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The Role of Biosimilars in Driving Innovation in the Biopharmaceutical Industry Thomas Vanden Boom, Ph.D. Vice President, Hospira Global Biologics R&D BioProcess International Convention Providence, Rhode Island September 23, 2010
Biosimilars Regulatory Framework Continues to Evolve Worldwide WHO 2009 Canada 2010 US 2010 Europe 2005 Japan 2009 Australia 2006 Dates represent year when primary guidelines, guidance or legislation adopted
Growing Biologics Market Driving Interest in Biosimilars Space Source: Hospira analysis of Datamonitor IMS data, December 2009 Rest-of-World $18 B Europe $26 B US $50 B Japan $6 B 2009 Global Biologic Sales
Biosimilars Represent a Distinct New Sector of the Biopharmaceutical Industry Biosimilars Originator Products Generics Development Environment Development Environment Probability of Success Cost Time Development Low (~ 30%) High (~ 90%) High (>$800 M) Low ( <$5 M) Long (8-12 yrs) Short ( 3-4 yrs) Barriers to Entry Point of Differentiation Other Dynamics High Low Product profile, marketing Price, breadth of portfolio Competitors Investment Pricing Marketing Few, well differentiated Many, little differentiation High Low Premium Commodity Source: FTC Report June 2009 and HSP internal analysis
What is the state of innovation in the industry?
FDA approvals used as a frequent measure of biopharmaceutical industry innovation (and productivity) R&D Investment ($US B) FDA Approvals Adopted from Nature Rev. Drug Discov. 9, 89-92; 2010 and http://www.phrma.org/key_industry_facts_about_phrma
Executive Survey Rankings of Top 50 Most Innovative Companies Source: Innovation 2010: A Return to Prominence-and the Emergence of a New World Order, A BCG Senior Management Survey, January 2010 and FastCompany Issue 143, March 2010 2 FastCompany 0 Boston Consulting Group/ BusinessWeek Number of Biopharmaceutical Companies in Top 50 Ranking Survey
Innovation Executive Survey Results BCG Innovation Survey Results by Industry FastCompany Top 50 Innovation Survey Results Merck & Company 5 Novartis Corporation 4 Bayer 3 GlaxoSmithKline 2 Pfizer 1 Company Number Synthetic Genomics 26 Novartis Corporation 8 Company Number
What impact do biopharma insiders think biosimilars will have on innovation?
“ The majority of biopharma executives see the increasing market share of generics as a threat to companies in the industry and to investment in innovation.” Quintiles The New Health Report, 2010 A Survey of Biopharmaceutical Stakeholders in the New Health
Biopharmaceutical Executive Survey Results 81% 78% 46% Failure of some biopharma companies Decline in investment in new therapies Worsening of public health 81% 78% 46% Failure of some biopharma companies Decline in investment in new therapies Worsening of public health How likely are each of the following to occur if generics continue to gain market share in biopharma? Adopted from: The New Health Report A Survey of Biopharmaceutical Stakeholders in the New Health Quintiles, 2010
How will biosimilar companies impact innovation in the biopharmaceutical industry?
Defining the Innovation Space Radical Substantial Incremental Value-Add Newness Adopted from: www.ceoforum.com.au/articles.cfm?k=Invetech, February 2005 and Morgan S, Lopert R, Greyson D. Open Med. 2008; 2(a):e4-7. Commercial Comparative Effectiveness Gravity of Unmet Need Radical Substantial Incremental Biopharmaceutical
Where will biosimilar companies compete in this innovation space? Value-Add Newness Radical Substantial Incremental Biosimilar companies will compete in the areas of Incremental and Substantial innovation
The Competitive Nature of the Biosimilars Space Will Lead Companies to Innovate Fully and Aggressively Around Products and Processes
Customer convenience and safety
Regulatory and IP
Layered Incremental Innovations Will Offer Substantial Innovation Value to Patients and Customers Substantial Incremental Value-Add Newness Biosimilar Innovation Space
Innovation Project Portfolios Must be Carefully Managed to Ensure They Drive Value Substantial Incremental Value-Add Newness Biosimilar Innovation Space Substantial Incremental Substantial Incremental Newness Newness Value-Add Value-Add
What are the trends among biopharmaceutical companies in this innovation space? Radical Substantial Incremental Value-Add Newness “ Companies are raising their emphasis on the conservative end of the innovation spectrum” Innovation 2010: A Return to Prominence-and the Emergence of a New World Order A BCG Senior Management Survey, January 2010
Boston Consulting Group 2010 Innovation Survey Results New-to-the-world offerings New offerings that allow expansion into new customer groups New offerings for existing customers Minor changes to existing offerings Cost reductions for Existing offerings Percentage of Pharma respondents selecting ‘important’ or ‘very important’ +78% +12%
A few closing thoughts on the potential dark side of innovation
BLA Manufacturing Supplements: Are we choking the FDA with “innovation”? +38% Prior approval BLA manufacturing supplements increased 38% and reached a 5-year high of 333 in 2008 Source: 2008 FDA PDUFA Performance Report