US market offers the greatest biosimilar rewards
With Japan poised to receive its first biosimilar and the US moving ever closer to the establishment of an approval pathway, the biosimilars market is set for imminent expansion. Given the size of the US market and the generic erosion which characterizes it, the sector is an attractive prospect for large and established pharmaceutical companies looking to succeed in the biosimilars sector.
According to Datamonitor, the biosimilars market will grow to more than $2 billion across the seven major markets by 2014 following key patent expiries for epoetin alpha, filgrastim, interferon beta 1a, interferon alpha, human growth hormone (hGH), and insulin-glargine. While many of these drugs represent the low-hanging fruit of the biologics world and are unlikely to provide the monetary gains of more complex drugs, they do offer manufacturers the opportunity to position themselves within the biosimilars sector in anticipation of more lucrative targets.
First generation biosimilars offer strategic rewards
The level of biosimilar uptake will have as much to do with the outcome of the public relations battle between the pro- and anti-biosimilar parties as more tangible absolutes such as biosimilar price and performance. Therefore, just which companies are selling biosimilars will have an impact on uptake across all markets, and especially those that are traditionally brand loyal. Given that large and established pharmaceutical companies are ideally positioned to succeed in the biosimilars sector, it is unsurprising that so many - including Merck & Co. and AstraZeneca - are looking to enter the market.
However, in addition to the benefits of brand-recognition, a proven biosimilar track record will be invaluable in promoting uptake, rendering the ostensibly unprofitable first generation biologics an attractive prospect. The generally small and simple structure of these biologics facilitates development and commercialization and therefore makes them an ideal vehicle through which to enter the biosimilars market relatively rapidly and easily, if not particularly profitably. Indeed, biosimilar insulin-glargine, a second generation insulin, dominates Datamonitor's biosimilars forecast, second only to the epoetin alpha biosimilar franchise.
Second generation biologics are a double-edged sword
The availability of second generation biologic products that offer superior dosing and/or therapeutic efficacy to the original reference brand is something of a double-edged sword for first generation biosimilars. Although cost may well drive switching from the second generation brand to the first generation biosimilar, the initial switch from the first to the second generation brand will have already significantly reduced the market potential, and therefore, attractiveness for prospective first generation biosimilar players. Datamonitor anticipates that the market entry of biosimilar versions of second generation brands will aggressively erode market share of first generation biosimilars.
Indeed, the forecasted decline in biosimilar market size beyond 2014 is for the most part due to the incursion of second generation biosimilars.
The high cost and extensive use of biologic drugs, coupled with the growing need to curb pharmaceutical expenditure, provides considerable momentum to the emerging biosimilars market. Therefore, Datamonitor anticipates that the extent and rate of biosimilars uptake will be greatest in those markets where the balance of power lies with the payer (Germany, the US and the UK) compared to those in which physician prescribing power and brand loyalty hold sway (France, Italy, Spain and Japan).
As the first to introduce guidelines for biosimilar drug approval, the EU has emerged as the testing ground for biosimilar drugs, with biosimilars for three biologics having entered the market to date: hGH, epoetin alpha and filgrastim. Unsurprisingly, all were first launched in Germany, the largest generics market in Europe with a high level of uptake for such products. The generic-friendly nature of the German market, driven by strong payer pressure, makes this something of a best-case scenario for the biosimilar contingent. Datamonitor forecasts that the German biosimilars market will contribute to almost half of all biosimilars market volume and sales through 2012, beyond which it will be overtaken by the US.
The US market represents the greatest opportunity for the emerging biosimilars industry and is forecast to constitute nearly 90% of the 7MM biosimilars market volume in 2014. The size of the US market, combined with the voracious generic erosion that characterizes it, makes it an attractive prospect for would-be biosimilars makers.
An approval pathway is essential
The attractiveness of the US market, however, is currently tempered by the lack of an approval pathway. Datamonitor anticipates that this could be in place by 2010, thus paving the way for biosimilars market entry from 2013.
Although guidance for biosimilar approval was issued in Japan in 2009, this market is unlikely to experience significant biosimilar incursion through the forecast period and contributing just 1% at most of total 7MM volume in 2019. The historically slow uptake of conventional small molecule generics suggests that biosimilars will face an uphill struggle in Japan, where distrust of the quality and efficacy of generic drugs from all key stakeholders has hindered uptake to date.
The historically low generics use in France, Italy and Spain will similarly contribute to slower and more limited biosimilars uptake in these markets, collectively forecast to constitute a maximum of 25% of biosimilar market volume in 2012. High brand loyalty and greater physician prescribing power mean that marketing and promotion will be critical to promoting biosimilar uptake. Therefore, Datamonitor anticipates that only the larger and more established companies with higher brand recognition and marketing budgets will succeed
Related research:
Biosimilars Series: Forecast Analysis priced $11,400 DMHC2477
Negotiating the Emerging Biosimilars Landscape: Key developments in the regulatory environment priced $3,835 RBHC0216
Generic Benchmarking: Brand Erosion at Patent Expiry priced $7,600 DMHC2496
