Swarm of small players clouds biosimilar forecasts

Copycat versions of Abbvie’s Humira and Amgen’s Enbrel took big steps towards the US market this week, and it is clear that the age of the biosimilar is approaching fast. It is less certain how big these products will become.

Issues around pricing and access have yet to be played out, for sure. However, many of those who make predictions for a living – namely sellside analysts – remain reluctant to forecast the market. Partly this is an issue of fragmentation; around three quarters of biosimilars in phase III development are in the hands of small companies that typically do not attract the attention of the financial community (see tables below).

The analysis below, by Evaluate Custom Services, shows that only a third of the phase III pipeline is in the hands of the sort of company that a bank analyst would typically cover. This means that a huge proportion of late-stage development is ongoing in companies that the financial industry does not monitor particularly closely.

Forecasts have been made, of course. EvaluatePharma’s consensus of sellside analysts shows $7bn of biosimilar sales by 2022, with copycats of Humira, Lantus and Remicade contributing almost half of this figure. However, these relatively near-term expectations mostly concern products on or nearly at the market, and most of these are indeed in the hands of the bigger players.

The two filings reviewed by FDA advisory committee panels this week were made by Amgen, traditionally a branded biologics player, and Novartis’s generics division, Sandoz. The first biosimilar antibody approved in the US, Inflectra, a version of Remicade, is to be sold by Pfizer (US biosimilar space reaches its Inflectra point, April 06, 2016).

Inflectra was originally developed by the South Korean company Celltrion, which has emerged as an important biosimilar player; in Europe the drug is being sold by various licensees. This space has already seen substantial deal making, and this fragmentation of the late-stage pipeline suggests that this is likely to continue, if not accelerate, as the industry matures.

Still, the manufacturing cost and complexity of biologics means that many believe that the biosimilars market will remain the territory of larger players. As such fragmentation is perhaps more of an issue for those trying to ascertain the longer-term value of the biosimilars market.

The activities of these smaller groups and their technologies are not well known. And, while some might be tempted to dismiss the activities of “sub-scale” players, they do so at their peril. Innovation in the biotechnology industry has long been driven from the bottom end, where small firms are quickly able to access and incorporate new technologies and techniques.

There is no reason to believe that this will not also apply to the biosimilars space.

Many expect the biosimilars market to be profitable in its own right, with few similarities to the low-cost, small-molecule generics industry. The picture of a fragmented space that this analysis paints suggests that this is not necessarily going to be the case.

For those attempting to put a number on the future opportunity, this is another factor to consider. 

To contact the writer of this story email Amy Brown in London at AmyB@epvantage.com or follow @AmyEPVantage on Twitter

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