The worldwide biologics market was 160 billion dollars in 2012. Half of this was from US sales.
Not only does this factoid give manufacturers a good sense of the biopharmaceuticals market in 2014, it also informs how the market will grow over the next ten years, into 2024.
Biosimilars: 2014
Currently, biological medicines that are not chemically synthesized, called “biologics”, are major players in the pharmaceuticals industry. “Biosimilars”, also called “follow-on biologics” in the US, are the generic equivalents of biologics, and they’re slowly gaining ground as well.
In 2010, Congress passed the Biologics Price Competition and Innovation Act (also known simply as the “Biologics Act”), which granted the FDA absolute authority in approving follow-on biologics. This opened up huge opportunities for biosimilars, and pharmaceutical manufacturers around the world set their eyes on replicating “blockbuster biologics” like Humira®, Avastin®, Herceptin®, Remicade®, and Enbrel®. In 2013, less than a year after Remicade® went off-patent, two biosimilars were approved in Europe, and many more are in the works.
Due to their affordability and availability, biosimilars are very attractive compared to brand-name innovator pharmaceuticals for both seller and buyer alike. Yet sales of biosimilars remain poor. The sales from the 2nd half of 2010 to the 1st half of 2011 were only $400 million globally, and cumulative sales since 2006 are only approx. $3.5 to $4 billion.
Yet, despite these underwhelming numbers, there are several reasons to assume that biosimilars will take off within the following decade. In fact, optimistic predictions put biosimilar sales at $20 billion by 2020.
Biosimilars: 2024
Over 30 years ago, generic chemical drugs faced similar hurdles while trying to break into the American market. It took almost 10 years of frantic marketing and back-and-forth before generic drugs picked up during the 90s. Many of the concerns that faced generics back then are remarkably similar to today’s concerns over biosimilars. When Congress passed the Biologics Act in 2010, most of those concerns were assuaged. However, several swing factors still remain.
Chief among these is the question of whether biosimilars will gain acceptance quickly within the US over the following decade. Given that 18% of the US GDP is spent on its healthcare system, and that pharmaceutical prices are almost twice that of other countries, it seems highly likely that the US will readily embrace biosimilars.
In fact, the argument could be made that, given the recent changes to health coverage, the US healthcare system cannot afford not to embrace biosimilars. A forecast by Dr. Steve Miller at the Express Scripts Projections Symposium shows how the adoption of only 11 specific biosimilars could save US manufacturers over $250 billion dollars from 2018 to 2024:
Not only will biosimilars save manufacturers money, they’re also poised to take over the existing biologics market, starting in 2015. Keep in mind that the 5 largest mABs (Humira®, Avastin®, Herceptin®, Remicade®, and Enbrel®) will all go off-patent before the end of the decade, and each currently has global sales of over $6 billion. Dozens of smaller biologics will go off-patent by 2015 as well:
Even pessimistic forecasts will have a hard time dealing with these numbers. 2014, which coincides with Enbrel®’s send-off, is a potential spike year for biosimilar sales. The following year another huge mAb, Avastin®, goes off-patent as well. If these numbers are any indication of the true state of the biosimilar market by the close of 2015, then the $20 billion projection for 2024 is right on the money.
The Role of the Emerging Market
The biggest long-term factor in the future success of biosimilars is their acceptance in emerging markets. Large potential markets with poor patent regulation, like Brazil, India, and China, are wide open to biosimilar penetration.
Brazil and Latin America are expected to become 30% of the biosimilar industry by 2020-2025 due to the lack of patent enforcement for drugs like Remicade, Enbrel, and IFNB1A.
India, well-known for its low-cost manufacturing, has already embraced biosimilars at a faster rate than other countries and is expected to continue expanding its market. Indian biotech company Biocon, partnering with US Mylan, is expected to disclose a portfolio of biosimilars for biologics going off-patent in 2015 that could exceed $30 billion.
China, potentially the largest market of all, has a burgeoning pharmaceutical industry that is low in cost and seeking to sell worldwide. Hong Kong-based BioMab and Cipla have partnered to create manufacturing facilities in India and China for 12 biosimilars by 2015.
South Korea, already a biologics hotbed, is also aiming to enter the global biosimilars market. Their goal is 22% of the global market share for biologics and biosimilars by 2020 – achieved through competitive pricing. Samsung’s $389 million in biosimilar research from 2009 to 2014 saw backing by US investors, so this scenario is not entirely unlikely. In 2012 Korea developed Remsima, a biosimilar of Remicade, and is developing a biosimilar of Herceptin.
Lastly, Japan has had a mature pharmaceutical industry for decades, but only recently entered the biosimilar market. Kyowa Hakko Kirin and Fujifilm have partnered to develop a biosimilar of Humira, and Fujifilm has also partnered with India-based Dr. Reddy’s for future biosimilars.
5-year CAGRs place Asia, Latin America, Africa, and Australia at the forefront of biosimilar production and penetration. By 2018, monoclonal antibody, insulin, and interferon markets will skyrocket. North America & Europe, currently the dominant players in the biologic and biosimilar markets, will only hold slightly over 50% of the biosimilar market by 2018.
Conclusion
The success of biosimilars will depend largely on their acceptance in the US over the next ten years, as well as their development in regions of interest like Brazil, India, China, Korea, and Japan. If a global marketplace is reached by 2024, global biosimilar sales could easily exceed $20 billion, perhaps reaching $30 or $40 billion.
References:
Biosimilars seven years on: Where are we and what’s next?
Biosimilars: Current perspectives and future implications
The New Biosimilar Era: The Basics, the Landscape, and the Future
The future of biological therapy: a pathway for biosimilars
The $250 Billion Dollar Potential of Biosimilars
