Kalorama Information Report: Biosimilars Will Reduce Prices, But Don’t Expect Generic-Like Savings
More than half of all pharmaceuticals prescribed in the United States in 2017 were generic, totaling sales $197 billion. But don’t expect the exact same scenario for biosimilars, often compared to generics for biopharmaceuticals (though they are not the same). So says Kalorama Information, a New York City-based healthcare market research firm. Similar savings for biosimilars, the firm says may not be possible, however, due to the complexity of certain biopharmaceuticals. Nonetheless the firm’s new market research study Biosimilars: Global Market and Trend Analysisindicates there will still be a healthy market as a handful of generic companies are willing to risk lower profits at first to lead the charge into biosimilar development. The top biopharmaceuticals with generics already marketed or underway are included in the report.
According to the report, the success of generic drugs has come from the fact that In the past, successful chemical generics have met four conditions – profit margins, simple and patent-free formulations, and very little promotion needed. Biosimilars won’t meet all those conditions.
“Only the first – potential for market size and profit margins is met by biosimilars,” said Melissa Elder, analyst for Kalorama Information and author of the report. “With the others, there are hurdles for biopharmaceuticals that are not present for chemical drugs.”
Elder said the two types of agents are scientifically different in most cases. Although some biologic drugs, such as human growth hormone and insulin, are well characterized, others are not well understood and lack well-established markers for providing efficacy. As a result, the initial investment in biosimilars is larger and takes longer to recoup compared with the investment in mainstream generic drugs. Compared with chemical drugs, upfront costs are high for building complex manufacturing sites for biopharmaceuticals. Small companies often have had to rely on contract research organizations, such as universities. Promotion will still be necessary in early stages of U.S. biosimilars to convince markets.
“Nevertheless, a larger potential market may offset increased manufacturing costs, given that the market for biopharmaceutical products is young and growing,” Elder said.
These differences in generic history, the report says, make the current situation very unlike that of the 1980s when chemical generics came to market. In the late 1980s, the science of how to design, manufacture, process, and test a generic version of a chemical drug was far more advanced than today’s outlook for biotech products.
Virtually all biotherapeutic agents on the market are biopharmaceuticals, which is simply any medically useful drug whose manufacture involves microorganisms or substances that living organisms produce. Most biopharmaceuticals are recombinant – that is, produced by genetic engineering. Insulin was among the earliest recombinant drugs. When a biopharmaceutical is developed, the company will typically apply for a patent, which is a grant for exclusive manufacturing rights. This is the primary means by which the developer of the drug can recover the investment cost for development of the biopharmaceutical. The patent laws in the United States and Europe differ somewhat on the requirements for a patent; the European requirements are perceived as more difficult to satisfy. The total number of patents granted for biopharmaceuticals has risen significantly since the 1970s. Within the United States, the Food and Drug Administration (FDA) exerts strict control over the commercial distribution of a pharmaceutical product, including biopharmaceuticals. Approval can require several years of clinical trials, including trials with human volunteers. Even after the drug is released, it will still be monitored for performance and safety risks. Biopharmaceuticals are created through fermentation, recombinant DNA technology, and other bioprocesses. Biosimilars are close copies of these biodrugs designed to treat same condition.
Biosimilars: Global Market and Trend Analysis contains information on pharmaceuticals that have expired patents and projections of biopharmaceuticals under possible biosimilar threat. Market projections for categories and regional markets for biosimilars are included.
About Kalorama Information
Kalorama Information, a division of MarketResearch.com, supplies the latest in independent medical market research in diagnostics, biotech, pharmaceuticals, medical devices and healthcare; as well as a full range of custom research services. Reports can be purchased through Kalorama’s website and are also available on www.marketresearch.com and www.profound.com.