Amazon (AMZN) and Alphabet (GOOG), two of the world’s most recognizable brands and Wall Street...
10 Drug Firms to Profit on Biosimilars
07/26/2011 9:51 am EST
Over the next five years, the market for "biosimilars" is forecast to climb to $10 billion worldwide, as many brand-name biologic drugs lose patent protection, and only a handful of companies have the resources required to compete, writes Barry Cohen at InvestorPlace.
Among those most likely to lead the biosimilar charge are Teva (TEVA), the Sandoz unit of Novartis (NVS), and Hospira (HSP) on the generics side, and Big Pharma mainstays Merck (MRK) and Pfizer (PFE).
Other names that have entered the discussion are India-based Dr. Reddy's Laboratories (RDY) and Spectrum Pharmaceuticals (SPPI), which said it plans to be one of the first biotechs to develop a biosimilar version of Roche's $6 billion seller Rituxan.
The biosimilar party will be limited to just a fortunate few, because of the cost and R&D infrastructure needed to bring a copy to market. The FDA is a long way from revealing what hoops prospective manufacturers will have to jump through to get a biosimilar OK'd, but count on the rules to be strict.
Most likely, clinical trials will be required for every drug. Just how extensive they'll have to be is unknown at this time.
Whatever the requirements, gaining the blessing of the FDA and regulators outside the United States is unlikely to be cheap. In fact, a group of experts at Reuters thinks it will take eight years to run a biosimilar program, with development costs ranging from $100 million to $150 million.
That kind of commitment of time and money is going to force all but the heartiest biotechs to the sidelines. Most just don't have the resources to conduct the full-scale clinical trials necessary to gain approval of biosimilars, which are made from living cells.
The process is far more complicated than the one now required to gain approval for small-molecule drugs, where the copycat company merely has to show their drug is chemically identical to the brand-name product.
That's means the deep-pocket companies are going to divvying up the market for biosimilars. At the top of their target list are such brand-name biologics as:
- Humira, Abbott Laboratories' (ABT) $7-billion seller;
- Rituxan, as mentioned earlier, from Roche;
- The anti-anemia drug Epogen, from Amgen (AMGN).
- Enbrel, which is co-marketed in North America by Amgen and Pfizer;
- And the Johnson & Johnson (JNJ) monoclonal antibody Remicade, used to treat autoimmune diseases.
The impetus for making biosimilars available was the health-care legislation signed into law by President Barack Obama in March 2010. Because brand-name biologic drugs can cost around $100,000 per year per patient, the government hopes biosimilars can substantially reduce treatment costs.
Those who are successful stand ready to reap the rewards. Sandoz, for example, sees biosimilar revenue climbing from $250 million this year to $20 billion by 2020.
Teva, meanwhile, already has started full head-to-head trials of its version of Rituxan against the original in both non-Hodgkin lymphoma and rheumatoid arthritis. And Hospira is selling a biogeneric of Epogen in Europe, and last year began clinical trials in 20 US hemodialysis centers.
Related Articles on STOCKS
Both Newfield Exploration and Pioneer Natural Resources are trading near trendline resistance, and a...
Anavex (AVXL) is a biopharmaceutical company dedicated to the development of novel drug candidates t...