This article forms part of the CPhI 2017 Annual Report, which will be released during the CPhI Worldwide event in Frankfurt (October 24-26, 2017) http://www.cphi.com/europe/cphi-annual-report
The generic medicine industry has generated significant cost savings for payers over many years (over 100 billion euros in Europe alone in 2014) and provided access to affordable medicines for millions of patients. Competition has been generated through the availability of generic medicines from multiple sources delivering lower prices and a choice of suppliers. One aspect of such competition is that in order to maintain growth a generic portfolio has to be replenished or refreshed frequently. Many generic companies set targets of 20 new products to be launched each year. Product development of new generic molecules starts early in the life cycle of the originator product so long term planning is essential and mainly based on product patent expiries. Following the patent cliff in 2012 it became apparent that the opportunities for developing a new range of ‘blockbuster’ generic medicines based on small molecules would be curtailed, such molecules diminishing in numbers in the ensuing 5-10 years.
The opportunities for growth from the existing portfolio of legacy products was also being constrained by the slow, or even declining, growth of traditional therapy areas where generic medicines dominated. In Europe, analysis showed the challenge facing manufacturers of declining prices and low volume growth.
Pipelines then turned to developing products that had devices as part of their requirement such as the asthma inhalers and injectable products. Alongside these came the range of added value generic products including modified release, combinations and reformulations to improve absorption, dosing or side-effect profiles. Analysis of market trends illustrated the growing importance of medicines based on biological technology showing that they had exhibited growth at twice the rate of the small molecules.
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Figure 2.Whereas historically the league table of top products featured mainly small molecule medicines the current picture is very different. Biologics now dominate the chart and future years will show a deepening of the penetration by biologics.
Those companies that identified the growing importance of biologics identified an opportunity to develop copies of these products. Thus started the pursuit of biosimilar medicines.
The evolution of the biosimilar medicine market has been an interesting journey and one which has still to fully deliver on its promise. It is a classic example of how the players in the off-patent industry can tackle what initially was seen as a huge challenge (some even said an impossible one) and bring about regulatory change, adopt a clinical approach to development, gain market access in specialist fields and deliver complex molecules at affordable prices for patients. Much of this ground breaking work was carried out with the support of the Medicines for Europe team who have provided additional technical support where necessary and the lobbying of the key decision makers within the European theater. Europe is now seen as the leader in biosimilar development with many countries around the world adopting the regulatory processes and positioning of the biosimilar industry seen in Europe.
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Figure 4.One common question from generic medicine manufacturers has been ‘should I be in the biosimilar market?’ The answer to this question at the advent of the introduction of the first biosimilar medicines may well have been negative. The specialist requirements for developing a biosimilar; the need for expensive comparative clinical trials; the failings in the available laboratory tests for characterization and confirming amino acid sequencing and molecular structures; complex manufacturing plants and finding scientists with the requisite knowledge were just a few of the issues put forward to suggest the return on any biosimilar investment was fraught with danger. The initial experience with the first biosimilar molecules launched also tended to support the fact that this would be a risky venture. These first biosimilars had to be branded, would require promotion to clinicians and were in specialist areas of medicine, something which most generic medicine companies had little experience of. Concerns about the delivery system with the first biosimilar somatropin (HGH), clinician preference in selection of an erythropoietin (EPO) for dialysis and a lack of understanding with regard to biosimilar filgrastim (GCSF) were just some of the reasons for a slow adoption of these biosimilars. It should also be remembered that these first biosimilars represented just 8% of the total biologics market. Even the explanation of the naming of this new innovation of off-patent medicines was difficult; if it is called a biosimilar and this means that it is not the ‘same’ as the originator what is the difference? Having been used to bioequivalence with generic medicines this posed additional questions in the minds of clinicians and payers. Thus a lack of understanding and the need for education was evident. Also speculation on discounts that they would be in the range of 20-30% off of originator prices suggested that costs savings would not be as significant when compared to generic medicine discounts of 70-90%. Initial sales results were poor and sales forecasts varied widely from the absurdly positive to the lowest of negatives. Finally the concept of low volume/high price meant a shift in the generic medicine doctrine of high volume/low price. This move from volume to value was a major concern for many generic players.
Figure 5.Moving from a business model based on supplying commodity generic medicines in high volumes to a wide spectrum of buyers at low prices to the biosimilar model which was built on supplying specialist medicines into institutions usually on a contract or tendered business scheme required different skills and capabilities. Mistakes were made at first but slowly a better understanding of what the clinicians wanted and how best to support the specialist needs of this market have evolved. Over time the dynamics of the biosimilar market have moved closer to the generic scenario. Thus we are seeing some congruence especially in the following areas:
- Regulatory guidelines are now in place which should accelerate the access to the market for newer biosimilars. The need for comparative clinical studies is under review and it is felt that a more relaxed approach will be accepted. A common dossier for use both in the USA and Europe is under discussion which will significantly reduce costs and should speed up registrations.
- We have an increased number of biosimilar players which has helped to increase awareness of biosimilars. Additionally some research based companies such as Pfizer, Novartis, and Boehringer Ingelheim are now biosimilar players and this also reinforces the positioning of biosimilars as a valuable tool in controlling costs.
- More players introduce more competition, especially in the pricing arena. Thus discounts have increased with a resultant improvement in savings and consequently increased interest in payers in ensuring access to biosimilars.
- Several new biosimilar molecules have been launched across a wider range of indications increasing awareness of the role of biosimilars. The launch of the first biosimilar monoclonal antibody into a primary care managed condition has expanded the potential patient numbers adding a volume dynamic. Approvals are across all the major markets making the opportunity a global one.
- The resolution of guidelines on interchangeability and substitution of an originator medicine by a biosimilar has aligned biosimilars closer to the generic medicines scenario albeit still under the control of a healthcare professional. As experience and familiarity grows with biosimilars then we can expect an increase in the number of patients who will have their therapy switched from the originator to the biosimilar with cost becoming the driver. Uptake of the latest biosimilars in Europe is extremely positive and is starting to track the dynamics of small molecule products.
- Several generic manufacturers now have biosimilars within their portfolios and this adds credence to the role that generic companies can play across a wide spectrum of therapies.
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Figure 9.The congruence of the two business models is also further reinforced by the investment in manufacturing facilities by some of the generic players who now consider the two portfolios as an integral part of their operations. Marketing tactics and sales force resources are harmonized and utilized across the full range of products. As biosimilars move into areas where patients have more of a role to play and pharmacists are able to influence product selection then we can anticipate the two markets aligning themselves even more closely. The use of biologics in oncology may show to have different dynamics but the effect of lowering of prices seen with existing biosimilar molecules in other therapy areas would indicate that all other things being equal then the biosimilar will win on price differentials.
Asking the same question on whether or not to be in the biosimilar market would in today’s environment elicit differing responses. The main answer would be ‘it depends’.
Some companies may feel that they have ‘missed the boat’ with respect to biosimilars but all is not lost. As with small chemical molecules there now exists biosimilar developers who are seeking partners for marketing and distribution and contract manufacturing organisations with biosimilar capabilities. If that is not an option then portfolio growth from small chemical molecules will still offer opportunities. The recent increase in launches of small chemical products forecasted to be potential blockbuster molecules will offer significant generic opportunities in the years beyond 2025.
As the biosimilar pioneers found, it will pay to be patient.