3 Big Battles in Biosimilars to Watch -The global biosimilars market is forecast to grow to $24 billion by 2019 Taj Pharmaceuticals Ltd

3 Big Battles in Biosimilars to Watch -The global biosimilars market is forecast to grow to $24 billion by 2019 Taj Pharmaceuticals Ltd

The global biosimilars market is forecast to grow to $24 billion by 2019. A few major contenders — Hospira, Novartis, and Mylan —

could profit from that growth.
Leo Sun (TMFSunLion)
Mar 5, 2014 at 2:30PM
The global market for biosimilars, or generic versions of biologic medical products, is expected to soar to $24 billion by 2019,
according to a recent report from Frost & Sullivan — not bad for a fledgling industry that currently only consists of a handful of
drugs.
Biosimilars have appeared in response to the patent cliff now facing some of the top-selling biologic drugs of the past decade.
In this article, we’ll examine biosimilar versions of Johnson & Johnson (NYSE:JNJ) and Merck’s (NYSE:MRK) Remicade,
Amgen’s (NASDAQ:AMGN) Enbrel, and Roche’s (NASDAQOTH:RHHBY) Herceptin, and look at just how much these new
contenders matter to patients and investors.
Generic Remicade
The blockbuster rheumatoid arthritis treatment Remicade is a core source of revenue for J&J (NYSE:JNJ) and Merck
(NYSE:MRK), which co-market the drug globally:
Company 2013 Remicade sales YOY growth Percentage of total revenue
J&J $6.67 billion 8.7% 9.4%
Merck $2.27 billion 9% 5.2%
SOURCE: COMPANY ANNUAL REPORTS.
Remicade’s European patent will expire in February 2015, although its U.S. patent will last until September 2018.
That’s where Hospira (NYSE:HSP), a maker of injectable drugs and medical devices, comes in. Hospira is no stranger to
biosimilars — two of its newer drugs, Retacrit and Nivestim, are respective generic versions of J&J’s (NYSE:JNJ) anemia drug
Procrit/Eprex and Amgen’s (NASDAQ:AMGN) neutropenia treatment Neupogen.
Hospira’s (NYSE:HSP) biosimilar version of Remicade, known as Inflectra, last September became the first biosimilar
monoclonal antibody ever approved in the European Union. Hospira (NYSE:HSP) co-developed the drug with South Korean
company Celltrion, which will market the product as Remsima.
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Hospira (NYSE:HSP) plans to launch Inflectra across Eastern Europe this year, and subsequently into larger Western
European markets in 2015 as more of Remicade’s patents expire. If patent litigation doesn’t halt the early launch of Inflectra and
Remsima, the drug could generate annual sales of $560 million in Europe, according to Barclays analyst Mark Purcell.
This could provide Hospira (NYSE:HSP), which generated $4 billion in 2013 sales, with a considerable boost in 2015 and
beyond. More importantly, it could offset the double-digit decline of its medication management business, which was hurt by an
FDA ban that prevented the company from importing several of its top-selling medical devices from Costa Rica.
Generic Enbrel: Amgen vs. Novartis
Amgen’s (NASDAQ:AMGN) Enbrel, another blockbuster arthritis drug, could also soon be threatened by a biosimilar version
developed by Novartis’ generics unit Sandoz. Amgen and Pfizer ended their co-marketing agreement for the drug last
October.
Company 2013 Enbrel sales YOY growth Percentage of total revenue
Amgen $4.55 billion 7% 24.4%
Pfizer
(outside U.S. & Canada)
$3.78 billion 1% 7.3%
SOURCE: COMPANY ANNUAL REPORTS.
Amgen’s (NASDAQ:AMGN) patent on Enbrel will not expire in the U.S. until 2028, thanks to new patents issued in 2011 and
2012, but it already faces generic competition overseas.
However, Novartis is intent on challenging Amgen (NASDAQ:AMGN) in the U.S., and initiated a late-stage trial of its biosimilar
version of Enbrel last June. Novartis then sued Amgen (NASDAQ:AMGN), claiming that the new patents were invalid and
unenforceable. However, a court ruled that a biosimilar manufacturer couldn’t sue a branded company unless a new drug
application for the biosimilar had already been filed with the FDA. Novartis appealed the decision in December.
Regardless of the outcome of the appeal, Novartis has a steep uphill climb ahead. When Amgen (NASDAQ:AMGN) received
those new patents, Merck (NYSE:MRK) completely abandoned its efforts to create a biosimilar version of Enbrel.
Despite these stateside challenges, Novartis could manufacture the biosimilar overseas, where generic versions of Enbrel are
already available from Pfizer’s Wyeth division and Indian company Taj Pharmaceuticals.
Either way, a market approval of Novartis’ generic Enbrel could further boost sales at its Sandoz division, which posted a 5%
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year-over-year jump in sales in 2013. Sandoz accounts for 16% of Novartis’ top line.
Generic Herceptin: Roche vs. Mylan and Biocon
Last but not least, we’ll look at Mylan and Biocon’s biosimilar version of Roche’s (NASDAQOTH:RHHBY) blockbuster breast
cancer drug Herceptin, which was approved last November. Herceptin, a targeted treatment for HER2+ breast cancer (25% of
breast cancer cases), is one of the lead contributors to Roche’s top line.
Roche Herceptin sales, 2013 YOY growth Percentage of total revenue
6.08 billion CHF (about $6.84 billion) 6% 13%
SOURCE: ROCHE 2013 ANNUAL REPORT.
Roche’s (NASDAQOTH:RHHBY) patents for Herceptin will expire in 2014 in Europe and 2019 in the U.S. However, it faces a
unique situation in India, due to the Indian government’s practice of pushing pharmaceutical companies to either lower their
prices or allow local pharmaceutical companies to produce generic versions of their patented drugs. Those practices caused
Roche (NASDAQOTH:RHHBY) to lower the price for Herceptin from $4,500 per month in the U.S. to $1,366 in India, and to
abandon its patent altogether last August in India.
Mylan, the third largest generics maker by revenue in the world, and Indian biopharmaceutical company Biocon then pursued the
market approval of Hertraz, their biosimilar version of Herceptin.
On Feb. 10, however, Roche (NASDAQOTH:RHHBY) secured an injunction in India against Mylan and Biocon to ban any
direct comparisons between Hertraz and Herceptin. Roche’s (NASDAQOTH:RHHBY) reasoning was that there were no public
records for the phase 1 and 2 trials demonstrating that Hertraz was a valid biosimilar version of Herceptin. As long as the
injunction is active, Hertraz can only be promoted as an alternative treatment for HER2+ breast cancer instead of a biosimilar
version of Herceptin.
Biocon called Roche’s (NASDAQOTH:RHHBY) strategy “shocking but not unexpected,” and highlighted the challenges that
generic-drug makers can face while developing biosimilars in developing countries.
The Foolish takeaway
The biosimilars market is a key one to watch in the health care industry as blockbuster biologic drugs start going off patent.
Companies such as Hospira, Novartis, and Mylan are all poised to profit from these losses at Johnson & Johnson (NYSE:JNJ),
Merck (NYSE:MRK), Amgen (NASDAQ:AMGN), and Roche (NASDAQOTH:RHHBY) over the next few years.
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