Biosimilars; where we are and where we are headed

NexGen Consulting Group, LLC
New Era for Biosimilars:
What the future holds
Presented by Larry Singer, R.Ph., MBA, JD
President, NexGen Consulting Group, LLC
www.nexgen.org
http://www.linkedin.com/company/nexgen-consulting-group-llc
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 Introduction
 Larry J Singer, President, NexGen Consulting Group, LLC
 Key topics:
 Biosimilars at a Glance: Where we started
 Global Trends 2020: Where we are going
 Innovation and Growth: Drivers of the Next Big Wave
 Risk Environment & Changing Regulatory Landscape
 Building Stakeholder Value
 Q&A
New Era for Biosimilars: What the future
holds
New Era for Biosimilars: What the Future Holds - Agenda

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New Era for Biosimilars: What the Future Holds – Presented by:
Larry Singer has been President, NexGen Consulting
Group, LLC for the past 15 years. He has over 35 years of
experience in biotech, pharma, consumer products and
medical devices. His background includes extensive
experience in biopharm product and process development,
manufacturing, supply chain management, and new
product launches. NexGen‘s clients include companies
such as Biogen, Salix Pharma, LG Lifesciences (Korea),
Kaketsuken (Japan), Red Swan Pharma (Netherlands),
Kodak Healthcare, InterMune, and many others. Mr. Singer
holds a B.S. in pharmaceutics, an MBA in supply chain
management, and a Juris Doctorate in intellectual property
management.

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New Era for Biosimilars: What the Future Holds
Biosimilars at a Glance:
Where We Started

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Biosimilars at a Glance: Where We Started
2015
Major products from the
current cliff include:
• Remicade
• Neulasta
• Lantus
2019
Major products from the
2019 cliff include:
• Avastin
• Lucentis
• Herceptin
Patent Cliffs: 2015 & 2019
 Two Large Cliffs Exist for Expiry of
Major Numbers of Patents: 2015
and 2019

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Biosimilar Patent Expiries at a Glance

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Where We Started: c2008 – 2010
 Initial thought: all biologic products were targets for biosimilars.
Basic assumptions:
 Global market
 Common regulatory pathway
 Current analytical methods would support reverse engineering
 Easy to achieve
And most importantly:
 Biosimilars would sell at or near originator
prices
 Total originator worldwide market in excess
of $25B

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Global Trends 2020:
Where We Are Going

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Global Trends 2020: Where we Are Going
 The USA, EU, Japan and Korea represent the largest R&D investments in
Biosimilar development
 The same geographic sectors also represent a large portion of the spend/profit

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Global Trends 2020: Where We Are Going
 As with other drugs, the USA will likely represent the largest payor/reimbursement
market

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While the Regulatory Pathway is Somewhat Defined:
 The EMEA & FDA are essentially requiring functionally
identical molecules
 BLAs have been rejected for improved side
effect profiles relative to the innovator
 Current analytical methods
are not necessarily enough

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 The revenue size of the global Biosimilar market remains undefined, but it
is likely far less than originally projected
But why?
 The target products are in place
 Markets are defined
 So is pricing
Is that really the case?

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Is That Really the Case?
 So is pricing
 Although the list of target products remains
the same, there were initial oversights
 Creating biosimilars turned out to be more
difficult than first estimated
 The majority of (originator) development &
manufacturing IP remain trade secrets
 Trade secrets, unlike patents, can last
indefinitely

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Is That Really the Case?
 So is pricing
 Pricing & reimbursement are not what was
originally expected
For example, Infliximab biosimilar is already
in a price war with the originator
 There is a scientific bent that from a market
perspective, biosimilars are fundamentally
different (better?) than small molecule
generics
 Driven by the difficulty in creating
biosimilars relative to small molecules

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However:
Biosimilar developers will find that
pricing and reimbursement will be unrelated to
the degree of
difficulty of development
Why?
 Exactly like small molecule generics,
the only thing upon which biosimilars
can compete is price
 This is identical to small molecule generics
 Eventually, biosimilars and their
originators will find themselves
locked in price wars

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So Where Does This Leave Us?
 The Biosimilar market out towards 2020 and beyond will mirror small molecule
generics:
Few, large volume producers
Intense price pressures on both Biosimilar and originator
organizations
Consolidation of the small players
MUCH slimmer profit margins on both sides
Global trends 2020: Where We Are Going

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What Else Are We Expected to See?
 Originators will step up advertising budgets in
the short term
 Payor organizations will be unimpressed
 So will the medical community
 Legislation Mandating Interchange
will appear
 Several USA states have already
proposed mandatory interchange
Global Trends 2020: Where We Are going

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 Many biologic products require cold
chain distribution (unlike small
molecules)
 Very expensive and technically complex
 Some as low as minus 70
 This Creates Additional Price Pressures
for Both the Innovator and Biosimilar
Manufacturers
Cold Chain: Another Twist in Costing

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 This will raise the complexity and cost
for organizations entering the Biosimilar
field who are unfamiliar with:
- cold chain logistics
- storage
- development (e.g., master and
working cell banks, etc.)
Cold Chain: Another Twist
In Costing

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Innovation and Growth:
Drivers of the Next Big Wave

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Innovation and Growth: Drivers of the Next Big Wave
Innovators
VS.
Biosimilar
organizations
• Will reduce
manufacturing costs to
stay competitive
• Will seek patent
extensions through
new indications –
This will utimately fail
• Will also seek to reduce
manufacturing costs
and will be more
effective at doing so
than innovators
• Will utilize disposables
• Will attempt to "live
with fixed stainless
steel"

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 Allied organizations will see a rise in business
 Worldwide capacity for fixed stainless steel will drop – slowly, as innovators
consolidate, bring in contract business and shutter facilities
 Manufacturing using disposable technology will become the norm
 Worldwide contract filling capacity will decrease and costs will rise
 Worldwide contract finishing (package and label) capacity will decrease and costs
will rise

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Allied organizations:
Rise in business
Fixed stainless steel:
Worldwide capacity to
drop
Manufacturing using
disposable technology:
Will become the norm
Contract filling:
Worldwide capacity
to decrease
Costs
to rise
Contract finishing
(package & label):
Costs
to rise
Worldwide capacity
to decrease

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New Era for Biosimilars: What the Future Holds
Risk Environment & Changing
Regulatory Landscape

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Risk Environment & Changing Regulatory Landscape
 FDA and EMA regulations are becoming more clear
 Molecule similarity remains a major challenge –
how similar is sufficient?
 What degree of tolerance do the agencies have for a similar but higher incidence
known side effects?
 Long-term market exposure (patient years) has yet to be established
 How will the agencies react to changes, even if they are minor?

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New era for biosimilars: What the future holds
Building stakeholder value

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Building Stakeholder Value
The final Take Away:
 USA & EU remain the largest income markets, however:
this will only be the case for patent protected molecules
 Biosimilar organization relative margins will ultimately drop in a manner similar to
those of small molecule generics
 Supporting organizations (i.e., manufacturers of disposable technology) will see
their market shares, profitability and stakeholder value rise
 Overall, generics are generics:
- it is a mistake (driven by scientific pride) to assume that biosimilars will not be
subject to the same price pressures as small molecule generics

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