November 5, 2012

Current and Future Trends in Biosimilar Development: A Conversation with GE's Gunter Jagschies

Process Development Forum spoke with Gunter Jagschies, Strategic Customer Relations Lead at GE Healthcare, about current and future trends in biosimilar development. The interview was conducted by Dr. Amy Ritter, Science Editor at BioPharm International Magazine.

Process Development: Do you see that the introduction of the biosimilars class has changed the industry in any way?

Yes, in several ways. First, innovation is being fostered and the competition has heated up—in fact, we have innovation in pretty much all of the areas where biologics have been launched. For autoimmune disease, for example, I think we have six molecules, antibodies and fusion proteins, in the market already, and all of them are originator products.

Another response that is clearly visible now is that many of the originators have started their own biosimilar initiatives. So originator companies, with their R&D machinery and experience and manufacturing power, are looking at biosimilars as an opportunity to defend their franchise and perhaps also to improve the success rate of their R&D with something that can generate revenue for them.

On that note, I think that overall, the price levels will also go down as a result of this competition, at least for the first-generation molecules and the biosimilars.

Process Development: Do you see similarities between the development of biosimilars and the emergence of the generics?

For the western markets where most of the originators business with biologics happens, the appearance of biosimilars is a sign of market maturation, after 30 years of build-up of the biopharma industry. But I don’t think the biosimilars will have as significant an impact on our industry as generics had on the small molecule drug market. With generics, about 80% of the originator’s market share was eroded, very quickly. I think in this case, we’ll see maybe 10%-20% erosion in the foreseeable future.

And I say that because biologics are not easily copied. If you have a small molecule like aspirin, technology will let you make a very exact copy and then process that into an identical drug. So that’s why the originator market was eroded so deeply. I don’t think that will happen here, however I do think biosimilars will have an impact on price levels and more players will offer their alternatives to established drugs.

Process Development: Can you take us through that impact of biosimilars on a regional level?

The uptake of biosimilars has been slow in Europe, despite seven years of a well-established regulatory framework and even though quite a few originators lost their protection a number of years ago. In fact, nothing has been approved in Europe in the last three years. There are new approval filings, but not that many.

Process Development: Can you clarify why nothing has been approved in Europe over the past three years?

I don't think I have all the explanations but it's just an observation. One could argue that it’s because we have now a number of biosimilar molecules in the European markets. And with those biosimilars in the market competing for price and market access, it may just not be as attractive for anyone else to go for the same target molecules again and go for the same markets. The business case may just not hold. That's speculation on my side, of course, but it seems to make sense.

Process Development: What is happening outside of Western Europe?

In the developing markets of Asia, South and Latin America, Eastern Europe, and parts of the Middle East, the significance is different. Biologics at the Western price levels are not affordable to the majority of patients and this has led to the rise of a significant number of companies in India and China who have launched non-biosimilar copies of originator drugs. 

However molecules in India and China are just copies of originator molecules. I would call them non-biosimilar copies or non-originator copies—there’s still a debate about what the best terminology is. These copies are often not approvable under the biosimilar regulations because they’ve never faced comparison with any reference product. The concept of reference product is not used or was not used in India or China for any of the molecules that are currently on the market there. So, most of these are probably not candidates for approval under a fully developed biosimilar regulation anytime soon in Europe or the U.S. and thus only of local significance at least for now. 

That will probably change as well, as the rules are tightened in India and China and so the local players will become more competitive in response.

Process Development: How do you see US market developing?

With generics, the US market saw an extreme uptake rate and that is probably where much of the fear of biologics originators comes from, i.e., that we may get another patent cliff phenomenon. But as I said before, I think biosimilars will follow a different scenario. If I take the European history as an indicator of what will happen in the U.S., then biosimilars will probably develop slowly in the U.S., even once the floodgates are opened and the regulation is actively being used. There's no requirements for clinical trials in the US, but the evidence approach that the FDA is describing for this tells me that it is very likely that there will be demand for clinical trials and that alone means that it will take time, will cost a lot of money. So I don't really foresee that it will be much faster than in Europe.

If, and this if is very important, there would be interchangeability, then the US market will quickly become the most attractive target market for any biosimilar developer.

Process Development: Do you think shares of biosimilars will grow as people become more accustomed to seeing them in the marketplace?

Yes, especially since we have a number of very experienced players now, even quite a few originator companies who really know how to make quality biologics, develop them and manufacture them. It will grow, but that doesn't necessarily mean that the originators will lose all their business because I believe originators will also own a significant part of the biosimilars market.

I don’t think we’ll see much lower prices because it's just too expensive to develop and test in the clinic and then produce the drugs. I think generics with huge margins really can just play with price in any imaginable way essentially. That's not possible or advisable for a biologic. On the price front, I think the most aggressive pricing announcement that I'm aware of is from the head of the Samsung Biologics who has said that they will offer their biosimilar products at some point in the future, at about 50% of the originator's price, which is aggressive but in reality today, you hardly see more than 20% or 30% less than the originator.

Process Development: What do you see as the greatest challenge for a company developing biosimilars?

The degree of realism in their expectations for time to market and cost of development paired with the market share achievements planned in the business cases. I suspect that many of these plans are too optimistic.
I think that on a technical side, the greatest challenge is all the analytical machinery that is needed to do the proper characterization of a similar molecule and compare it to the reference product. Not very many companies have that machinery in place or have the deep pockets that they need to build this up and often may not have the experience required for doing this. So that is, on the technical side, a very significant hurdle.
I think the biggest challenge on the development side is to do all that analytic work that is necessary to prove similarity in the first place—and even with that, you’ll most likely still have to go into the clinic with your molecule. That's the greatest challenge because that's where all the money is being sunk into a project. And as I said, not many companies really have that much money, so investors have to be patient.

Speaking of investors, there are also challenges on the business side. When you develop a biosimilar, it’s much more complex than developing a chemical, so a lot of money is needed for this. The lowest numbers that are out there are $20 million to $30 million, but most people speak about $100 million to $150 million of development costs. And in that higher range is included the assumption that people will have to do clinical trials. Now a small company that is facing an investment of $100 million to $150 million over time -- anywhere between, I would say, three and seven years before they get ready for marketing -- they would just think twice, right? Because many companies don’t have those kinds of deep pockets or that kind of time, especially small companies. We have seen cases already when investors -- private investors, often in Asia, essentially pulled out of their investment because they realized it was much higher risk than they maybe had assumed.

Process Development: In terms of process development, what areas do you think are most critical for success?

The analytical effort to characterize the biosimilar and compare it to the reference product clearly is the greatest challenge. And if you want to go further than that and get the regulators to agree to interchangeability, then you will have to do even more. You’ll most likely have to go into the clinic with your molecule. That's the greatest challenge because that's where all the money is being sunk into a project. And as I said, not many companies really have that much money. In contrast to many other people, I don't believe that production technology has any major challenges to it. Essentially, the biosimilar players can go to any of the CMO’s that are available, all of which have access to the latest generation of production technology and very experienced staff and ready-to-go facilities, so that’s not really a differentiator.
There is some thought that the manufacturing cost is going to be a differentiator for biosimilar manufacturers. I don't think so either because I don't see that a relatively small producer can ever compete with one of the large payers with their legacy product when it comes to production cost. So I don't see major challenges in production.

Process Development: Do you think that biosimilar developers will impact the way the industry in general develops biopharmaceuticals?

I believe that the appearance of new competition fosters innovation and already second and even third generation biologics are under development. In addition, many originators have started their own biosimilar initiatives, and those who are not doing that are obviously looking at their options to conquer with marketing measures as well as their R&D efforts.

This industry had a lot of competition basically from day one. Remember --the first two insulins on the market were launched within a month of each other in 1982—Eli Lilly and Novo Nordisk. So essentially, from day one of this industry, there has been competition and biosimilars are just a form of that competition.

But I think the competition will have a more moderate effect and I don't see the industry changing in any fundamental way because of it. It's just a maturation effect.

This edited article is also available as a full podcast.

Tags: biosimilar