Pharma forecasting: Stress-testing the business case for biosimilars
Angelo DePalma examines the commercial future of the biosimilars market
By on Sep 15, 2011Generic biopharmaceuticals were briefly known as ‘biogenerics’, then ‘follow-on biologics’ before the current ‘biosimilar’ nomenclature was adopted.
The US Food and Drug Administration website defines biosimilars as “biological prescription drugs that are demonstrated to be ‘highly similar’ (biosimilar) to or ‘interchangeable’ with an FDA-approved biological product.”
In Pharmaceutical Key Trends 2011 – Biosimilar Market Overview, Datamonitor estimates that $150 million worth of biosimilar drugs were sold in the US and EU in 2009.
Growth is expected to explode by 2015 to $3.7 billion, mostly as a result of 30 biologics with annual sales of $51 billion losing patent protection before then.
Total worldwide revenues for all biologics in 2008 amounted to $123 billion.
Biosimilars are not to be confused with the gamut of follow-on products that include ‘biobetters’ (aka biosuperiors) or innovator biologics that resemble an approved molecule in chemical form.
Biosimilars are drugs that strive to be identical in every measurable way to an approved biological.
Biosimilars are expected to dominate emerging markets (e.g., Russia, South America, Eastern Europe), where consumers generally pay for their own medicines and price makes all the difference.
Their success in mature markets is a big question mark.
Western Europe has already approved 14 biosimilars, but the US licensed just four.
It is still too early to tell whether price or value will drive biosimilars in these regions, however, or which jurisdictions among the US, EU, and Japan will become the most accommodating or forward thinking with respect to biosimilar development. (For more on biosimilars, see ‘Forecasting the potential of the biosimilars market’ and ‘Forecasting the future of biosimilars’.)
Scientific and regulatory issues
Developers of biosimilars face significant ongoing hurdles, as the sweeping 2010 US healthcare legislation created a legal framework but ignored the thorny scientific and regulatory issues.
Defining chemical similarity to an innovator compound is much more difficult for a biological than a small-molecule generic.
Achieving perfect chemical backbone analogy is straightforward enough, but process differences can significantly affect protein aggregation, folding, and glycosylation.
And these factors, which subtly but measurably affect safety and efficacy, concern regulators.
Yet the sticking point—the highest source of risk—will probably be clinical development, whose requirements will be considered case-by-case.
Paul Wotton, CEO of Antares Pharma, puts it succinctly: “The entry barrier for biosimilars, in many cases, will be the money companies can afford to spend on clinical trials.”
If regulators insist that studies compare biosimilars specifically to the innovator drug on file in their countries, streamlining and coordinating development programs across jurisdictions will be difficult.
“We spend considerable time trying to justify the use of only one reference product past an early certain stage of the clinical program,” says Bruce Babbit, principal consultant with Parexel International.
A related issue involves how much original clinical research biosimilar developers can “import” from the innovator’s development program, particularly for secondary indications.
Rituximab (Rituxin) was originally indicated for cancer, and later for rheumatology.
If a biosimilar developer’s data for the first indication are convincing, how much can be assumed for second (or third) indications?
Ideally, demonstrating a very high level of physico-chemical similarity should suffice, but reaching this level of trust could take many years and many approvals.
Complicating matters is the comparability, or lack thereof, between reference studies conducted a decade before and modern practice, which may be built on evidence from post-approval studies or pharmacovigilance. (For more on pharmacovigilance, see ‘Market access: How to get REMS right’.)
“The clinical trial challenges for biosimilars will be significant,” Babbit adds.
“It would not surprise me if the FDA holds more frequent meetings with biosimilar developers than with other biologics developers, particularly around chemical manufacturing and controls. It will be a slow-moving process, and the agency will not commit to phase III from the outset.”
Regulatory scrutiny will no doubt relax as companies and regulators gain experience. The question is: Will anyone be left standing at that point?
Clinical uncertainty has led some experts, like Bassil Dahiyat, CEO of Xencor, to question the business argument for biosimilars compared, say, with biobetters. “A good case could be made to stay out of the biosimilars business altogether,” he says.
The list of approved biosimilars suggests as much, as all are relatively low-risk hormones and cytokines.
Jump-starting biosimilars
In testimony before the FDA last autumn, Terence E. Ryan, business development chief at Newark, Delaware-based iBio, Inc., suggested that only by radically reducing the cost of goods could biopharmaceuticals ever compete as true generics.
iBio produces therapeutic proteins and vaccines in transiently-transfected green plants.
Through transient transfection, foreign genes are incorporated into plant cells for the duration of the plant’s life, but not into the plant’s chromosomes.
The technique is similar to transgenics, but the plants do not pass on the acquired trait to their progeny.
Transient transfection and transgenic expression have been tried before.
Most companies employing these techniques have gone out of business through a combination of under-funding, regulatory hurdles, and a lack of process robustness.
Yet producing human therapeutics in plants, by whatever means, provides notable benefits, and may be just what the doctor ordered for jump-starting biosimilars.
Depending on the expression method, production costs for crude drug preparations may be as little as 5% compared with production in stainless steel vessels.
Culture media costs are virtually eliminated, and buffer prep and hold greatly reduced.
Plants do not require special growth conditions, as do animal cells or microorganisms.
From a safety standpoint, no plant pathogens carrying through will hurt human patients.
By contrast, conventional biomanufacturing requires a validated series of steps for inactivating and/or physically removing viruses that arise naturally because they are part of the cells’ genomes.
“We can produce monoclonal antibodies much more cheaply in plants than in Chinese hamster ovary (CHO) cells,” says Robert Erwin, president of iBio.
The company has thus far licensed its technology to three firms for producing vaccines.
Yet the glut of conventional biomanufacturing capacity makes prospects for adopting alternatives to cell culture and fermentation in developed countries rather bleak.
Top US biotech firms have been divesting themselves of capacity for several years now.
And cost of goods issues aside, established firms prefer to operate within their preferred processing and regulatory comfort zones.
Moreover costs have only recently become an issue with biomanufactured drugs.
Erwin explains that this paradigm is shifting. The high cost of biotech’s most successful products restricts patient access, even within wealthy countries.
In developing and emerging markets, where patients usually pay for their own medicines, utilization of advanced protein drugs is minimal. (For more on emerging markets, see ‘Getting into the Indian pharma market’, ‘The Middle East: A pharma market in the making’, ‘Reassessing Russia's pharma market’; ‘Breaking into the Brazilian pharma market’; ‘Cracking the Chinese pharma market’; and ‘How to get ahead in 'pharmerging' markets’.)
Furthermore the current manufacturing and pricing climate is inconsistent with the idea of ‘generic’ biopharmaceuticals.
Nevertheless, Erwin feels that the logical place to implement alternative manufacturing methods is in the very markets where biosimilars are expected to perform the best, in countries that currently lack excess—or, in some cases, any—physical plant capacity.
How similar is similar?
In his testimony, iBio’s Ryan urged regulators “to take the broadest possible perspective on how the specification of ‘highly similar’ should be interpreted.”
He suggests emphasizing analytical biochemistry as the principal benchmark for similarity and allowing for minor post-translational modification differences, primarily glycosylation.
Ryan has an axe to grind, of course. His business plan is at odds, at least for biosimilars, with the dominance of stirred-tank bioreactors.
Emphasizing absolute chemical identity would likely restrict production of biosimilars to the same techniques employed for branded products, thus reducing incentives to competition and innovation while restricting patient access to expensive medicines.
“Clinical trials should also be required, but not the long-term expensive studies that should be conducted when nothing is previously known about a product,” adds Erwin.
“We need to strike a rational balance between demonstrating clear safety without full-blown human testing.”
Despite economic uncertainty, pharmaceutical and biotechnology players are forging ahead with biosimilars.
Novartis/Sandoz has two such marketed products while Merck and Parexel announced a biosimilars collaboration, through the former’s BioVentures division, in January 2011.
That same month, at a J.P. Morgan Healthcare Conference in San Francisco, Biogen Idec CEO George Scangos predicted that biosimilars would become “a meaningful source of revenues” for his company within a few years.
Even Samsung, the consumer electronics giant, announced last year a $389 billion investment in biosimilars.
Yet Roche remains on the sidelines in deciding to defend its $6 billion-per-year Avastin franchise rather than watch it cannibalized by generics.
Roche may be hoping that the climate for US biosimilars continues to stagnate.
Regardless, the company has time to change its mind, as Avastin does not lose patent protection for another eight years.
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