European Biosimilars Market May Hint At Limited US Threat
17 Agosto 2009 - 3:40PM
Dow Jones News
The threat of biosimilars is a hot topic in the U.S. biotech
market, but their introduction in Europe may reveal that their
effects will be limited.
These drugs, which are as close to a generic version as possible
for complex biologic drugs, haven't gained traction in Europe
because of limited cost savings and worries that they aren't exact
copies. The drugs' struggles in the more cost-conscious European
market hints that lucrative U.S. biologic drugs may be able to
defend their turf.
"Clearly the impact of biosimilars in Europe has not been very
dramatic in terms of market share and price," Credit Suisse analyst
Michael Aberman said.
There is no regulatory pathway for generic biotech drugs,
produced through biological processes, but that could change by
year-end with a structure similar to that in Europe.
Generic pharmaceuticals - made with chemicals - must show that
they have the same active ingredient as the brand-name version. But
biologic molecules are often thousands of times bigger, making it
extremely hard to make a carbon copy - hence the name,
biosimilar.
These drugs, sold as distinct brands, cost more to produce than
traditional generic pills, which can cost just pennies.
In the U.S., most biologics have years of patent protection
remaining, but European patent expirations have led to biosimilars
of Amgen Inc.'s (AMGN) anemia treatment Epogen, and Neupogen, which
wards off infections in chemotherapy patients.
Amgen doesn't actually sell Epogen in Europe, because of a
licensing agreement with Johnson & Johnson (JNJ), which sells a
similar product called Eprex. But European market share of Amgen's
Aranesp, a longer lasting version of Epogen, has remained steady as
Amgen responded to biosimilar competition by lowering prices in
some countries.
In May, Amgen Chief Executive Kevin Sharer projected that
biologics should maintain 30% to 50% of their cash flows in the
face of biosimilar competition, a rate that is drastically
different from the small-molecule market.
Some European biosimilars have been selling for 18 months, notes
Barclays Capital biotech analyst Jim Birchenough, but they have
only managed to grab 5% to 10% of the European market on average.
That is a stark comparison to traditional generics that often grab
80% of branded sales in a matter of months.
The low biosimilar adoption rate stems from physician concern
about imperfect copies causing problems in a patient, and the
related cost savings not being worth that risk.
Earlier in the decade, J&J learned a hard lesson when a
slight change in the manufacturing process for Eprex seemed to
result in severe immune system reactions in hundreds of
patients.
Biologic production difficulties have been demonstrated by
industry bellwether Genzyme Corp. (GENZ), which faces shortages of
its top-selling drugs because of facility contamination and delays
in mass production of Pompe-disease treatment Myozyme due to slight
differences from smaller batches.
To be sure, the European market could shift as time passes and
biosimilars become more common. Some believe they will gain
traction in the U.S., simply because cultural differences make it
more acceptable to use generics.
"There is historically a lot less generic penetration in
Europe," Natixis Bleichroeder analyst Corey Davis said.
Even if biosimilars are successful in the U.S., Birchenough at
Barclays Capital points out that Epogen and Neupogen are
"relatively simple" compared to many biologic drugs.
In order to develop copycat versions of more complex drugs,
generic companies will have to make significant investments and may
need to conduct large clinical trials to convince regulators of
their similarity.
Biosimilar makers, which will likely include prominent biotech
and pharmaceutical names, may find that it makes more sense to make
slightly better versions of the drugs in order to ensure a better
return on that investment.
"I just don't see the value proposition of doing full clinical
development work in order to grab 5% of the market," Birchenough
said.
-By Thomas Gryta, Dow Jones Newswires; 212-416-2169;
thomas.gryta@dowjones.com