Ten years after biosimilars first rocked their boat, how will biologics stay competitive?
Of all recent developments to roil global pharma, few have courted quite such controversy and commotion as biosimilars. Almost but not quite identical to their reference biologics, worlds apart from generics in their structure complexity and manufacture, and sufficiently unique to merit a discrete regulatory pathway, they have raised challenges for stakeholders across the healthcare spectrum for more than a decade.
Today, the once elite biotech sector is a crowded and competitive marketplace, upturned by a swell of biosimilars. Since the landmark approval of the growth hormone Omnitrope (somatropin) in Europe in 2006, an additional 19 biosimilars of leading biologics have been launched in the region, offering lower-cost alternatives to the original brands in anovulation, supportive cancer care, kidney failure, diabetes and various chronic inflammatory diseases. A major milestone has been the breakthrough entry of monoclonal antibody (MAb) biosimilars (infliximab and etanercept). Achieving a new level of complexity, this innovation paved the way for biosimilar versions of other leading MAb biologics in significant, high-profile therapy areas, including oncology treatment.
As the dust settles on the first ten years of disruption, the spotlight is now on the future as more leading MAbs, including Humira (adalimumab), MabThera (rituximab), Avastin (bevacizumab) and Lucentis (ranibizumab), encounter biosimilar competition. According to a recent analysis, by 2020 biosimilars could start competing with biologics currently achieving annual sales of $50bn. Originator biologics manufacturers are thus under greater pressure than ever to find new, creative ways to stay ahead. The question is, what will it take?
Understanding the appeal of biosimilars
The attraction of biosimilars inevitably lies in their (lower) price, as an opportunity to reduce costs and allow more patients to be treated. Biologics are among the most expensive medicines, with prices averaging 22 times those of small molecule brands. In 2015, they accounted for a record $154bn of global spending on pharmaceuticals. By 2020, this figure is expected to reach $390bn, representing 28% by value of the total pharmaceutical market. Much of their growth is being driven by MAbs, which typically cost between $10,000 and $100,000 annually. In some cases, more: topping $400,000 per year, Soliris (eculizumab) is one of the costliest drugs available globally.
Cash-strapped payers have already been pushing back with greater scrutiny of prices and cost-effectiveness. High price tags have seen a string of rejections for routine NHS use by the UK watchdog NICE, including cancer MAbs Avastin (bevacizumab), Kadcyla (ado-trastuzumab emtansine) and Perjeta (pertuzumab). Cost-driven barriers to accessing biologics, including reimbursement and prescribing limitations and high patient co-pay levels, are also common elsewhere in Europe. This is particularly the case for biologic disease-modifying anti-rheumatic drugs (DMARDs), found in one study to be unreimbursed in 22% of 49 countries surveyed.
Against this background, one estimate projects that biosimilars could potentially save health systems in Europe and the US between $56-110bn until 2020. This is a compelling prospect for payers, many of whom have already been making strategic use of biosimilars. However, as experience has shown, the situation is far from straightforward.
The story to date
The biosimilars opportunity in Europe over the last 10 years has seen discounts (in some countries, mandatory) averaging around 30%. Similar levels have been anticipated going forward. However, indications from the entry of the first MAb biosimilars suggest a more aggressively competitive pricing landscape, with unexpectedly high discounts of around 70% for infliximab in Norway, Denmark and Finland and 47% for etanercept in Norway - a move that has prompted a price reduction on the original brand. Whether these will prove exceptional or directional remains to be seen, but they clearly raise questions for originator biologics manufacturers in their quest to tackle the biosimilar challenge head-on.
Price or preference?
At the heart of the current uncertainties is a constant: despite their theoretical appeal, the adoption of biosimilars has so far been chequered. Even in the case of infliximab, uptake remains variable by country. A recent comprehensive European analysis confirms a poor correlation between market share and price. This finding reflects myriad complex drivers in a landscape that is still adjusting to the reality of biosimilars, including multiple, intertwined influencers of usage, prevailing reservations at all levels in the system, and a range of unmet clinical and evidence requirements. Together, these provide originator biologics manufacturers with important pointers for developing strategies to protect and even enhance their brand position in the market.
Building strategic advantage
At a broader level, many of the larger biotech and pharma companies, such as Amgen, Biogen, Boehringer Ingelheim, Novartis and Pfizer, have taken the strategic decision to develop biosimilars themselves, in parallel with their innovative research programmes. Within a framework of tactically-oriented strategies, our research, observations and experience in talking to payers, physicians and originator biologics manufacturers underscore the value of efforts to:
In all cases, robust and targeted market research programmes, leveraging a variety of methodologies, can provide valuable insights to inform key business issues and ensure that strategies for countering biosimilar competition are well-grounded in evidence. Preparation will be key to understanding the many complex factors that influence the adoption of biosimilars and, critically, to building an accurate perspective of the future market landscape and optimal brand positioning within it.