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At least 255 pharmaceuticals playing biosimilars. Rise of the "Pharmerging"​ middle class.


Preliminary results of the Emergpharma’s “biosimilar 255 tracking January 2020”  Emergpharma has just completed the first phase of its “tracking on biosimilars” report in January 2020, probably the most ambitious study on companies that develop or market biosimilars products worldwide. Although it is not likely that the 255 companies reviewed, from 51 different countries, represent all those that are in this market, they are an important sample that is providing very valuable information on how this segment, expected to be one with one of the highest growth in the coming years but also one of the most dangerous, will be organized. Next, we summarize some of the outcomes and take-aways.  Biosimilars and the pharmaceutical “middle class” One of the first things to be mentioned is the importance of the "middle class" in this segment. As shown in the graph, two - thirds of the surveyed companies have yearly revenues below 500 million USD / year. In fact, only 16 exceed 10,000 million. We could even reduce the thresholds further: 65% of companies with less than 500 million sales actually have less than 50, and there are 39 below 5 million. We have stressed in other previous posts that the cost of developing a biosimilar, although much higher than that of a generic, does not seem to be an entry barrier for medium-sized companies, which is corroborated by the report outcomes. In fact, we could say that they are being the gateway to R&D for many middle-size companies. It is also interesting to note that among the 100 best-selling companies worldwide according to the ranking by Pharmaboardroom (https://pharmaboardroom.com/facts/top-100-pharma-companies-globally/), 51 of the 100 companies are “playing biosimilars.”

There are two ways of reading the results: one is considering that slightly more than half of the 100 largest laboratories have decided to include biosimilars in their strategy. Another is to note that almost half have decided not to be, despite evidence indicating that this is one of the segments with the highest growth potential in the coming years. An interesting fact is consistency in the four categories studied. The percentage differences are barely noticeable between the group of more than 10,000 and the lowest one. It seems clear that one half considers an opportunity to enter this segment while the other has decided that the risks of the adventure are too high. Let’s see who is right in the end. Biosimilars and emerging markets As we mentioned in other previous posts ( https://www.linkedin.com/pulse/biosimilars-really-opportunity-next-trap-companies-j-ignacionadiaz/ ), the development of biosimilars is being a formidable opportunity for many Emerging market companies to enter the field of R&D under conditions accessible to them and to achieve ROI within an acceptable timeframe. A significant percentage of these companies, while advancing in the process of developing biosimilars, have also seen the possibility of investigating new molecules. In a sense, biosimilars act as a "transition phase" that allows them to avoid the long “journey in the desert” that the long clinical developments of innovative products entail, as well as the risks associated with them. In addition, it is allowing them to adapt the manufacturing plants to the harsh demands of developed markets, in particular, the EMA and the FDA. In some cases, innovations are being approved in the home markets (China, India, Korea) but this is only the first step towards its extension to other developed markets. The following chart shows the distribution of companies by geographic areas.

Almost half of the 255 companies reviewed are original from the Asia-Pacific area, slightly less than 20% from the European area, 14% from North America and an important 11% from Latin America. These data show the importance of emerging economies in this market segment. The data could be even more compelling: according to some sources, in India alone, there are about 1000 companies with biosimilars in different stages of development. So far, we have verified 40. The same could be said about China and to a lesser extent about Korea. As we can see in the following graph, the number of companies in these three countries represents one-third of the total in the 51 markets studied.

In the following graph, we can see which countries lead to this ranking. In addition to the three mentioned, another 6 markets of the previously considered emerging are represented: Brazil, Mexico, Russia, Argentina, South Africa, and Singapore.

It is true that the distinction between "developed" and "emerging" should be revised, as it does not seem appropriate to keep considering “emerging” some cases such as Korea or Singapore.  At the same time, we should clarify that in this report we have assessed companies developing or marketing products similar to a biologic out-patented molecule, despite in which regulatory environment they are moving. There are two reasons why we decided this way: first, because the environment is evolving to a more harmonized regulation and second because many of the companies that were only selling in local low regulated markets are now working to adapt their standards to the new expected environment. But let’s explain the situation more in detail. In developed markets, there is clear regulation on biosimilars for several years, with registration requirements that include phase III efficacy studies, in addition to others on immunogenicity and of course bioequivalence. These requisites placed on the biosimilars at a distance of innovative, since the clinical development is considerably more limited and consequently cheaper, but it’s certainly much longer and expensive than a generic bioequivalence study. However, in many emerging countries, in almost all of them, biosimilars have long been in a gray area, with regulatory requirements very similar to those of generics and therefore not subject to approval in developed markets. In recent years, things have changed a lot due to different factors, of which we are going to list the most important ones. First, some of the best-selling biological drugs (the so-called blockbusters) have lost patent protection or are about to lose it, making this segment more attractive. Secondly, as we have commented in previous posts, the need to free up resources to meet growing demand, with new expensive drugs and an aging population and with greater life expectancy, forces the governments of developed countries to facilitate the entry of cheaper products of different origin.

"Many companies original from emerging countries have made a strong commitment to grow in their local and regional markets, which has given them a critical mass, but at the same time, they have seen in this segment a unique opportunity to gain experience and technological expertise."

Third, as we mentioned before, many companies original from emerging countries have made a strong commitment to grow in their local and regional markets, which has given them a critical mass, but at the same time, they have seen in this segment a unique opportunity to gain experience and technological expertise, which is also allowing them to bring their standards closer to the most demanding and allowing them to enter other (developed) markets. Finally, the inclusion of several biologicals among the essential medicines of WHO and the growing need for regulatory clarification of these products, whose degree of complexity and variability is high, are leading emerging countries to try to adapt their regulations, inspired by the most advanced. In this way, companies have understood that only by making their quality standards acceptable anywhere in the world can they survive in the future. This feeds the virtuous circle and is taking many of these companies to levels of development comparable, if not higher, to those of their peers in Western countries. Conclusions The year 2019 has marked a milestone in terms of biosimilars. Not only because it is a record year in the approval of new products in Europe and the USA, but because this fact together with others has generated that the interest in the role that these products can represent on a global scale has multiplied. Next, we present the main conclusions of this first part of tracking.

  • Biosimilars represent an important opportunity for what we call "middle class", ie companies with a turnover between 50 and 5,000 million USD / year

  • Among the 100 largest pharmaceutical companies in the world by turnover, the decision to “play biosimilar” is distributed equally: half yes and half no. There is no general opinion if this is a good business opportunity or a risky business.

  • China, India, and Korea have become a development pole, representing a third of the total number of companies that develop or market biosimilars

  • In addition to these three colossi, other countries previously referred to as “pharmergers” have joined in this game so that 9 of the 15 countries with the most companies developing or marketing biosimilars belong to this category

  • Biosimilars represent for these companies a unique opportunity to enter the developed markets taking advantage of their need to reduce costs to prevent the system from collapsing, but at the same time, they are seen by a part of these companies as a way to enter the world of R&D and as a transition to the development of its own innovative molecules.

For more information on the Emergpharma biosimilars tracking 2020, please write to me at “ignacio.diaz@emergpharmalinks.com”

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