03 March 2010

Few companies have clearly developed strategies to compete in the biosimilars market

Many factors underlie decisions to enter the nascent biosimilars market

Although a number of major companies have significant biological capabilities, few apart from Novartis have yet clearly developed strategies to compete in the biosimilars market. The most significant development was Merck’s December 2008 announcement of its formation of Merck BioVentures to develop biosimilars. It subsequently reinforced its capacity by acquiring Insmed’s Boulder facilities and pipeline of biosimilars in February 2009. AstraZeneca has indicated that it is considering entering the biosimilars market, while Pfizer is considering its options as it reviews its strategy. Companies that have a greater established presence in the biological segment, such as Johnson & Johnson and Roche, clearly have no reason to do so.

 A number of factors underlie companies’ strategic decisions to enter the nascent biosimilars market, with these entrants falling into three basic categories:

-specialist biological companies;

-established generics companies; and

-major pharmaceutical companies.

At the present time (early 2010) most of the specialist companies that have emerged are located either in Europe, India and China. The absence of commercial opportunities in the US appears to have deterred companies from trying to develop biosimilars at the present time. The Far Eastern companies have developed the technological capacity to develop and manufacture biosimilar products but few have yet sought to meet the requirements of the EMEA and/or the FDA to manufacture such products for use in Europe or the US, respectively. India’s largest biotechnology company, Biocon, has achieved such status and has struck a number of collaborative deals with Western companies, most significantly with the major generics company Mylan, for the development of biosimilars, while in Europe the Polish company Bioton acquired Biopartners and has indicated its intentions to enhance its range of marketed biosimilars.

The response of other major generics companies to Sandoz’s pioneering efforts has been to pursue strategies to enter this new market segment. Dr Reddy’s has already developed biosimilars for its domestic (Indian) market, establishing a strong position by pursuing a cost-leadership strategy, and is intending to expand into Western markets. The world’s leading supplier of generic injectable products, Hospira, is the first US-based company to actively market a biosimilar product, obtaining a licence for epoetin zeta, which it markets in Europe as Retacrit, and hopes to launch a second product in 2010. Hospira has developed an in-house manufacturing capability and aims to become one of the three global leading suppliers of biosimilars. Mylan has chosen to enter the biosimilars field through a strategic collaboration with Indian-based Biocon, recognising that it was behind other leading generics companies in entering this segment. Ranbaxy had entered the biosimilars market, in India, through collaboration with Zenotech, but further developments appear to have been stalled by Daiichi Sankyo’s acquisition of a majority stake in Ranbaxy. The Indian generics company Wockhardt markets a number of biosimilars in its domestic market but is seeking a strategic partner for its biosimilar business that can offer the marketing muscle to enable it to compete effectively in Western markets.

One of the leading German generics companies, Ratiopharm, is the parent company of two biogenerics companies, has one approved biosimilar product and appears to be developing at least two other such products. Another leading German generics company, Stada, was one of the first entrants into the biosimilars market in Europe, through its agreements with Bioceuticals, which it helped to found. It markets formulations of epoetin zeta, which it has also licensed to Hospira, and has been working on the development of other biosimilar products. Teva, the world’s leading generics company, achieved EU approval of Tevagrastim, its granulocyte colony-stimulating factor (G-CSF) biosimilar, in 2008, its first such product. It has augmented the biosimilar capabilities that it gained by acquiring Barr and CoGenesys by forming a strategic partnership with Lonza, a leading producer of protein products. The latter is probably the partner of first choice for contract manufacture of biological products.

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