very rich are not going to succeed.

Where to play

The challenges that can sink a biosimilars hopes are manifold, Hauser said.

Physicians may not receive the product as warmly as perceived, and market share may be difficult to attain.

Also, manufacturing can be more expensive than anticipated, consistent quality elusive, and commercialization thorny. (For more background on biosimilars, see Forecasting the future of biosimilars.)

Of the major players in the biosimilars market todaySandoz, Teva, Dr. Reddys, Bioton, and Stada, with Pfizer and Merck about to entermost have already experienced these challenges, and Bioton and Stada have already packed up and left.

Hauser recommended, therefore, that before any aspiring company goes seeking its treasure in biosimilars, it do some hard thinking about the most likely place for that treasure to be buried and the most effective strategy to unearth it.

Step one is figuring out where to play, Hauser said. That begins with targeting the right molecule.

Roughly 20 biotech products generate at least $300 million in revenue in Europe today and have patent expiration before 2020. Thats a good place to start.

Now consider that the price you can charge for your drug is going to drop by about 40 percent when the biosimilar enters the market and volume will drop as well due to interference.

As a result, the sales and market share available will drop considerably.

You should go through this math before you embark on a big development effort, Hauser advised.

Next, consider the physicians and the patients in the molecules disease area and whether they will be receptive to a biosimilar.

Studies show that about two-thirds of physicians are open to biosimilars, but that figure can vary by therapy area and between office-based physicians (who generally are enthusiastic) and key opinion leaders and scientifically oriented doctors (who generally are more skeptical).

Patients also can vary dramatically, depending on whether theyre on-brand.

Typically, a biosimilar can claim only 5 percent of patients who arent on-brand when the biosimilar launches.

That number climbs to 30 to 50 percent of patients who are on-brand, and even higher for those patients currently considering switching therapies.

Its essential to target acute disease areas or chronic diseases where you have lots of switching, Hauser said.

How to play

The final consideration is geography. Which countries are the most attractive for a biosimilar?

The United States tops that list because prices already tend to be high, its reimbursement system incentivizes generics, patients are motivated by cost due to co-insurance fees, and payers are motivated by savings opportunities.

Germany comes next, Hauser said, followed by Italy.

France, due to its lack of incentives for physicians and patients to pursue generic alternatives, bottoms out the list.

Once youve decided where to play, Hauser said, the next step is to figure out how to play.

First, how do you want to approach convincing physicians that your biosimilar is efficacious?

While two-thirds of physicians are open to the idea of biosimilars, that same percentage is concerned about biosimilars effectiveness.

Hauser said their concerns include, Is this product really safe? Was this biosimilar really manufactured at high quality standards? And lastly, what about immunogenicity? Is it going to create issues with neutralizing antibodies?

The value of good clinical trials, therefore, is immenseand expensive.

Suitable clinical trials can cost on the order of $100 million, and this is one place not to skimp.

Studies show that a small phase III trial will only convince about 7 percent of physicians.

Quality counts

Another consideration is manufacturing. Its expensive to create new capacity, and if you choose to save millions by opening a new manufacturing facility in, say, India, then you have to worry about quality.

A high-quality biosimilar will have identically sized molecules with no large aggregations. Products coming out of the developing world often lack this homogeneity.

These aggregates cause immunogenicity issues, and with that the product is essentially not going to be efficacious, Hauser said.

The final consideration is commercialization.

In 2009, Novartis launched Extavia for the MS market, which was the same drug as Betaferon but with a 9 percent price discount.

Still, the drug was only able to gain a five percent volume share.

Lets not forget, this is Novartis, they have invested heavily in marketing and sales, Hauser said.

It demonstrates that even if everything is going perfectly, you have the same product, you reduce the price, and you invest heavily in marketing, you get about a five percent market share.

In biosimilars, the recent launches of Somotroponae and Epo demonstrate the importance of a comprehensive commercial approach.

After three months, Somotroponae had essentially zero uptake, while Epo had secured 10 percent of the market.

The difference was the commercial resources behind Epo, as well as better devices to deliver the product and better patient services.

You cant go in there and expect physicians to prescribe your product if youre not offering the same patient services as the competing drugs, Hauser said.

He suggested that the biosimilars market, with its annual revenue ballooning to an impressive $66 billion, obviously offers lots of potential, but that doesnt necessarily make it right for a specific company.

Yes, there is potentially a pot of gold, and many people are now rushing after it, Hauser said.

But we have to ask, Is this really an opportunity or just a lot of potential?

Learn more at the Pharma Forecasting Excellence Summit in Boston from October 5-6, 2010.