Bellevue Asset Management

Biosimilars - an imperfect copy but a perfect investment - Seite 2

The regulatory hurdles are therefore quite demanding. Europe is in the vanguard on this front with a five to eight-year lead over the US and the rest of the world. European regulators approved the first biosimilar under a new regulatory pathway in 2006 and have approved another 22 biosimilars since then. Meanwhile in the US, the first biosimilar was not approved until 2015. The guidelines for approving biosimilars issued by the World Health Organization in 2010 were almost completely based on the European approach. Experience had shown that it was possible to standardize regulatory requirements and guidelines and establish better definitions thanks to technical advancements in analytical and diagnostic testing.

Complex production

One reason why the regulatory hurdles are so high is because the production of biosimilars is very challenging, given the complexity of the protein structures. Each stage of the production process has its challenges. The modification of host cells, the production of recombinant protein and the management of bacteria, yeast or other cell cultures pose specific difficulties. Additional steps include cultivation in certified bioreactors, the purification of the proteins and, ultimately, the formulation of the final compounds in cartridges, syringes or vials.

Five to eight years can pass between the start of development and the market launch of a biosimilar. Total costs can add up to USD 200 to 500 mn. The production facilities alone can cost anywhere from USD 50 to 300 mn. Scaling up production is a basic requirement for the actual clinical testing phase, which can last between 3.5 and 4.5 years. Then there are the development costs themselves, which in Europe and the US amount to USD 150 to 200 mn. Because cell characteristics can change with time in culture, production facilities are subject to continual monitoring. For example, the target product quality profile for Rituxan, an anti-cancer drug, comprises more than 200 variables.

While development and marketing costs for biosimilars are usually higher than for conventional generic drugs, sales of biosimilars are likely to be more sustainable than the sales of generic products. When medical specialists, health insurers and patients come to realize that these new biological products are just as effective and safe for patients as the reference biologics, the companies making them stand to earn good money. Ultimately it's the price that will make the difference. Biosimilar manufacturers will have to bear in mind, however, that a steep discount of 50% or more compared to the branded-drug price will clearly erode their own profitability. There are certain incentives for insurance providers and biosimilar producers to negotiate exclusive contracts that hold out the prospect of higher production volumes and cost savings.