The Future of Biosimilars - Market Forecasts to 2015, Opportunity Analysis and Regulatory Pathways

Escalating Healthcare Expenditures Increase the Need for Low Cost Biosimilars

GBI Research’s analysis has found that the proposals for the approval pathway of biosimilars, also called follow-on biologics (FOB) in the US, have the ability to shape the future of the biosimilars industry. The reduction of healthcare expenditures is on the top of many governments’ agendas and so many developing nations are introducing regulations to govern biosimilars. Since biologics are among the highest priced therapies in the world, controlling their cost is one of the key focus points and it has increased the expectations of a regulatory pathway among the biosimilars industry participants.

Europe leads the way with 13 approved biosimilars belonging to three classes; erythropoietin, granulocyte colony stimulating factors and human growth hormones. In Japan, the first biosimilar was only launched in October 2009. However, the market is expected to gather pace due to the emergence of generic-friendly policies in Japan. The global market for biosimilars was valued at $66m in 2008 and is expected to increase to $2,286m in 2015 at a compound annual growth rate (CAGR) of 65.8%.

Lack of Interchangeability Between Biosimilars and Reference Products Slows Down the Uptake of Biosimilars

GBI Research has found that in the US there is no consensus regarding the requirements for the bioequivalence of a biosimilar and an original product. One of the main challenges facing the biosimilars market is the intrinsic difficulty in replicating the efficacy profile of the original product. Biosimilars have similar therapeutic properties but they are not the same and so the issue of interchangeability is a major hurdle for the rapid growth of the biosimilars market. Unlike generic versions of chemical drugs, biosimilars require preclinical and clinical studies to evaluate and compare their efficacy and safety for the biosimilars manufacturer to be able to claim interchangeability. The manufacturers of branded biologics are opposed to the idea of automatic substitution at the pharmacy due to the differing characteristics of biosimilars and the original drugs. Europe has made significant progress in establishing a pathway for biosimilars and has set an example which no doubt other regions will follow. In Europe, all medicines are given an 11 year data protection period and the decision regarding interchangeability or substitution is left to the member states. However, GBI Research analysis has found that the substitution of biosimilars for biologics is not guaranteed to happen in the future. Hence, the rapid uptake of biosimilars in a manner analagous to the rapid uptake of the generic versions of conventional drugs is not possible due to the lower price differential, the lack of interchangeability and negative perceptions about biosimilars in markets which have traditionally consumed branded products.

High Costs of Development and Manufacturing Coupled with the Need for Technical Expertise in Biologics Act as Entry Barriers for Smaller Players and Favors Larger Players

GBI Research has found that the high costs of development and manufacturing favor large pharmaceutical companies with technical expertise, a strong sales force and financial strength. Consequently, smaller players are not able to compete on financial grounds or production capacity. The biosimilars market is unlike the market for chemical drugs’ generics where the development and manufacturing costs are comparatively much lower. The expected price reduction for a biosimilar is not more than 10% to 30% of the original biologic (compared to a difference of more than 70% between chemical drugs and their generic counterparts). This marked difference between the biosimilars and traditional generic drugs is because biosimilars, unlike traditional generic drugs, require preclinical and clinical studies to prove bioequivalence and safety.

The cost of constructing a biopharmaceutical manufacturing facility is between $200m and $500m and the manufacturing process is very complex and needs technical personnel with expertise in biopharmaceutical manufacturing. The sales and marketing of biopharmaceutical drugs also needs an experienced sales force, which the smaller biosimilar companies lack. While companies with financial muscle can afford these high costs and can spend an average development time of six to eight years, smaller manufacturers are discouraged from entering the biosimilars market.

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