Life Science in the Capital Market - Biosimilars


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Life Science in the Capital Market - Biosimilars

  1. 1. Life Science in the Capital Market Biosimilars DVFA e.V. Mainzer Landstraße 47a 60329 Frankfurt am Main Tel.: (069) 26  48-0 48  Fax: (069) 26  48-488 48  E-Mail: Web: Deutsche Vereinigung für Finanzanalyse und Asset Management Sponsored by: ISBN 978-3-928759-20-5 DVFA-Broschur_Titel.indd 1 11.11.2010 12:13:19 Uhr
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  3. 3. Foreword The DVFA’s Life Science Commission was set up in 2004 first specialist publication “Life Science in the Capital as a capital market initiative aimed at improving mutu- Market: Focus on Biotechnology”, a capital market dri- al understanding and interaction between Life Science ven by well-informed participants will make it easier companies and capital market participants. for companies to raise capital and enable investors to participate in the outstanding growth of this promising The Commission analyses interesting and promising sector. issues and markets in the Life Science sector for the capital market which are highlighted at annual confe- We hope the publication will provide valuable insights rences and in regular publications. The present publi- and be of great interest. cation is based on the 3rd DVFA Life Science Conference on biosimilars, which took place on June 8th 2010 at the DVFA Centre in Frankfurt/Main. The conference attracted lively interest from investors with around 100 participants from Germany and abroad. The publication summarizes the specific biosimilar knowledge of the speakers, panellists and selected biosimilar experts and offers a comprehensive picture of biosimilars from a financial, regulatory, legal, corporate and capitalmarket perspective. The aim of this specialist publication is to put capitalmarket participants in a better position to assess and Fritz H. Rau evaluate the risks and opportunities of the new biosimi- Chairman lars market. As we said already in the Foreword to our DVFA e.V. DVFA-Broschur.indb 3 11.11.2010 12:10:05 Uhr
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  5. 5. Introduction The 3rd DVFA Life Science Conference on Biosimilars In view of high growth potential, investor interest is like- in Frankfurt/Main has shown impressively that there is ly to continue to grow even though biosimilars are such lively investor interest for biosimilars or follow-on bio- a complex field. With increased regulatory guidance and logics and that they have now become an important improved visibility about market potential, the new mar- sector of the Life Science market. The complexity of the ket segment and key players such as Hospira, Novartis, new market segment requires a detailed understanding Stada and Teva are likely to come even more under the of the relevant regulatory, manufacturing, clinical and spotlight of investors. marketing issues. We would like to thank all those who have contributed The edited volume includes 12 papers from speakers to this publication for their huge commitment and a and panellists at the 3 DVFA Life Science Conference great team effort! rd held on June 8th 2010 and from a number of prominent experts in the field of biosimilars. The volume provides a comprehensive picture of the evolving biosimilar market from the perspective of generic and biotech companies, consultants, scientists, lawyers, analysts and investors. It offers detailed insights into the market potential, different strategic approaches, biosimilar business models and key success factors, counter strategies of innovator companies, regulatory hurdles, cost savings potential for health insurers, valuation methods for biosimilar companies and investment opportunities. A glossary of terms and bibliography are also included. Dr. Christa Bähr    r. med. Markus Manns D Chairs, DVFA Commission Life Science The publication underlines the increasing importance of biosimilars for the capital markets and highlights in a clear and well-argued manner the complexity of this field. A detailed discussion of significant developments, regulatory, manufacturing and marketing challenges puts readers in a better position to assess the risks and opportunities of this new market segment and select interesting investment opportunities. DVFA-Broschur.indb 5 11.11.2010 12:10:05 Uhr
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  7. 7. Table of Contents Origins and Future of the Biosimilars Industry ...........................................................................................................................   8 Dr. Ralf Emmerich, Capgemini Deutschland GmbH Regulatory Requirements and Challenges for Biosimilars in Europe ........................................................................... 13 Prof. Dr. Marietta Kaszkin-Bettag, PharmaLex GmbH Biosimilars – Legal, IP and Transactional Aspects ......................................................................................................... 18 Dr. iur. Dr. med. Adem Koyuncu, Mayer Brown LLP Biosimilars – Risks and Opportunities from a Pharmaceutical Perspective  .................................................................. 24 Prof. Dr. Theodor Dingermann, Institute of Pharmaceutical Biology, Biocenter Frankfurt Cost Savings Potential of Biosimilars in the German Health Care System  ...................................................................   . 29 Prof. Dr. Bertram Häussler, IGES Institute GmbH The Long View: Biosimilars – Henry Ford on Antibody Manufacturing .........................................................................   34 Ronny Gal, Sanford C. Bernstein & Co. Biosimilars – Commercialisation Approaches for Europe . ..............................................................................................   8 3 Paul Greenland, Hospira UK Limited The Biosimilar Opportunity in Asia ................................................................................................................................   43 Motoya Kohtani and Karan Ahuja, Nomura Securities Co., Ltd. Important Lessons from the Implementation of the European Biosimilar Pathway ......................................................   49 Charles Brigden, Amgen UK & Ireland Biosimilars in an Individualized Therapeutics World – The Challenge in Oncology.......................................................   54 Dr. Rainer Wessel and Dr. Karl-Heinz Sellinger, Ganymed Pharmaceuticals AG und SellWiss GmbH Valuation of Biosimilar Products and Pipelines .............................................................................................................   8 5 Dr. Elmar Kraus, DZ BANK AG Biosimilars in the Capital Market . ..................................................................................................................................   64 Dr. med. Markus Manns, Union Investment Privatfonds GmbH Glossary .........................................................................................................................................................................   70 Bibliography ...................................................................................................................................................................   76 DVFA Life Science Commission   ......................................................................................................................................   78 DVFA-Broschur.indb 7 11.11.2010 12:10:05 Uhr
  8. 8. Origins and Future of the Biosimilars Industry Dr. Ralf Emmerich, Capgemini Consulting, Germany What is a biosimilar drug? ment requires clinical studies to show “biosimilarity”, efficacy and safety (which are not required for gene- A biosimilar drug is commonly classified as a protein rics) and costs for regulatory approval are therefore therapeutic with a high level of similarity and compara- significantly higher. A typical generic can be develo- ble structure as well as efficacy to its branded reference ped for USD 3  10 million, whereas a biosimilar costs –  product. However, the exact definition of biosimilars between USD 50  100 million. –  differs among the various regulatory agencies. In consequence, different names are used for “biosimilars”, EMA was the first regulatory agency to define a pathway e.  ‘Similar Biological Medicinal Product’ by EMA, g., for biosimilars. The US has recently introduced a legis- ‘Follow-on Protein Product’ or ‘Follow-on Biologic’ by lative framework for biosimilars. FDA, ‘Subsequent Entry Biologic’ by Health Canada or ‘Follow-on Biologic’ in Japan. The current market is relative small A biosimilar is not a generic. The active ingredient of a generic is a small molecule which is usually manu- The current market share of biosimilars is only a fraction factured using chemical synthesis. The structure of of the sales volume of off-patent biologics. In 2007, the generic and the original small molecule drug is global biologics market sales totaled USD 86 billion. identical. A biosimilar and its originator, however, are 23  of biologic drug sales thereof have gone off pa% protein therapeutics – a very complex and significantly tent (e.  human insulin, betaseron), which translates g. larger molecule compared to a small generic molecule. into an opportunity of over USD 20  billion in sales It is developed using methods of genetic engineering for biosimilars. However, the actual biosimilar market is and produced in cell lines. As true replications of the well below 5  of this market potential and innovator % reference protein drug cannot be established, a bio- biologics gone off-patent still hold more than 95  of % similar is not exactly the same molecule, but shows the market volume. a high level of similarity and a structure compared to the reference product. In the past, regulatory agen- The biosimilars market in regulated environments (e.  g. cies struggled to define exactly what a biosimilar is, EU, USA) is currently quite small, with a total of less i.  what “similar” means, and what regulatory routes e. than twenty products launched so far and sales of should be followed for market approval. Regulatory roughly USD 200 million. At present, 14 biosimilars approval is further complicated by the fact, that even from nine companies are approved in Europe and two minimal changes in glycosylation patterns may reduce in the US. The first biosimilar approval was human efficacy or cause side effects (e.  immunogenicity). g. growth hormone Omnitrope from Sandoz in 2006. It Compared to generics, the regulatory requirements was followed by the biosimilars epoetin alpha, epo- are more complex for biosimilars and approval time etin zeta and filgrastim. All 14 European biosimilars is much longer. Furthermore, manufacturing and de- thus belong to these four classes. Biosimilars have velopment are more complex. Manufacturing requires been launched in three therapy areas – five biosimilar skilled personnel and investments into cell lines and Erythropoetins for the stimulation of red blood cells, bioreactors comparable to original biologics. Develop- seven biosimilar G-CSF’s for the stimulation of white 8 | Origins and Future of the Biosimilars Industry DVFA-Broschur.indb 8 11.11.2010 12:10:06 Uhr
  9. 9. blood cells and two human growth hormones for the payers are increasing their efforts to contain healthcare treatment of growth disorders. costs. Biologics present special challenges to these initiatives. The most effective ways to treat many conditions In non-regulated markets, there are a host of Indian such as rheumatoid arthritis, psoriasis and cancer are and Chinese manufacturers who have launched over 50 increasingly through novel biologic drugs – and these biosimilar products. The biosimilars market is therefore don’t come cheap. For example, the average price for highly fragmented with the top ten players representing a biologic is USD 16,425 p.  which is more than 20 a., less than 15  of the market. The top biosimilar players % times the cost for an average small molecule drug. In are Sandoz, Bioton, Hospira, Momenta Pharmaceuticals, the future, it will become increasingly more difficult to Teva, Stada, LG Life Sciences and Wockhardt. Sandoz is maintain these price levels. NICE, UK´s National Institute market leader with revenues from biosimilars of USD for Health and Clinical Excellence, has issued recom- 118 million in 2009 and five biosimilar launches in the mendations against the use of a series of monoclonal US and Europe. Teva published biosimilar sales of USD antibodies (mAb) based on the lack of cost-effectiven- 74 million in 2009. ess. Because the prices of biosimilars are approximately 20  30  below the original biologics, demand for bio–  % However, with sales of “only” USD 200 million, bio- similars will catch up. Potential cost savings of USD 25 similars have so far commercially disappointed. The billion were estimated for the US for 2009  2018 by the –  overall penetration of biosimilar Epogen and G-CSF in Congressional Budget Office, equivalent to 0.5  of total % Europe is still less than 10  The exception is Germany %. pharmaceutical spending. with penetration rates of 30  40%. Physicians are qui–  te reluctant to prescribe biosimilars based on efficacy The other lever is on the supply side, as the number of and safety grounds and sales forces have struggled to biosimilars will increase due to the continuing expiry of initiate medical discussions and promote the uptake of biologics patents. With more regulatory visibility, more biosimilars. The biosimilar price difference compared companies are expected to enter the biosimilar market to the originator is still small and may not yet have and the rate of approval of biosimilars should increase. reached a level which most payers consider attractive. Until 2015, 45 biologic drugs worth more than USD 60 For example, the price discount of biosimilar Epoetin billion in global sales will lose patent protection. For ex- is roughly 12  Furthermore, biosimilars are in most %. ample, Enbrel, a fusion protein for rheumatoid arthritis European countries not granted automatic substituti- will lose patent protection in 2012. The drug is marketed on, i.  a pharmacist cannot substitute a biologic with e. by Pfizer (Wyeth), Amgen and Takeda and generated a biosimilar. global sales of USD 6.5 billion in 2009. Many of the expiring blockbusters are monoclonal antibodies (mAb), like Remicade (global sales USD 5.3 billion in 2008) and What will the future look like? Rituxan (global sales USD 5.5 billion in 2008). Therefore, most of the future revenues are expected to come An increasing demand for biosimilars motivated by from the mAb segment. By 2015, the US/EU market size healthcare cost savings, increasing supply, i.  biologics e. for biosimilars could reach USD 10 billion. It is expected patent expiry and more regulatory approvals are drivers that antibodies will represent 40  of sales and Enb% for future market growth. rel, Erythropoetin, Insulin and G-CSF each about 10  %. The typical market penetration and price decline is ex- Faced with recessionary pressures, ageing populations, pected to be in the range of 20  though variations %, and increasingly expensive therapies, governments and between individual products will occur. For example, Origins and Future of the Biosimilars Industry | 9 DVFA-Broschur.indb 9 11.11.2010 12:10:06 Uhr
  10. 10. 1. Key success factors in the manufacturing area are: Clinical development experience and regulatory know-how ●  A stable and reproducible multi step cell-based manufacturing process ●  Manufacturing Manufacturing capabilities Customized sales marketing skills Operational capabilities throughout the process and batch to batch variability is limited Key success factors ●  Sterile Fill/Finish facilities ●  Product-specific proprietary standards and tests to control quality Company specific commitments Clearly defined long term biosimilar strategy capabilities to ensure that bio- logical activity is maintained for the product Significant upfront capital investments ●  Robust supply chain ●  Marketing and logistics support 2. linical development experience and regulatory C know-how will be based on: ●  Ability to select the right target molecule with high sales potential Figure 1: Key success factors for biosimilar players Source: Capgemini Consulting ●  Infrastructure and knowledge to manage the cli- nical trials process ●  Technical know-how to conduct clinical trials ●  Expertise in immunogenicity and pharmacovigi- a low penetration is expected for biosimilar insulin, because the market is dominated by three origina- lance studies ●  tor companies and insulin administration requires a I n-depth understanding of the regulatory guidelines range of advanced injection devices, which are still patent protected. 3. Customized sales marketing skills require: ●  Customized sales and marketing teams speciali- zing in biologics/ biosimilar drugs What capabilities do successful biosimilar ●  Sales players need? force detailing would need to include me- dical discussions with key opinion leaders and physicians The capabilities needed to be successful in the biosi- ●  Continuous milars market are significant and will limit the number of entrants in the near to midterm. From Capgemini Consulting´s point of view, the key success factors for scientific communication and mar- keting activities for commercialization targeted towards the medical community ●  Payer management biosimilar players comprise operational capabilities and company-specific commitments. Company-specific commitments are needed for a clearly defined long-term biosimilar strategy and for significant The following operational capabilities are necessary upfront capital investments. (see figure 1): (1) manufacturing capabilities, (2) clinical development experience and regulatory know-how and (3) customized sales marketing skills. 10 | Origins and Future of the Biosimilars Industry DVFA-Broschur.indb 10 11.11.2010 12:10:06 Uhr
  11. 11. Key success factors for a long-term biosimilar strategy are: ●  Long-term commitment to venture into the bio- similar market ●  Greater consideration towards investments, mar- best positioned, because they have a strong financial position, the necessary experience to deal with regulatory agencies as well as an extensive distribution infrastructure and payer management skills. keting, development and manufacturing ●  Competitive intelligence on biologics and pipe- line analysis of the competitors Big pharma companies show a mixed picture: whereas companies like Merck Co, Pfizer, AstraZeneca and Lilly announced plans to enter the biosimilar business, Significant upfront capital investments are needed be- others such as JJ and Amgen seem to be opposed cause of: to biosimilars. Only Merck Co has made obvious ●  High ●  A upfront investments for manufacturing moves to enter the field by establishing its BioVentures combination of high manufacturing costs, division in 2006 to focus on biosimilar and biobetter lengthy clinical trials, slow approval rates and products, and by acquiring the biosimilar companies high promotional costs that increase the upfront Insmed and GlycoFi. These acquisitions provided ma- investments nufacturing facilities as well as a biosimilar pipeline ●  Long gestation period with high risk of rejection by regulatory bodies including G-CSF, pegylated G-CSF, interferon beta and EPO. Big pharma companies, though well positioned, often lack the experience required for the production of biological products. What are the emerging biosimilar business models? Emerging market players and small biotechs have a Four different groups of companies have entered the much weaker financial position and often have inade- biosimilar market: generic companies, big pharma com- quate experience in clinical development, regulatory af- panies, emerging market players and small biotechs fairs as well as promotional and marketing campaigns. (see figure 2). What is more, they have no distribution network. For emerging market players like Biocon and Intas, it has Some of the classical generic companies have ente- proven rather difficult to enter the more regulated mar- red the biosimilar field quite early and are current- kets, which can be attributed to a lack of resources and ly the frontrunners. Sandoz and Teva are the most expertise in clinical development and regulatory affairs. active companies, followed by Stada, Hospira and They will need to form alliances with larger players for Mylan. Sandoz, a Novartis company, follows an orga- clinical development, regulatory approval, marketing nic growth strategy investing in RD and manufactu- and sales. One such example is the alliance of Biocon ring capabilities. Building on its extensive production with Mylan for clinical developing and commercializi- know-how (Sandoz produced 25+ different recom- ng biosimilars. Similar considerations apply for small binant human proteins for own distribution and for biotech companies and partnering with larger generic other pharma companies), its strong RD capabilities players seems to be a win-win situation for both parties. and expertise, Sandoz has about 25 biosimilar deve- As an example, US-biotech company Momenta Phar- lopment projects. Teva follows a strategy of inorga- maceuticals partnered biosimilar Lovenox with Sandoz nic growth with the acquisition of generic companies and gained recently US approval. such as Ratiopharm, Pliva/Barr, CoGenesys and Sicor and the collaboration with protein manufacturers such as Lonza. Large generic companies seem to be Origins and Future of the Biosimilars Industry | 11 DVFA-Broschur.indb 11 11.11.2010 12:10:06 Uhr
  12. 12. Large Generic Big Pharma Emerging market player Small Biotech Financial strength RD capabilities Manufacturing capabilities Clinical development expertise and regulatory know-how Distribution network and marketing skills low medium high Figure 2: Characteristics of biosimilar players Communication is key for success Source: Capgemini Consulting hood of approval of a specific product. The risk attached to developing biosimilars is unacceptable without this Communication with regulators is going to be vital for knowledge, since unexpectedly onerous approval requi- biosimilar developers. Particularly considering the ab- rements could destroy the business case for the drug. sence of universal guidelines, biosimilar developers However, the future looks promising. Governments, pay- need to involve regulators as early as possible in the ers and patients want to see a vibrant biosimilar sector development cycle to gain knowledge about the likeli- driving down the costs of expensive biologic agents. Dr. Ralf Emmerich Ralf Emmerich is Managing Consultant in the Life Sciences Sector of Capgemini Consulting. He leads strategy projects in the areas of research development, technology transfer, market access, post-merger integration, mergers acquisitions, organization and processes in all Life Sciences sub-segments like pharma, medical devices and agribusiness. He is in charge of Capgemini’s biotechnology projects at Central European level. Prior to joining Capgemini, Ralf was an investment manager at a venture capital company and worked as an equity analyst at an investment bank in Frankfurt. He is a member of the DVFA Life Science Commission and was supervisory board member of Combinature Biopharm AG and the EMBL Technology Fund. Ralf studied biochemistry and economics in Bayreuth, Paris and Zurich. 12 | Origins and Future of the Biosimilars Industry DVFA-Broschur.indb 12 11.11.2010 12:10:06 Uhr
  13. 13. Regulatory Requirements and Challenges for Biosimilars in Europe Prof. Dr. Marietta Kaszkin-Bettag, PharmaLex GmbH, Germany Definitions: Biosimilars are not Biogenerics mitted or due to lack of data. For example, a negative opinion for Alpheon from Biopartners was given as it Development programmes for biologicals are conducted was not considered biosimilar to Roferon A because of with a particular molecule as active substance being substantial lack of quality data and safety issues. There unique in their structure and mode of action (e.  proteg. were not enough stability data, validation issues in the ins such as somatropin, or polysaccharides such as low production process, more patients experienced a return molecular weight heparin products). Manufacturers of of the disease after stopping treatment with Alpheon biosimilars do only have access to the finished reference than with the reference medicine, more side effects were product and have to develop own strategies to produ- reported with Alpheon, a test used in the study to inves- ce a similar drug. Minor changes of the manufacturing tigate the potential for the medicine to trigger an immu- process or changing the molecule-producing host cell nological response had not been sufficiently validated. system can result in changes in the secondary, tertiary, Even for other biosimilar products, which have already and quaternary structures of the protein and affect post- been approved, certain data required according to cur- translational modifications (glycosylation, acetylation, rent guidelines e.g. demonstration of the lack of immu- phosphorylation). For example, a biosimilar for human nogenicity, were missing at the time point of assessing growth hormone is produced in Saccharomyces cerevi- the Marketing Authorization Application (see Schneider siae, whereas the comparator is produced in Escheri- Kalinke, Nat Biotechnol. 2008;26(9):985  909). –  chia coli without any posttranslational modifications. The products are biologically similar (“biosimilar”), but To ensure the quality, safety and efficacy of a biosimilar not identical, i.  not “biogeneric”. At the same time, e. for the intended therapeutic use, a number of guidelines it is critical that the manufacturing procedure of the have been established by the EMA to support the ma- approved reference product does not change during the nufacturer of a biosimilar from the very beginning of the development phase of the biosimilar. Synonyms for bio- drug development program on (see also Figure 1). similars are “Subsequent Entry Biologicals (SEB)” used by the Canadian federal authority, and “Follow on Pro- ●  The “overarching” guideline on similar biological tein Products (FOPP)” or “Follow on Biologicals (FOB)” medicinal products (CHMP/437/04) – general requi- used by the FDA. rements to demonstrate the similar nature of two biological medicinal products. ●  Guideline on similar biological medicinal products The Regulatory Framework for Biosimilars containing biotechnology-derived proteins as active In 2006, the first biosimilar (Omnitrope, active subs- quality issues relevant for demonstration of compa- substances: quality issues (EMEA/CHMP/49348/05) – tance is recombinant human growth hormone) was marketed in the European Union. In total, 14 biosimilar rability for similar biological medicinal products. ●  Guideline on similar biological medicinal products products based on 4 reference products have been ap- containing biotechnology-derived proteins as active proved in the EU, so far. However, a remarkable number substance: non-clinical and clinical issues (EMEA/ of applications for different biosimilars were rejected or CHMP/BMWP/42832/2005) and the guideline on cli- withdrawn due to insufficient quality of the data sub- nical investigation of the pharmacokinetics (PK) of Regulatory Requirements and Challenges for Biosimilars in Europe | 13 DVFA-Broschur.indb 13 11.11.2010 12:10:06 Uhr
  14. 14. Overarching Guideline (CHMP/437/04) on Similar Biological Medicinal Products defines key concepts/principles USER GUIDE Biotechnology-derived Proteins Quality QUALITY ISSUES EMEA/CHMP/49348/05 Nonclinical NON-CLINICAL CLINICAL General: Applies to all Biosimilars EMEA/CHMP/BMWP/42832/2005 EMEA/CHMP/89249/04/ Clinical Interferons Insulin G-CSF Somatropin Epoetin LMW Heparins Nonclinical Nonclinical Nonclinical Nonclinical Nonclinical Nonclinical Clinical Clinical Clinical Clinical Clinical Clinical Figure 1: Biosimilar Guidelines Class-specific Product-data Requirements    Source: EMA, PharmaLex therapeutic proteins (EMEA/CHMP/89249/04/in pre- on biosimilars at November 2nd 2010. The recent US ap- paration) provide suggestions for PK/PD studies and proval of biosimilar enoxaparin (Lovenox) from Sandoz/ non-clinical and clinical efficacy and safety studies Momenta Pharmaceuticas has been an important miles- with biosimilars and the reference product in the tone. The drug was approved as generic without clinical patient population. studies, a post-market pharmacovigilance program is ●  Further guidelines are established for specific sub- not required and automatic substitution is allowed. stance classes of biosimilar products, like somatropin, erythropoietin (EPO), G-CSF, and alfa interferons, or under preparation for Follitropin alpha, beta The Comparability Exercise – are the products biosimilar interferons. They define product class specific data and interchangeable? requirements for non-clinical and clinical studies (listed in CHMP/437/04). ●  Recently, The overall goal of drug development should not only the EMA released the first documentary be to prove biosimilarity but to demonstrate the benefit step on the pathway to developing a guideline for for the patients. The interchangeability of these medicinal comparability testing of biosimilar monoclonal anti- products is a challenge as high biosimilarity with com- body products (EMEA/CHMP/BMWP/632613/2009). parable clinical results in any patient is expected by the health care practicioners and the patient. The decision It is assumed that the future FDA guidelines will reflect for the health care practitioner to switch from the original the EMA biosimilar guidances. FDA has held a hearing product to a biosimilar strongly depends on the reliability 14 | Regulatory Requirements and Challenges for Biosimilars in Europe DVFA-Broschur.indb 14 11.11.2010 12:10:06 Uhr
  15. 15. that the biosimilar has the same therapeutic effect and developed drug and be submitted as a ‘stand-alone’ that there are no safety issues. In addition, the medico- application as per article 8(3) of Directive 2001/83/EC. economical environment should allow physicians to take For example, the change in formulation of an once daily a free and informed decision about the type of product to subcutaneous immediate-release human growth hormo- be prescribed. Therefore, comparability studies are nee- ne to an once-weekly sustained-release product requires ded to provide evidence for the biosimilar product and a completely new set of cinical data. the chosen reference product. However, the validity of the current criteria for comparability and interchangeability of biosimilars and their reference products remains contro- Non-clinical studies versial. For example, for the currently approved biosimilars of recombinant human growth hormone, long-term effica- The guidelines suggest comparative non-clinical studies cy and tolerability in all indications has not been proven to detect differences in the biological responses between to the same degree as for the reference products (Declerck the biosimilar and the reference product. This includes et al. Curr Med Res Opin. 2010;26(5):1219-1229). Only if pharmacodynamic (PD) studies like receptor-binding as- sufficient evidence is given to substantiate the claim of si- says or cell-based assays as well as animal studies. At milarity with respect to quality, clinical efficacy and safety, least one 4 week repeat dose toxicity study in a relevant a Marketing Authorization can be granted. NICE determi- species should be performed. A special focus should be ned recently that all biosimilar human growth hormones made on potential immunological responses. In additi- available in UK are interchangeable. It was stated that on, local tolerance testing at the injection site should be “the least costly product that, after discussion between performed. Normally, other routine toxicological studies the responsible clinican and the patient and/or their carer, such as safety pharmacology, reproduction toxicology, has been agreed to meet the needs of the individual child mutagenicity and carcinogenicity studies are not requi- and to maximise the likelihood of adherence to treatment red for similar biological medicinal products. should be chosen”. A decision of interchangeability was made also in Norway for G-CSF (filgrastim-containing products). It is important to consider here that in the EU, Clinical studies biosimilars are not substitutable, i.e. biosimilars are not part of the aut idem regulation at the pharmacist level. A clinical program for a biosimilar should have the primary aim of establishing ‘similarity’ and thus might be abridged compared with full clinical development of a Quality new drug. However, if biotech drugs were developed as biosimilars, but exert differences in efficacy or safety Comparability testing should include structural charac- profile representing a substantial advantage compared terisation, physicochemical properties, biological acti- to the reference product, a stand-alone application for vity, purity and impurities. Appropriate and sensitive these so called biobetters is required. methods should be selected by the manufacturer to sufficiently demonstrate comparability between the re- The typical crossover design for PK studies may not be ference molecule and the biosimilar compound. appropriate for therapeutic proteins with a long half-life, e.  therapeutic antibodies and pegylated proteins, or g. Is it a biosimilar or a new drug product? If the compara- for proteins for which formation of anti-drug antibodies bility criteria to a reference protein are not fully presen- is likely. The choice of the PK study design has to be ted, the biosimilar product will be assessed as a newly justified by the applicant. A comparison of all relevant Regulatory Requirements and Challenges for Biosimilars in Europe | 15 DVFA-Broschur.indb 15 11.11.2010 12:10:06 Uhr
  16. 16. pharmacokinetic parameters should be provided prefe- should be planned at a level high enough to get a broad rably in the patient population. In addition to similarity in picture of the adverse effect profiles of the test and the absorption  bioavailability, differences in distribution as /  reference product. A comparison of the type, severity and well as elimination characteristics between products e.  g. frequency of the adverse reactions between the biosimi- clearance and elimination half-life should be explored. lar and the reference products has to be provided. The PD markers should be selected on the basis of their The manufacturer of a biosimilar must minimize the im- relevance to demonstrate therapeutic efficacy of the pro- munogenic potential of the protein. The immunogenicity duct. It is recommended to integrate the PD markers as of a biosimilar must always be investigated. Immuno- surrogate markers in the clinical efficacy trial, if therapy- genicity may be a greater problem for antibodies and induced changes of that marker can explain changes in beta interferons and less of a problem for human growth clinical outcome to a large extent. Different doses of hormones, EPO and C-GSF’s. the study drugs should be tested. For selection of the reference product, sufficient knowledge of its PD and A risk management/pharmacovigilance system has to be PK properties should be available and bioequivalence established in accordance with current EU legislation and needs to be demonstrated. Usually, a range between pharmacovigilance guidelines to closely monitor the safety 80 and 125% equivalence as established for generics is of similar biological medicinal products during the post-ap- acceptable. For example, PK studies performed with the proval phase including continued benefit-risk assessment EPO biosimilar Retacrit revealed an AUC 80  125  and –  % (Guideline on risk management systems for medicinal pro- –  % a Cmax 70  143  of the reference product. ducts for human use, EMEA/CHMP 96286/2005. ICH Note for guidance on planning pharmacovigilance activities, Usually, one comparative clinical trial is required to de- CPMP/ICH/5716/03 – Final approval by CHMP on PHV). monstrate clinical comparability between the biosimilar and the reference medicinal product. However, it will be impossible to demonstrate 100% equivalence as for Recent Developments – this, the trials would need to be very large. Therefore, Biosimilar Monoclonal Antibody Products acceptable clinical comparability margins should be prespecified and justified according to ICH E9 – Note for As mentioned above, the EMA recently released the first guidance on statistical principles for clinical trials (CPMP/ documentary step on the pathway to developing a gui- ICH/363/96). Scientific Advice for the clinical trial design deline for comparability testing of biosimilar monoclonal including the statistical design is highly recommended. antibody products (EMEA/CHMP/BMWP/632613/2009). The Retacrit for example, was appoved on the basis of two need for this guideline arose with the question, whether phase III trials in 1200 patients with renal and chemo- the existing framework for biosimilars in Europe is appli- therapy induced anemia as it could be demonstrated cable to monoclonal antibodies. A comprehensive discus- that the hemoglobin concentration was comparable with sion of this issue has been published by Schneider and the reference product and no safety concerns regarding Kalinke 2008. Currently authorised biosimilars must have pure red cell aplasia were raised as no EPO neutralizing identical primary structures to their reference products, i.  e. antibodies were detected. With respect to the safety, their amino acids sequences should be identical. However, the biosimilar product may exhibit differences in the sa- it is impossible to apply this feature to monoclonal anti- fety profile, although the efficacy has been shown to be bodies as they represent a far more complex structure. comparable. Therefore, the number of patients in clinical Schneider and Kalinke (2008) stated that according to the studies conducted to obtain a Marketing Authorization overarching guideline, in practice, the success of a biosi- 16 | Regulatory Requirements and Challenges for Biosimilars in Europe DVFA-Broschur.indb 16 11.11.2010 12:10:06 Uhr
  17. 17. milar development approach for mAbs will depend on the other tasks – to provide Scientific Advice on general ability to demonstrate the overall similarity of the product and product specific matters related to efficacy, safety concerned with its reference product, i.  to show the thee. and comparability of similar biological medicinal prod- rapeutic effectiveness of the biosimilar mAb for the inten- ucts (mandate, objectives and rules of procedure for ded use. The difficulty to demonstrate clinical similarity to the working party on similar biological medicinal pro- a reference mAb means that the decision to authorize a ducts (BMWP). EMEA/CHMP/80650/2004). product as a stand-alone product or as a biosimilar needs to be taken at an early stage in product development. In To avoid negative response to the MAA, it is strongly Europe, the pathway for the approval for biosimilars of recommended that companies intending to develop bi- recombinant growth hormones, alfa interferons, EPO and osimilars, and particularly biosimilar monoclonal antibo- G-CSF is well established. EMA is currently working on dies, seek regulatory scientific advice in the EU early in guidelines for biosimilar antibodies and beta interferons. the drug development process. The EMA Scientific Ad- There is still controversy around appropriate end-points for vice Procedure could provide useful feedback to devel- clinical trials. One possibility could be that EMA feels com- opers of biotechnological products, allowing repetitive fortable approving biosimilars based on surrogate markers requests for scientific advice during development. for TNFalfa inhibitors or beta interferons and requiring either response rates or mortality studies for cancer antibodies. Requiring survival/mortality endpoints might be too expensive for many biosimilar companies. On the other side, relying on surrogate endpoints might not be enough to convince physicians and patients to use the Prof. Dr. Marietta Kaszkin-Bettag biosimilar (source: EGA Biosimilar Meetings, Ronny Gal, Bernstein Research, September 2010). Marietta Kaszkin-Bettag is Senior Manager Regu- Most of the current patent expirations concern murine latory Affairs and Scien- or chimaeric antibodies that seem to have an immu- tific Expert at Pharma- nogenic potential, and the development of biosimilar Lex GmbH, Mannheim, mAbs does not seem to be advisable. In such cases, the Division “Special Medi- development of newer antibody formats that facilitate cinal Products, Medical the development of improved (or second-generation) Devices and Borderline mAbs might be more desirable. Assay development has Products”. From 2004 to 2009 she was Scienti- reached a stage where comparability testing of two mAb fic Director and Preclinical Research Coordinator products should now be possible. Indeed, biosimilar at Health Research Services Ltd. (a mid-sized monoclonal antibody products are currently being deve- contract research organisation), St. Leon-Rot, loped and CHMP has already given companies scientific Germany. Before it, she was Associate Professor advice for the development of individual products. for Molecular Pharmacology and Research Group Leader at the University Hospital Frankfurt/Main, Centre of Pharmacology and Toxicology. Marietta Communication with Authorities studied biology at the University of Heidelberg and pursued an academic career at the German The European Working Party on similar biological medi- Cancer Research Center in Heidelberg. cinal products (BMWP) has been established – amongst Regulatory Requirements and Challenges for Biosimilars in Europe | 17 DVFA-Broschur.indb 17 11.11.2010 12:10:07 Uhr
  18. 18. Biosimilars – Legal, IP and Transactional Aspects Dr. iur. Dr. med. Adem Koyuncu, Mayer Brown LLP, Germany 1.  Introduction With the upcoming patent expiries in the biologic drugs market, the growth potential of the biosimilars market Biotechnological drugs are very complex products. This increases correspondingly. To exploit the potential of is true for the patented original drugs as well as for this market, companies and investors will need to be biosimilars. As such, it is regularly emphasized that in familiar with the governing legal regulation of these pro- this particular part of the biopharmaceutical industry ducts. Correspondingly, at the same time manufacturers “the product is the process”. This complexity on the of patented biologic products should be familiar with underlying factual level leads to a corresponding com- the legal instruments available to protect their products plexity on the level of legal regulation of these products. from biosimilar competition. Legal options for such pro- The legal complexity results from the factual complexi- tection are not only based on patent law but also on ty. This chapter will provide an overview of the legal regulatory, pricing and reimbursement laws. environment of biologics in general and biosimilars in particular. This legal framework is relevant for all market Overall, the combined knowledge of the scientific par- players interested in these products. ticulars and the familiarity with the legal regulation governing the biologics market is of paramount im- The biosimilars market has turned out to be more dif- portance for biopharma companies and investors in ficult than initially expected. Nevertheless, it is a gro- this market. wing market with increasing commercial relevance and size. A quick look at the market size and the revenues of the major biologic drugs combined with their ex- 2.  Legal and IP aspects pected patent expiry dates of these biologic drugs demonstrates that it is foreseeable that the market size The market for biologic drugs is governed by an inter- for biosimilars will grow significantly in the near future woven set of cross-jurisdictional regulation which takes (see Table 1). place on the international and the national level. A num- Table 1: Major biologic products Product Therapeutic Area Global Sales (USD, 2009) Source: Hospira, Inc. Patent Expiry (USA) Epo alpha Oncology/ESA 5.9 Bn 2015 Etanercept Rheumatoid arthritis 5.9 Bn 2012 Infliximab Rheumatoid arthritis 5.4 Bn n/a Adalimumab Rheumatoid arthritis 5.9 Bn 2016 Bevacizumab Oncology 4.9 Bn 2019 Rituximab Oncology 4.6 Bn 2015 Insulin glargine Diabetes 3.9 Bn 2014 Trastuzumab Oncology 3.8 Bn 2019 Pegfilgrastim Oncology 3.7 Bn 2015 Insulin Aspart Diabetes 3.3 Bn 2017 18 | Biosimilars – Legal, IP and Transactional Aspects DVFA-Broschur.indb 18 11.11.2010 12:10:07 Uhr
  19. 19. ber of legal areas are of practical relevance for these biosimilar producers intend to file a marketing au- products and are briefly highlighted in the following. thorisation application. The data exclusivity terms vary from country to country. In the EU, patented drug owners are basically granted 8 years of data 2.1   Patent and other IP laws exclusivity, while in the USA the data exclusivity period is 4 years. Patent law is one of the central legal fields impacting biosimilars and the biologics market in general. Patents ●  “Market exclusivity” regulates that the approval of a are of central importance for biologic products. For bio- marketing authorisation application for a biosimilar logic products, patents play an even more important that relies on the data of a prior patented (reference) role than for synthetic chemical drugs. As a key aspect, biologic drug is delayed for the period of market ex- for biologic drugs patents are not only relevant for the clusivity. The market exclusivity also varies depending molecules and drug indication but also – and not less on the jurisdiction and needs to be reviewed carefully. important – for the manufacturing process. In the EU, a period of 10 (up to 11) years applies while in the USA 12 years market exclusivity is granted. Usually biologic drugs and their manufacturing processes are protected by a large number of patents. These, among others, also include formulation patents and pa- 2.2 Drug law tents covering the medical devices used for the delivery of the drugs. For marketing of biosimilars a marketing authorization is necessary. To obtain such marketing authorization, In addition to patents, further intellectual property the drug has to comply with the requirements of the rights are relevant in the context of biosimilar busi- regulatory drug laws. These regulatory provisions also ness. For example, trademarks, trade-secrets, copyrights set out the manufacturing, labeling, packaging, marke- or utility models (registered design) have to be taken ting and safety monitoring of these products. Drug law into account. In German judicature, lawsuits are known in the EU consists of a set of legal rules on the EU and involving biosimilars in which the claimant biologics the national level. These rules are interrelated. As with company alleged that its utility model for the stabiliza- patent law, the knowledge of the applicable drug laws is tion of the active substance in a solution was infringed key for a successful market entry of a biosimilar. On the by a competitor. As the manufacturing and stabilization other hand, the profound knowledge of the possibilities processes are key elements for all biologic drugs, it is based on the drug laws can enable manufacturers of evident that the outcome of such lawsuit will determine patented drugs to protect their market position (in addi- the future prospects of the whole product envisaged. tion to the options they have based on patent law). In addition, further IP-related aspects relevant for bio- For biosimilars in the EU, a centralised marketing autho- similars are the “data exclusivity” and the „market ex- risation procedure exists. The competent authority is the clusivity“ regulation: European Medicines Agency (EMA) in London. The EMA has issued specific guidance documents that apply for ●  To be entitled to claim “data exclusivity” by a pa- biosimilars and are aimed to provide for a regulatory tented (reference) drug owner leads to the conse- pathway for biosimilars and which have to be taken into quence that competitors cannot rely on the paten- account by manufacturers when applying for a marke- ted (reference) drug owner‘s clinical data when the ting authorization for a biosimilar. Biosimilars – Legal, IP and Transactional Aspects | 19 DVFA-Broschur.indb 19 11.11.2010 12:10:07 Uhr
  20. 20. The drug laws depend on the market where the marke- petition. In the realm of pricing and reimbursement, the ting authorization application is filed. In the EU, the mar- need for drug companies increases to establish working keting authorization procedure is harmonized. In other relationships with further stakeholders and healthcare countries and markets, other regulatory rules have to be market players who are involved in the decision-making followed and further requirements have to be met (e.g. with respect to pricing and reimbursement (e.  social g., in the USA, the biosimilar manufacturers have to provide insurance funds, health technology assessment organi- data regarding the interchangeability/substitutability of zations (like the NICE in the UK), physician and patient their product with the original reference product). organizations, etc.). 2.3 Clinical trials and research regulation 2.5 Competition and marketing regulation In conjunction with drug laws, the rules governing cli- After market access, the relevance of competition and nical trials and research are also of practical impact on marketing regulation for biosimilars increases subs- biologic drugs in general and biosimilars, in particular. tantially. In this legal field, specific rules exist that Clinical trials are much more relevant for biosimilars govern and restrict the advertisement and marketing than for generic drugs with chemical molecules as the for drugs and, in particular, for prescription drugs. The grant of a marketing authorization for biosimilars de- competition and marketing regulation is, in general, pends much more on sufficient clinical data (regarding an important legal field for the pharmaceutical indus- the “similarity”) than this is the case for generics of try as this is a highly competitive market. With res- chemical drugs. pect to biosimilars, patented drug manufacturers will consider using legal instruments against biosimilars whereas biosimilar companies have to set up specific 2.4 Pricing and reimbursement regulation marketing models. It is foreseeable that there will be an intensive competition between biosimilars and the After the conduct of clinical trials and obtaining the original patented drugs. Given that patented biologics marketing authorization for a product, the crucial ele- and biosimilars are – other than with chemical drugs ment for the product’s market potential is linked with its – not interchangeable per se, companies active in the pricing and reimbursement options after market access. biosimilar market will need to develop specific and The regulation of pricing and reimbursement of biophar- from legal perspective more tailored marketing con- maceuticals varies significantly from country to country. cepts for their products. Different legal and market access concepts have to be analysed for different markets. In summary, a successful Competition courts in Germany regularly have to handle market access strategy for all drugs requires a careful lawsuits in which the manufacturers of patented biolo- legal analysis of the pricing and reimbursement rules. gics and of biosimilars claim that the other party has committed unfair competition by claiming certain posi- Biosimilar manufacturers will have to analyse the pricing tive attributes for their drugs or certain negative attribu- strategies of the manufacturers of the patented biologic tes for the other party’s drug (e.  a biosimilar company g., drugs whereas the latter have to analyse the biosimilar claimed that its biosimilar has an “equivalent safety competition. For manufacturers of the patented biologic profile” as the patented drug – the biosimilar company drugs, the instruments of the pricing and reimbursement lost the case). With the increasing market relevance of regulation provide options to face the biosimilar com- biosimilars, such litigation will increase as well. 20 | Biosimilars – Legal, IP and Transactional Aspects DVFA-Broschur.indb 20 11.11.2010 12:10:07 Uhr
  21. 21. 2.6 Other relevant legal areas Act was part of the intensively debated US Healthcare reform and provides for a general framework for FDA ap- The practice of biopharmaceutical business is also in- provals of biosimilars. It further includes specific rules for terrelated with the regulation of healthcare professi- the management of patent infringement issues resulting onals. The interaction between healthcare companies from biosimilar applications. The new US Biosimilar Act and medical doctors is subject to the regulation by the establishes standards for the application and approval of professional rules and general legal compliance requi- biosimilars and also sets out terms for data and market rements. For example, the professional rules allow me- exclusivity. It further requires biosimilar manufacturers to dical doctors to prescribe biosimilars even though the disclose relevant patent information after the submission drugs are not generally interchangeable. Thus, biosimi- of a marketing authorization application. Based on this lar manufacturers will need to convince medical doctors information complex and time-sensitive requirements ap- to prescribe their products as an alternative to the pa- ply for the management and resolution of patent infringe- tented reference product. This interaction with medical ment disputes with patented reference biologic owners. doctors is regulated by the said professional rules so that companies need to observe these as well. A proper due diligence will have to include these various legal aspects that are attached to biologic drugs as a Among the other fields that are or may become relevant particular group of healthcare products. for biosimilar manufacturers the medical devices laws should only be mentioned here. As such, the medical 3.  Transactional aspects devices law is relevant for the devices used for the delivery of the biologic drugs (e.  pens for the injection g. The above presented legal aspects have to be conside- of drugs). red in all types of transactions involving biologic drugs and companies manufacturing, selling or licensing such drugs. With the increasing market relevance of biosi- 2.7 International regulation milars, these considerations will gain more practical relevance. In the course of the due diligence of the regulation applicable to a particular biologic, differences in the regulation depending on the specific market and country 3.1 Types of transactions need to be taken into account. As noted above, in the EU, biosimilars and their approval are regulated by com- Types of transactions may include classic mergers and munity wide legal provisions and guidance documents acquisitions involving biosimilar manufacturers. Also, issued by the European Medicines Agency. The Agency asset deals with respect to a particular product (product is currently working on developing further guidance do- acquisition) or involving, for example, manufacturing fa- cuments specifically applicable to biosimilars (e.g., for cilities are possible types of transactions. Biosimilars monoclonal antibodies). and manufacturers of such products will also become more interesting targets for the capital market with res- Specific regulation governing biosimilars and their market pective activities (e.  IPO, private placement, venture g., approval also have been enacted in other major markets financing etc.). in the world. As such, in the USA the “Biologic Price Competition and Innovation Act” (“Biosimilar Act”) has In addition to the corporate and capital markets acti- been enacted on 23 March 2010. This new Biosimilar vities, specific partnering models (including corporate Biosimilars – Legal, IP and Transactional Aspects | 21 DVFA-Broschur.indb 21 11.11.2010 12:10:07 Uhr
  22. 22. partnering) and strategic alliances play prominent roles ●  Commercial/Business Due Diligence in the life sciences industry. These, among others, in- ●  Legal Due Diligence clude ●  Regulatory Affairs Due Diligence ●  Medical Affairs and Clinical Due Diligence ●  Financial Due Diligence ●  Tax Due Diligence ●  RD-partnerships ●  Licensing relationships (e.  one-way licensing or g. cross-licensing) ●  Technology transfer relationships Depending on the stage of the target product, for the ●  Co-Marketing relationships due diligence before an in-licensing or acquisition it can ●  Co-Promotion relationships be further differentiated between the due diligence of ●  Strategic supplier-cooperations an approved product and the due diligence of a product still under development. Different (further) aspects be- In general, it can be differentiated between contract- come relevant depending on this stage. For an approved based alliances and equity-based alliances. Thus, inte- product, among others, the known market performance resting models for such partnering models and strategic and market potential, the cost of goods, the market en- alliances are also joint ventures, minority investments vironment (competition) are central aspects in addition or cross-shareholding constellations. to the legal and regulatory considerations. For a product under development it is central to understand the proof One central upside of such cooperations from a com- of concept and the stage of the product’s development mercial perspective is the shared risk as – particularly in or of particular processes (e.  manufacturing). For a g. the early stage partnering and strategic alliances – both product under development also additional legal and strategic partners face a considerable level of uncer- regulatory pitfalls have to be scrutinized. tainty with respect to the commercial and regulatory prospects of the product. 3.3 Legal due diligence On the other hand, the tradeoff of such partnering and strategic alliances is that the partners incur a potential The legal due diligence has to cover a broad range of „relationship risk“ with respect to commercial and legal aspects whereby the individual relevance and weight aspects. Therefore, a sound and thorough due diligence of these depend on the particular transaction. Among before entry into such investments is key to a sustaina- others, following aspects should be noted: ble and well-arranged transaction. ●  General corporate aspects ●  Organizational aspects ●  Legal disputes and exposures ●  Contracts and obligations As already mentioned, the due diligence is the central ●  Employment and pensions tool to assess the value and the potential risks of the ●  Insurances respective transaction. This is true for all types of tran- ●  Environmental sactions mentioned in the foregoing sub-chapter. The ●  Compliance 3.2 Due diligence due diligence will regularly include a broad range of aspects. Among others, relevant fields to be covered include: issues (e.  interaction with healthcare g, professinals, anti-corruption) ●  Permits and licenses (e.  regarding manufacturing g., facilities) 22 | Biosimilars – Legal, IP and Transactional Aspects DVFA-Broschur.indb 22 11.11.2010 12:10:07 Uhr
  23. 23. ●  Biosimilar-specific legal and intellectual property as- subsequent contract negotiations (e.  by appropriate g. pects (See the points mentioned in sub-chapter 2 in representations and warranties, indemnities, royalties). this article above) As already noted, the due diligence is the central step to assess the value and risks of the envisaged transaction. The central element of the due diligences in the life sciences and healthcare market is the IP due diligence. This is particularly true for transactions involving bio- 4. Summary logic drugs where the relevance of patents goes far beyond the products itself (see above). In the course of The market for biosimilars is continuously growing. With the IP due diligence, the patent and IP status as well the increased market presence of these products, the as exclusivity terms have to be analysed. Further, the number of legal questions linked with them increases enforceability of these IP rights need to be determined. as well. This chapter has presented an overview of the Correspondingly, the potential IP risks need to be eva- legal environment that applies and governs biosimilars. luated (e.  litigation risks, loss of exclusivity). g., All market players – biopharmaceutical companies as well as investors in the market – need to be aware of The legal and IP due diligence should also include the the legal environment through which they have to na- review of possible opportunities to enhance the IP vigate if they are interested in biologics in general and position by analysing respective options (e.  patent g., biosimilars, in particular. Various legal fields are rele- term extensions in key markets). Potential patent and vant for a biologic drugs. This additionally underscores IP issues or uncertainties detected in the legal due dili- the importance of a sound and thorough legal due gence can affect the overall value of the target. On the diligence in case of transactions and investments in other hand, many such findings can be covered in the this market. Dr. iur. Dr. med. Adem Koyuncu Adem Koyuncu is double qualified as lawyer and medical doctor and is a partner in the Cologne office of the international law firm Mayer Brown LLP. He is one of the co-chairs of Mayer Brown’s global life sciences practice. Dr. Koyuncu focuses his practice on advising and representing life sciences industry clients and investors in the healthcare market. He assists clients in transactions, corporate matters and strategic alliances as well as commercial and regulatory matters. Prior to joining Mayer Brown, Dr. Koyuncu worked in the pharma industry and as medical doctor. He is named as „often recommended lawyer“ for pharmaceutical and medical devices law by JUVE, Germany’s leading legal handbook. Biosimilars – Legal, IP and Transactional Aspects | 23 DVFA-Broschur.indb 23 11.11.2010 12:10:07 Uhr
  24. 24. Biosimilars – Risks and Opportunities from a Pharmaceutical Perspective Prof. Dr. Theodor Dingermann, Institute of Pharmaceutical Biology, Biocenter Frankfurt/Main, Germany Recombinant proteins are generally recognized as inno- authentic human standard, which has been optimized vative pharmaceutical products. However, an innovation during centuries of evolution. Authenticity, once thought is finite; it is no longer an innovation when its patent to be a prerequisite for safety and immunological to- protection expires. Although determining a definite pa- lerability, is not a value anymore. Today’s most advan- tent expiry date for a protein product can be extremely ced biologicals are frequently structurally modified to a difficult, it is clear that several recombinant drugs are degree which would have been considered ridiculous currently patent-free and many others are set to follow. if suggested 15 years ago. These modifications repre- In principle, this provides the legal basis for follow-on sent either a variation of the amino acid sequence or products, which can be seen roughly as generic versions they represent attachments of other structural moieties of original biopharmaceuticals. The question is whether (polyethylene glycol chains, fatty acids, additional sugar they present more risks than opportunities. From a structures) to the protein backbone. Even such artificial pharmaceutical point of view, they definitely offer more constructs as fusions of parts of absolutely unrelated opportunities than risks, provided a well-designed legal proteins are tolerated and safe. framework is in place! Of course, the safety and efficacy of such altered moleThere is an ongoing debate about whether copying a cules cannot be anticipated automatically, and like any recombinant protein for clinical use might be generally new drug compound, biopharmaceuticals – innovations possible. Of course it is! And clearly Europe is leading as well as biosimilars – have to undergo a highly struc- the way in this respect while the US is still struggling. tured set of regulatory requirements, which, if success- Recombinant drugs, or biologicals as they are generally ful, leads to approval by the authorities. known, are highly complex drug substances which have added tremendous value to modern medicine. While On the other hand, despite their enormous value for our chemically synthesized, low-molecular-weight com- healthcare system, biopharmaceuticals have become a pounds mostly modulate an ill-functioning biomolecule serious threat to the system itself. Some of the treat- by enhancing (agonists) or reducing (antagonist) its ac- ments now available are ridiculously expensive, costing tivity, many biologicals come with their own biological up to USD 500,000 and more per patient p.  This might a. activity thus substituting or complementing an insuffici- be warranted so long as the medicine in question is new ent physiological inventory. and innovative, but this cannot last forever since biopharmaceuticals put an enormous strain on the system. Introducing such highly complex molecules into a patient And there is no doubt that many patients who qualify is clearly a risky intervention, which by the way is also for treatment with a recombinant drug are left untreated the case – and indeed far more so – when a new original because the system cannot afford their treatment. molecule is tested. Fortunately, we have learned that these risks are dramatically outweighed by opportunities Solutions are at hand but they require systematic super- which recombinant proteins offer to very sick patients vision, leading to approval by the authorities who apply who are often untreatable with any available medicines. an approval pathway specially adapted to the specific In addition, we have learned that these molecules, when problem of approving a copy of a patent-free molecule used as medicines, are not structurally restricted to an with a long record of clinical safety and efficacy. 24 | Biosimilars – Risks and Opportunities from a Pharmaceutical Perspective DVFA-Broschur.indb 24 11.11.2010 12:10:07 Uhr
  25. 25. The product is the process binant drugs are defined based on their concrete production process. The new paradigm reads: “The product Without a doubt, copying a biotech medicine is much is the process” as opposed to the traditional definition more complex than copying a chemically synthesized “The product is the molecule”. drug of low molecular weight. A highly controlled manufacturing process is intrinsically important in the case Strictly speaking, this would mean that a generic versi- of biotech medicines because control equals consisten- on of a biotech protein should “not only“ be a perfect cy and consistency equals safety and efficacy when it copy of the reference molecule, but also that the entire comes to biologicals. Even minor variations can result production process should be copied. Process details, in vastly different products since the process is extre- however, are considered extremely valuable assets of mely sensitive to changes in both manufacturing and a company that do not appear in any publication or in production. any patent and therefore cannot be copied by a different manufacturer. These are only a few of the reasons why it immediately became clear that the process of copying an original This was highly reasonable at the time when recom- biopharmaceutical and its subsequent approval by the binant drugs entered the market; meanwhile, a recon- authorities cannot just follow rules which are routinely sideration of this “dogma” seems warranted. In princip- applied to low-molecular weight, chemically synthesized le, there is no magic to the process of manufacturing products. Because of the macromolecular nature and biopharmaceutical drugs and therefore no argument highly complex matrix of biopharmaceuticals and biosi- against generic copies of biopharmaceuticals, provided milars, they demand additional attention to guarantee measures are taken to prove the safety and efficacy of safety and efficacy. a well-known biomolecule which is produced in a robust and reproducible process, even if this process is diffe- The intrinsic relevance of the production process of rent from that of the originator. biopharmaceuticals has eventually led to a paradigm change in the definition of this new class of drug compounds. In a monograph entitled RECOMBINANT DNA Biosimilars are similar and not identical to their TECHNOLOGY, PRODUCTS OF (Producta ab ADN recom- reference molecules binante), the European Pharmacopeia defines recombinant products as follows: A biosimilar does not necessarily have to be a perfect copy of an original. At least in Europe it is now widely “Products of rDNA technology are produced by genetic understood that a biosimilar is similar but not identical modification in which DNA coding for the required pro- to its reference molecule. This makes a lot of sense duct is introduced, usually by means of a plasmid or a since the alternative would simply be impossible. Even viral vector, into a suitable micro-organism or cell line, in originators have to make process changes and indeed which that DNA is expressed and translated into protein. they are allowed to do so. This would not be possible The desired product is then recovered by extraction and if the original “dogma” in its strict sense were still in purification. …” place. According to this definition, recombinant products are al- In addition, variations in the structure of biomolecules ways proteins (last word of the first sentence). But more are nothing unusual. Even when isolated from any hu- importantly according to the second sentence, recom- man source, biomolecules show remarkable structural Biosimilars – Risks and Opportunities from a Pharmaceutical Perspective | 25 DVFA-Broschur.indb 25 11.11.2010 12:10:07 Uhr
  26. 26. heterogeneity if one looks carefully using up-to-date Although the degree of sophistication of current analyti- analytical tools and techniques. In fact, typically, “pro- cal tests has improved tremendously, the fact that the teins” are more or less complex mixtures of similar mo- safety and efficacy of biosimilars need to be defined lecules, particularly – but in no way exclusively – when independently in formal clinical safety and efficacy trials it comes to carbohydrate modifications. is still demanding. It is known that even slight structure alterations can alter key parameters such as stability, Nevertheless, one can easily identify a purified frac- resistance to degradation, circulatory half-life, biological tion as insulin, erythropoietin, beta-interferon or as an activity or the potential for adverse immune reactions in antibody with a certain specificity. There is absolutely patients. But it is even more probable that none of these no doubt that a molecule identified as insulin will act concerns will be observed. However, given the general like insulin; a molecule identified as erythropoietin will unpredictability of biologics in humans, stringent post- act like erythropoietin; a molecule identified as beta- marketing monitoring studies are inevitable as well. interferon will act like beta-interferon, and a molecule identified as an antibody with a certain specificity will There are extremely important differences between an act like such an antibody – whether it be in vitro or in innovative molecule and a biosimilar in the early deve- vivo in a patient. lopment stages: On a simplified basis, the manufacturing process for ●  By definition, the innovative molecule has never biologics can be divided into six stages: host-cell deve- been tested in humans at the early (preclinical) sta- lopment, master-cell bank establishment, protein pro- ge of drug development. Even though the molecule duction, purification, analysis and formulation. Hardly has been developed on the basis of strong phar- any of these stages are or even can be identical between macological plausibility, clinical trials nevertheless the reference and the “copy”. But should they? Is there still have to prove its clinical benefit. Examples are just one optimum solution to a highly complex problem? known where new biomolecules have failed these Of course not! What is necessary, however, is that a particular solution has been rigorously tested as safe. tests. ●  Many biologicals cause a complex cascade of res- ponses and it is impossible to predict in early deThe challenge when setting up a manufacturing process velopment stages whether this will be tolerated by for biologics lies in its requirement for robustness. It is patients. Consequently, side effects can always jeo- not necessarily a problem if an original and a similar pardize the successful introduction of a biomedicine. copy differ slightly. However, it would be a problem if A biotech product will only be successful if benefits proteins from various batches differed significantly. clearly outweigh potential risks. Consequently, compared with the manufacture of orga- In the case of biosimilars, all this is known from the nic compounds, the production of biologics requires far clinical performance of the reference drug: greater stringency and documentation, including a greater number of batch records, more product quality tests, more critical process steps and more process data entries. ●  the reference drug has a long clinical history and has proved its clinical efficacy On the other hand, improvements in the availability and ●  it sophistication of analytical techniques allow a thorough ●  its apparently has a positive benefit/risk ratio, and immunological activity is acceptable description of all chemical and physical aspects of the molecules and of possible contaminations and impurities. 26 | Biosimilars – Risks and Opportunities from a Pharmaceutical Perspective DVFA-Broschur.indb 26 11.11.2010 12:10:07 Uhr
  27. 27. On the other hand, what needs to be shown in the case are innovations since they are all structurally very diffe- of a biosimilar is: rent. But all have turned out to be safe and more or less efficacious, and consequently, all have been approved by ●  the degree of efficacy and safety of the copy which authorities in Europe and the US. most likely differs slightly from the original Why not add another molecule (or more), which is a Nobody realistically doubts these requirements. more or less an exact copy of an existing one which has become patent-free? Such a molecule can be developed without the drugability of a particular disease being an Opportunities issue and it should therefore turn out to be significantly cheaper than the original where such a risk was part of Most biotech drugs are very expensive, but this can only serious calculations. partly be explained by the cost of goods. The fact is that it is extremely risky to develop such drugs, mainly because Although biosimilar proteins arise from separate manu- of the uncertainty related to the drugability of a particular facturing processes and differ in master cell line, proces- disease with a biotech drug. Once drugability has been sing and purification, they can be constructed sufficient- demonstrated, competitors enter the market even though ly similar to an approved product to permit the applicant the original molecule is still patent protected. This is pos- to rely on certain existing scientific knowledge. sible since in many cases a whole variety of different proteins can solve the same clinical problem. For example six Prices of biotech drugs must come down for the sake structurally very different TNF-alfa antagonists compete in of patients and for the affordability of our healthcare the market for chronic inflammatory diseases and several system based on the solidarity principle. Competition more are in the advanced pipeline. All these molecules after patent expiry is one reasonable tool. Table 1: Approved Biosimilars in Europe Biosimilar INN Company Approval year Omnitrope somatropin Sandoz      Source: EMA 2006 Valtropin Binocrit Biopartners epoetin alfa Epoetin alfa Hexal Medice epoetin zeta Retacrit Filgrastim Ratiopharm 2007 Hexal Abseamed Silapo Sandoz Stada Hospira filgrastim Ratiopharm Ratiograstim Ratiopharm Biograstim CT Arzneimittel Tevagrastim Teva Filgrastim Hexal Hexal Zarzio Sandoz Nivestim Hospira 2008 2009 2010 Biosimilars – Risks and Opportunities from a Pharmaceutical Perspective | 27 DVFA-Broschur.indb 27 11.11.2010 12:10:07 Uhr
  28. 28. Innovators should concentrate on innovations, and in- macokinetics, or increased immunogenicity. This could deed the potential for innovations is enormous. Many indeed happen and additional clinical testing to prove unmet medical needs are waiting for innovative inter- the safety and efficacy of products was therefore put in vention options and there is always potential for impro- place before market authorization was granted. ving the characteristics of specific molecules towards second or third generation drugs. Biosimilar products are now a reality – at least in Europe (Table 1) – and opponents of an accelerated ap- The concerns of opponents of an accelerated approval proval procedure for biosimilar protein products have procedure for biosimilar protein products remain ill- been proved wrong. Biosimilar protein drugs are mar- founded. They have argued that regardless of rigorous keted without unintended effects – clearly demonstra- physicochemical characterization of the protein, even ting that safety is not an issue, so long as appropriate small and seemingly insignificant manufacturing chan- regulatory supervision is in place. ges could theoretically contribute to differences in protein folding, aggregates and glycosylation, which might This is an opportunity for seriously ill patients and for manifest clinically as decreased efficacy, altered phar- our healthcare system as well. Prof. Dr. rer. nat. Theodor Dingermann Theodor Dingermann studied Pharmacy at the University of Erlangen-Nuremburg. He received his Ph.  1980 in Biochemistry. Between 1980 and 1982 he worked as a postdoctoral D. fellow at Yale University, New Haven, USA with Prof. Dr. Dieter Söll. Between 1987 and 1991 Dingermann was assistant professor for Biochemistry and Molekularbiology at the University of Erlangen-Nuremburg. Since 1990 Dingermann is C4 Professor and director of the Department for Pharmaceutical Biology at the Goethe-University Frankfurt/Main. He is editor in chief of the international scientific journal DIE PHARMAZIE and of “Pharmazie in unserer Zeit”, the official journal of the German Pharmaceutical Society. 28 | Biosimilars – Risks and Opportunities from a Pharmaceutical Perspective DVFA-Broschur.indb 28 11.11.2010 12:10:07 Uhr
  29. 29. Cost Savings Potential of Biosimilars in the German Health Care System Prof. Dr. Bertram Häussler, IGES Institute, Germany Biologics play an important role in the provision of high- Biosimilars and conventional small-molecular generics quality medical care within the German Statutory Health display completely different product characteristics. Bi- Insurance (SHI) context. Biologics are, however, also osimilars, as all biologics, may be produced from micro- comparatively expensive products whose use implies bial cells, mammalian cell lines and plant cell cultures high annual costs of therapy. in bioreactors. The product is thus heterogeneous by definition. A (small-molecule) generic displays the same After patent expiry biopharmaceuticals can be produced qualitative and quantitative composition of active ingre- by companies other than the originator. The new pro- dients as the original product. ducts, mostly called “biosimilars” (whereas „follow-on biologics“ is the common term in the USA), form a new Fundamental differences in product characteristics bet- category of drugs in regulatory terms. Competition as ween biosimilars and generics explain the different regu- a result of the introduction of biosimilars opens up the latory requirements that need to apply. The RD costs of potential to reduce drug expenditure. biosimilars are of a completely different order than the Conventional generic Post-approval Other RD costs Development Marketing authorization Clinical Production sales Other RD costs Marketing authorization Development Dev. costs Biosimilar Production sales Post-approval Production sales Reference product Clinical Preclinical Pharmacovigilance (1  20 years) –  Registration (EMA) (1.5  2 years) –  Clinical studies (2  4 years) –  Process development, quality, preclinical (3  6 years) –  Preclinical Drug discovery Figure 1: xpenditure of the pharmaceutical development in comparison to generics and biosimilars Source: IGES 2009 E Cost Savings Potential of Biosimilars in the German Health Care System | 29 DVFA-Broschur.indb 29 11.11.2010 12:10:08 Uhr
  30. 30. relatively low development costs of traditional generics share of biologics of the SHI pharmacy market is about (Figure 1). Evidently, there is also a dramatic difference in 13.8  The highest indication-related expenditure is for %. production costs between the two categories. autoimmune diseases (about EUR 1.8 billion) and diabetes (about EUR 1.2 billion). The European regulatory agency EMA has introduced a separate process for the market authorization of bi- Without the market entry of further biosimilars, SHI ex- osimilars. Comparable arrangements do not yet exist penditure for biologics will amount to approximately in the USA or Japan. Therefore, Europe has taken on a EUR 9.7 billion in the year 2020. In 2020 these product’s pioneering role. Within Europe, Germany plays an im- share of 21  will account for more than one fifth of sa% portant part regarding the production and marketing of les in pharmacy market. Given patent expiry of a whole biosimilars. Different factors underline Germany’s positi- range of important biological products before 2020, the on. Several large producers of generic drugs have access potential for biosimilar market entries will increase si- to the required technical and economic know-how and gnificantly. A considerable share of the market will still bring in the financial power to drive the development benefit from patent protection. New (to some extent and marketing of biosimilars. still unknown) products will enter the market under the protection of patents. After 2013 the market of biologics Within the German SHI market, the expenditure for bio- under patent will stabilize by value. Correspondingly, logics is expected to increase continuously over the ye- the expenditure share of products with biosimilar po- ars ahead. Spending in 2009 was EUR 4.25 billion. The tential will increase. 10.000 1.3 billion 9.690 9.000 8.000 Accumulated possible savings from biosimilars: 8.1 billion 8.359 1 billion Sales in million euros 7.000 6.000 With biosimilar potential 5.000 4.273 4.000 3.000 Patent protected 2.000 1.000 0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Figure 2: Savings potential of biosimilars until 2020 within the German SHI System   Source: IGES 2009 30 | Cost Savings Potential of Biosimilars in the German Health Care System DVFA-Broschur.indb 30 11.11.2010 12:10:08 Uhr
  31. 31. Biosimilars promise significant savings for the German under EUR 9.7 billion to just under EUR 8.4 billion. The SHI drug budget. To gauge these savings a systema- cumulative savings through biosimilars until 2020 will tic analysis based on information from a large number be about EUR 8.1 billion (Figure 2). of sources was conducted including observed market trends, forecast epidemiological developments in the re- Initial experience of the effects on spending of the intro- levant indications, information about restrictions on and duction of biosimilars is available in the form of a first- extensions of indications, data on development pipe- generation scenario in the field of erythropoietins. Here, lines in biopharmacy, information about patent expiries biosimilars came onto the market in October 2007. and possible dates of biosimilars’ market entry. At the time biosimilars entered the market the average The expiry of patents on biopharmaceuticals will lead pharmacy selling price of the originals per DDD (defined to the appearance of biosimilars on the market. But daily dosis) was EUR 14.93. The price of biosimilars not every patent expiry will lead to biosimilars being settled at about EUR 10.00 per DDD and is thus about developed for the particular reference product. The de- 33  below the starting price of the originals. With the % velopment of biosimilars is very strongly dependent on originals the price was reduced to about EUR 12.58 per product characteristics and the associated market op- DDD. This means an average drop in price of about portunities for a possible biosimilar product. Also two 15.7  (Figure 3). % effects were taken into account of the forecast of the proportion of sales and the overall effect of entry on The double saving effect can be simply illustrated as fol- the market: lows: the consumption in the erythropoietin segment for 2008 was about 25.7 million DDD. Assuming an average A 1.  direct effect on spending through the appearance on the market of the less expensive biosimilar, and starting price of EUR 14.93 per DDD, this would give total sales of about EUR 383.7 million. 3.3 million DDD were accounted for by biosimilars at a price of EUR 10.00 per 2.  competitive effect on spending which shows up as A a drop in the price of the reference product. DDD. The other 22.4 million DDD were supplied at an average price of EUR 12.44 per DDD. Total sales on the pharmacy market were EUR 311.7 million, with EUR 33.0 In a few areas, savings can be realized in the short million accounted for by biosimilars. Compared to the term. However, given the patent situation and the baseline scenario, this results in savings of about EUR complex processes associated with market entry of 72 million or about 18.8  %. biosimilars, savings are more likely to occur in the medium or longer term. If fair competition can be es- Since 2007 biosimilars in the erythropoietin segment tablished in the biopharmaceutical market, the market have become more important. 2008 the share of con- entry of biosimilars can generate a reduction of up to sumption was 13  and 2009 22  Related only to % %. 25  in the off-patent segment of the biopharmaceu% erythropoietin with excluding derivatives the share of tical market. consumption was even 40  in 2009. This high proporti% on in Germany is caused by target agreements between Assuming the potential saving is 25  in the particular % SHI and physicians’ associations in order to control drug segment, annual savings of just under one billion Eu- expenditure. ros will be achieved in 2017. In 2020 spending in the biopharmaceutical segment of the SHI pharmacy market Assuming that the market share of biosimilars will con- would be reduced by about EUR 1.3 billion from just tinue to grow and that competition will lead to further Cost Savings Potential of Biosimilars in the German Health Care System | 31 DVFA-Broschur.indb 31 11.11.2010 12:10:08 Uhr
  32. 32. 16 15 14 -15,7  % -33  % 12 Price reduction originals completed 11 10 Original Market entry of biosimilar Imports 2005 2006 2007 Jun Apr Mai Mrz Jan Feb Dez Okt Nov Sep jul Aug Jun Apr Mai Mrz Jan Feb Dez Okt Sep jul Aug Jun Apr Mai Mrz Jan Feb Dez Okt Nov Sep jul Aug Jun Apr Mai Mrz Jan 2004 Feb Dez Okt Nov Sep jul Jun Apr Mai Mrz Jan Feb 8 Aug Biosimilars 9 Nov Price in euros 13 2008 Figure 3: Price trend for erythropoietin in Germany (pharmacy selling price/DDD in euros) Source: IGES presentation according to NVI (Insight Health) price reductions, the medium-term saving potential funds. There is a further risk of the originator engaging compared to the baseline situation is estimated at in predatory pricing. about 25  %. From an SHI perspective, a framework should be estabDespite the potential of biosimilar products for the Ger- lished to facilitate the realization of medium- and long- man economy and the health system, these products term savings through biosimilars. These will only be face very high barriers to entry: possible under free and fair competition. The following instruments should be discussed in this context: ●  H igh investments in production facilities; ●  significant technical and analytical requirements; ●  complex and lengthy regulatory processes preceding market authorization; ●  ●  The contracts with sickness funds. ●  roducers P a high degree of uncertainty regarding future uncertain market acceptance. of biosimilars can enter into contracts with sickness funds even before patent expiry, as revenue; ●  originator is not allowed to enter into exclusive long as these are not exclusive contracts. ●  R eference pricing should not be applied to these market segments for a certain protection period. In addition there is a risk of the originator locking up potential markets. Barriers to entry can arise in the form Naturally, the producers of biosimilars are entitled to ap- of (exclusive) contracts between originator and sickness proach the German Competition Court and demand the 32 | Cost Savings Potential of Biosimilars in the German Health Care System DVFA-Broschur.indb 32 11.11.2010 12:10:08 Uhr
  33. 33. application of antitrust law when it comes to predatory An European collaborative approach that levels the pricing or exclusivity agreements. ground for development and optimization of biosimilars competition on European health care markets would be Building on experience from the German marketplace, an important precondition for achieving favorable con- strategies that focus on optimizing the biosimilars mar- ditions for biosimilars at the global level. ket share should embrace an European perspective. Prof. Dr. Bertram Häussler Prof. Bertram Häussler MD, has been the managing director of the IGES Institute, a large private and independent R D institute for health and health care, based in Berlin, Germany since 1990 and chairman of the board of management since 2006. He joined IGES after completion of his studies in medicine and sociology in 1986. Ever since the main emphasis of his work is in the areas of health services research, health economics, innovation research and benefit assessment in medicine, and pharmacoepidemiology as well as clinical and observational drug research in the national and international contexts. Additionally he is the managing director of the Clinische Studien Gesellschaft (Clinical Studies Society) an IGES subsidiary in the field of pharmacoeconomics and clinical research since 1998. Since 2009 he is also executive director of IMC IGES. In addition he is a member of the Executive Board of the Berlin Public Health Center and is an advisory-board member of several pharmacological and health care research societies. In 2002 he was appointed a chair for Industrial Economics of the Pharmaceutical Industry at the Technical University (TU) Berlin. Cost Savings Potential of Biosimilars in the German Health Care System | 33 DVFA-Broschur.indb 33 11.11.2010 12:10:08 Uhr
  34. 34. The Long View: Biosimilars – Henry Ford on Antibody Manufacturing Ronny Gal, Sanford C. Bernstein Co., USA Highlights dy markets and several entrants should be expected on larger products. (ii) Me-too players which can 1.  CapEx associated with building an antibody cellThe now justify entry with lower ultimate share; and culture manufacturing facility and the high COGS as- (iii) specialty-biotech companies which will position sociated with manufacturing them, particularly by the known molecules/classes for niche specialties. low market share players, are considered significant barriers for biosimilars/follow-on biologics (FOB) entry. In this note, we provide an overview of antibody Investment Conclusion manufacturing and argue that technology progress over the past 10 years has significantly reduced the As process yields improved, the overall cost declined manufacturing entry barriers from the USD 250  500 –  but prices are not likely to decline in parallel thereby million to a USD 50 million upfront investment. opening a substantial gap between cost and price. On 2.  he cost of antibody manufacturing decreased T the positive side, it does validate their investment in with process improvements and standardization. biosimilar antibodies; however, profitability may erode Through successive improvements, cell culture fer- over time if the business becomes too similar to the mentation yields have increased from 1 gram/L classic generic model. Teva, Mylan, Hospira and Sand- to ~  grams  reducing manufacturing costs to 5 /L oz, the generic unit of Novartis, have all taken steps to ~  USD 100  gram. As downstream processes did not /  participate in biosimilars. substantially improve, costs migrated downstream from fermentation to antibody purification and increasingly – fill  finish. It is thus less certain to us /  Details – if innovators will have substantial cost advantage Overview of the antibody manufacturing process over biosimilar developers. 3.  mplications for biosimilar developers. Part of the I The manufacturing process (Exhibit 1) is logically divi- concern in the market has been that (i) even if ded to three steps: (i) the cell culture/fermentation step, approved, profitability of biosimilars could be hurt (ii) purification of the antibody (to the drug substance) by innovators reducing prices to make biosimilars and (iii) fill/finish – reconstituting of the pure drug subs- costs prohibitive and (ii) the need to match the tance in the correct carrier (drug product) and packaging CapEx investments of innovators. It now appears bi- it in a vial/prefilled syringe etc. osimilars manufacturers could achieve cost-efficient manufacturing even in relatively low market share, The cell culture process starts with growing the previ- making price-competition unattractive to innova- ously frozen cells in steps until they reach production tors. The need for CapEx investment is likewise a scale (5,000L  25,000L) where they produce anywhere –  lower concern as capacity can be rented until it is between 0.5 grams to 5 grams of the desired antibody economically preferable to bring it in. depending on the efficiency of the process. A typical cell 4.  he innovative space will get more crowded. We T culture process takes 10  12 days. After the fermentation –  see development of three players: (i) the biosimilars is completed the cells are harvested usually through players which will likely participate in most antibo- centrifugation (followed by a day of clean up  sterilizati/  34 | The Long View: Biosimilars – Henry Ford on Antibody Manufacturing DVFA-Broschur.indb 34 11.11.2010 12:10:08 Uhr
  35. 35. Fermentation Purification Fill / Finish Cell Bank Vial Protein A Chromatography Fill  / Finish Seed Train Anion Exchange Chromatography Inoculum Train Cation Exchange Chromatography Production Culture Virus Retention Filtration Centrifuge Harvest UF / DF Figure 1: A consensus process for antibody manufacturing    ource: mABs 1:5, 2009 S on). Most plants operate with four reactors (some three, Process standardization allowed for ongoing improve- some six) in staggered fashion. ments and reduction in costs The purification stage essentially always starts with The standardization of the process across products al- protein A chromatography (protein A strongly binds an- lowed the manufacturing teams to move to the next tibodies), typically followed by either an anion or ca- step of attempting to reduce the costs in each of the tion exchange chromatography. Most processes usually manufacturing steps. Most of the attention of the manu- have a third chromatography stage (either another ion facturing teams was on the fermentation step which was exchange or hydrophobic/hydrophilic column). Additio- the largest cost component. Over the past decade, these nally, there are steps to remove viral contamination, teams have gone back and developed more efficient which typically include filtration and a change in pH. The cell-lines which produce antibodies at higher titer and purification process ends with ultra-filtration. use more standardized and less expensive media (no fetal calf serum). They have also addressed numerous se- The fill  finish usually is done in a separate facility and is /  condary issues which affected batch failure like antibody very similar to the high-end fill  finish process of small injec/  aggregation, optimized scale up conditions etc. Most table molecules (it is an aseptic fill  finish as antibodies can /  high scale commercial operations are now operating at not be sterilized after the vial is filled). It is often outsour- 2 gram  L or better efficiencies with RD stage pro/  ced to specialized players like Baxter or Hospira although jects are now aiming to achieve 5  10+ g/L yields. The –  there is growing realization of its importance (DNA built a increase in cell culture yields reduced the costs of ma- large facility in Oregon to address its fill/finish needs). king the drug substance from USD 500+/gram to about The Long View: Biosimilars – Henry Ford on Antibody Manufacturing | 35 DVFA-Broschur.indb 35 11.11.2010 12:10:08 Uhr