Reuters has a report out today on the potential market for biosimilars, or generic versions of biologic drugs. The players will be few, and the challenges many, the report suggested.
“Access to the nascent market for so-called biosimilars, worth an estimated $10 billion (6.6 billion pounds) by 2015, will be limited to a close circle of specialist companies with the means to invest heavily and to fend off a legal onslaught, analysts said.”
Coincidentally, I sat down earlier this week with Michael Kamarck, the new head of the company’s biosimilars arm Merck Bioventures. Kamarck, who previously headed up biologics manufacturing at Wyeth, had a strikingly similar perspective on the market. He also expects few players based on a high barrier to entry. Biosimilars players will need to have technology capabilities (see Genzyme’s woes for the challenges of manufacturing biologic products), the financial mettle to conduct large clinical trials, the ability to navigate a still fuzzy regulatory pathway, and the right commercial strategy once a biosimilar is approved.
When asked about drug pricing, Kamarck noted that in markets with a limited number of players, prices tend to stabilize after an initial drop. The biosimilars approved in Europe generally cost about 70% of the innovator’s price, and he expects the U.S. market will shake out in a similar way. “We think that’s a good model and provides a fair return and a large advantage for patients,” he said.
Why so little of a discount? As the Reuters article explains, the “development, production and marketing of a copycat version of biological drugs already cost about 50 times the amount needed to launch a generic copy of conventional chemical drugs.”
However, biosimilars players could have an advantage of more cost-effective manufacturing. When asked whether he was worried about innovators simply lowering their price or selling their own biosimilars, a strategy Amgen seems prepared to pursue, Kamarck pointed to the significant improvements in yields of the mammalian cell culture lines used to make many top-selling biologics. The innovator, on the other hand, has to go through FDA to make changes to their manufacturing process. “It might well be that coming into the game now, you can make manufacturing improvements to the processes that the innovator is stuck with,” he adds.
Merck has two biosimilars, both acquired last year from Insmed, in the clinic: MK-4214 and MK-6302, generic versions of Amgen’s Neupogen and Neulasta, respectively. The company plans to have five biosimilars in late development n 2012, though isn’t identifying which innovator medicines they will be copying. Development of MK-2578, a similar version of Amgen’s Aranesp, was abandoned earlier this year due to regulatory and market challenges for erythropoietin-stimulating agents. The drug had been considered a “biobetter” rather than a biosimilar, because it was being made using yeast-based technology rather than the same kind of cell line as Amgen’s drug.
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