As a large number of branded biopharmaceuticals/biologics are
slated to lose patent protection in the US and other markets,
generic companies like
Hospira, Inc.
(
HSP
),
Teva Pharmaceuticals
(
TEVA
) and Sandoz, the generic arm of
Novartis
(
NVS
), are stepping up their R&D expenses to manufacture
biosimilars/biogenerics which are cheaper generic alternatives to
expensive biopharmaceuticals.
Biopharmaceuticals/biologic drugs, which are large-protein
molecules derived from genetically modified cell lines, are
structurally much more complex as compared to the traditional small
molecule medicines. Thus, the manufacturing of the generic versions
of these drugs requires much more rigor and involves higher costs.
It is estimated that developing a biosimilar can cost anywhere
between $150 million and $200 million whereas a small-molecule
generic can be made with just $500,000-3 million.
With more than $60 billion of biologic sales slated to lose
patent protection through 2017, the biosimilars market -- which is
currently in a nascent stage -- represents a huge, untapped
commercial opportunity. According to the IMS Institute for
Healthcare Informatics, global spending on biosimilars is expected
to exceed $2 billion annually by 2015, up from more than $300
million in 2010.
Biosimilars Yet to Break Ground in U.S.
Biosimilars are currently available only in Europe and certain
other countries outside the U.S. However, governments worldwide are
under pressure to allow a path of approval for making affordable,
effective and safe biogenerics/biosimilars. In this context,
President Obama signed into law the Patient Protection and
Affordable Care Act in March 2010. The Act includes a provision
authorizing the US Food & Drug Administration (FDA) to develop
an abbreviated approval pathway for biosimilars.
The FDA has yet to issue its regulation in this matter. The
entry of biosimilars in the US, widely anticipated in 2014, would
open a new and significant avenue of growth for pharmaceutical
companies.
Generic Firms See New Opportunity
Among the generic companies, Hospira is fast working on
expanding its biosimilar portfolio. It already markets two
biosimilars in Europe and Australia - Nivestim, a biosimilar of
Amgen
's (
AMGN
) Neupogen and Retacrit, a biosimilar of
Johnson & Johnson
's (
JNJ
) Eprex.
While Retacrit is marketed for the treatment of anemia
associated with chronic renal failure, Nivestim is marketed for
treating neutropenia. Moreover, Hospira boasts a strong biosimilars
pipeline with 11 compounds in development. It recently began a
phase III trial in the US for Retacrit, results from which are
expected in 2013.
Teva's biopharmaceutical product portfolio consists of
Tev-Tropin, Ratiograstim, Eporatio, and TevaGrastim. In order to
build its biogeneric pipeline, Teva has been pretty active on the
deal-making and acquisition front. It has acquired CoGenesys, Inc.
and set up joint ventures with Lonza Group Ltd. and TL
Biopharmaceuticals AG.
These alliances should help the company establish a leading
position in the biosimilars market. Teva intends to focus on the
largest and most important biologics, mainly products which
represent most of the current biopharmaceutical market.
Sandoz also shows an increasing interest to build a strong
foothold in the potentially multi-billion dollar biosimilars
market. Already marketing biosimilars outside the US, Sandoz has
begun phase III trials for its biosimilar version of
Biogen
(
BIIB
)/
Roche
's (
RHHBY
) cancer drug Rituxan in first line follicular lymphoma. A phase II
study is also ongoing in rheumatoid arthritis patients.
Big Pharma Not Far Behind
Big pharma giants like
Merck, Inc.
(
MRK
) and
Pfizer, Inc.
(
PFE
) are also not willing to miss the bandwagon of biosimilars
opportunity that holds tremendous promise over the long haul. Merck
has established a whole new segment called BioVentures which will
focus on the development of biosimilars.
Merck remains on track to have five biosimilar candidates in
late-stage development by the end of 2012. The company entered into
an exclusive global agreement with Hanwha Chemical Corporation for
the development and commercialization of HD203, a biosimilar
version of Amgen's Enbrel.
Merck has biosimilar versions of Amgen's drugs Neupogen and
Neulasta in development. Pfizer has a partnership with Biocon (an
Indian bio-pharmaceutical company) for the global commercialization
of Biocon's portfolio of bio-similar insulin, which should help the
company strengthen its biosimilars portfolio and establish a
presence in the diabetes market.
To Conclude
Generic companies are all set to make hay in 2012 and beyond
selling generic versions of high-value branded pharmaceuticals
(small molecule medicines) which have gone off-patent with many
more due to lose patent exclusivity in the next few years. The
much-sought-after FDA nod for the regulatory pathway of approval of
biogenerics would be the icing on the cake for generic players.
AMGEN INC (
AMGN
): Free Stock Analysis Report
BIOGEN IDEC INC (
BIIB
): Free Stock Analysis Report
HOSPIRA INC (
HSP
): Free Stock Analysis Report
JOHNSON & JOHNS (
JNJ
): Free Stock Analysis Report
MERCK & CO INC (
MRK
): Free Stock Analysis Report
NOVARTIS AG-ADR (NVS): Free Stock Analysis
Report
PFIZER INC (PFE): Free Stock Analysis Report
TEVA PHARM ADR (TEVA): Free Stock Analysis
Report
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