Biosimilars or Follow-on
biologics are terms used to describe officially approved new versions of innovator
biopharmaceutical products, following patent expiry.
Unlike the more common "small-molecule" drugs, biologics generally exhibit high molecular complexity, and may be quite sensitive to manufacturing process changes. The follow-on manufacturer does not have access to the originator's molecular clone and original cell bank, nor to the exact fermentation and purification process. Finally, nearly undetectable differences in impurities and/or breakdown products are known to have serious health implications. This has created a concern that copies of biologics might perform differently than the original branded version of the drug. However, similar concerns also apply to any production changes by the maker of the original branded version. So new versions of biologics are not authorized in the US or the European Union through the simplified procedures allowed for small molecule
generics. In the EU a specially-adapted approval procedure has been authorized for certain protein drugs, termed "similar biological medicinal products". This procedure is based on a thorough demonstration of "comparability" of the "similar" product to an existing approved product. In the US the
FDA has taken the position that new legislation will be required to address these concerns. Additional Congressional hearings have been held, but no legislation had been approved as of December 2007.
Recent FDA Actions Fuel Debate Over Copycat Biotech Drugs11-19-08 3:47 PM ESTNEW YORK -(Dow Jones)- The Food and Drug Administration's scrutiny of production changes by
Genzyme Corp. (GENZ) and
Amylin Pharmaceuticals Inc. ( AMLN) may signal a tougher stance in eventually evaluating generic versions of biologic drugs - should they ever become legal.
The market for so-called biosimilars could grow to as much as $200 billion a year by the middle of the next decade, as recently estimated by an industry executive, but their regulation will likely be more rigorous than that enjoyed by chemical counterparts. That scrutiny could make their development more difficult and expensive for generic drug makers, possibly hurting sales and forming a barrier to entry that allows only the largest companies to participate.
"This could be a concerted effort on the part of the FDA to draw a line in the sand in advance of a biosimilar pathway," said analyst Chris Raymond with Robert Baird & Co.
The FDA denied that it has changed its policies, saying that it "has had clear and consistent guidance about comparability since 1996." The agency wouldn't comment further.
No pathway for generic biologics exists in the U.S., but legislation to provide a pathway for generic versions is widely expected to be among President- elect Barack Obama's agenda. An official with Obama's transition team declined to comment on the issue.
Currently, generic drug makers can receive approval of copycat small-molecule drugs, like cholesterol-fighting statins, by showing they have the same active ingredient and the same action as the brand-name version, which allows the generics to depend on the original clinical trials and avoid having to pay for new ones.
Biotech drugs, made by culturing specially engineered organisms, are large proteins that are sometimes thousands of times bigger than small-molecule drugs. Their manufacturing makes them sensitive to minor changes in the process, potentially altering their complicated structures and even how they work in the body.
The biotech industry has long argued the complicated nature of the drugs makes it hard for a generic company to copy the drug, and expensive clinical trials should be used to prove similarity.
Earlier this year, the FDA decided that a version of Genzyme's Myozyme, to treat a rare enzyme disorder, produced on a larger scale had slight differences and had to be reviewed as a separate product with clinical data.
"I think what they have done with Myozyme is a pretty big departure," said Raymond, who notes that treating the larger-scale production as a separate brand was "unimaginable" until recently.
The FDA also recently requested more information on the comparability of Amylin Pharmaceuticals' Byetta LAR, an experimental once-weekly version of already approved twice-daily Byetta for diabetes. The issue is between batches of the drug made by partner
Alkermes Inc. (ALKS) in its facility, used in previous clinical studies, and batches made on a commercial scale in Amylin's Ohio facility.
Barrier To Entry
The size of the generic biologics markets is unclear. In a 2007 report, Cowen & Co. estimated that U.S. sales of major biologics totaled $25 billion in 2006. Assuming lower prices, and limited penetration of generics, the firm estimates that the total generic revenue from those sales at $2 billion to $7 billion.
That differs greatly with the more recent projection of worldwide biosimilars sales of $200 billion by 2015 from
Teva Pharmaceutical Industries Ltd.'s (TEVA) North American chief executive, Bill Marth.
But Raymond points to his own research that shows biosimilars of
Amgen Inc.'s (AMGN) anemia treatments aren't being widely adopted in Europe yet.
Understandably, the biotech industry is hoping that the U.S. policies are tougher than in Europe, and it has long pushed for heavy scrutiny, citing the complexity of the products and processes.
The industry, led by the Biotechnology Industry Organization, advocates for clinical data requirements and fighting interchangeability, which allows the generic to be substituted for the branded drug, citing potential safety issues from imperfect drug copies.
While all parties involved are concerned about safety, those policies erect a number of hurdles for the generic companies.
Many observers expect biosimilars to require clinical data to some degree and be distinct products that must be marketed and specifically prescribed by physicians. That may make the drugs more expensive to develop and possibly less lucrative.
Furthermore, the scientific, manufacturing and marketing investment needed to enter such a market will likely allow only the biggest of the generic drug makers to take part, including Teva,
Mylan Inc. (MYL) and
Novartis AG (NVS).
"This is going to be a big thing. This is going to be very expensive, very intensive," Marth said. "I can't imagine somebody investing less than $1 billion and getting involved in this."
Teva has positioned itself to benefit from any regulatory pathway for biosimilars in the U.S., including its pending $7.46 billion acquisition of
Barr Pharmaceuticals Inc. (BRL).
Evan McCulloch, a mutual fund manager with Franklin Templeton, believes that generic companies will have a tougher time selling generic biologics than small- molecule drugs.
He expects clinical trial requirements and companies having to sell biosimilars like a branded product using an expensive sales force, which is a new strategy for most generic companies. All of that could bode well for the biotechnology companies that would face sales pressure from generic competition.
"It is one thing when that drug goes generic and essentially disappears within three months," said McCulloch, referring to the situation seen with small- molecule drugs when generics enter the market, "and another thing entirely when you can bet that that drug is going to hold onto some of its revenues into perpetuity."
-By Thomas Gryta, Dow Jones Newswires; 201-938-2053;
thomas.gryta@dowjones.com
