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Biosimilars Yet To Have Financial Impact Some Had Hoped

Biosimilars costly

When the biosimilar industry first hit the United States, many had hoped that they would bring similar savings as generic drugs. Generic drugs typically knock of 80 to 90 percent of the price of the branded version. However, biosimilar drugs are currently only discounting 15 to 30 percent of the branded biologic price tag. The biosimilar market is currently valued at $2 billion, while the biologic market is valued at $200 billion.

Earlier this month, Morgan Stanley analysts released a report claiming that the lack of success of biosimilars had been disappointing thus far. “We believe that biosimilars will capture meaningful market share, but the disappointing commercial success so far with less than $2 billion annual sales illustrates that the bar is high,” the analysts said.

Biosimilars are more complex than generic drugs, and that makes them more costly to reproduce. Generic drugs are chemical based and can be completely interchangable with their branded versions, while copycat biosimilar drugs are made from living cells and have steeper regulatory hurdles. The typical biosimilar takes about eight years and $250 million to produce. Compare that to generic drugs, which are generally produced for about $5 million in a time frame of only two years.

Morgan Stanley did go on to write that biosimilars still present a real sales opportunity, even if the economics of the market isn’t currently favorable. Even Trump’s pick to head the FDA, Dr. Scott Gottlieb, commented on the disappointment with the biosimilar market in a Senate committee hearing. “Many of us have been disappointed by the economic savings we’ve seen from biosimilars so far,” he said.

Top biotech law firms are working to protect biologic patents, but it is expected that biosimilars will continue to grow as a share of the market over time. Their growth just might not be as fast as the generic drug industry.

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Wilson Sonsini Goodrich & Rosati is the premier legal advisor to technology, life sciences, and other growth enterprises worldwide. In today’s fast-growing, highly regulated generic pharmaceutical market, companies require specialized legal guidance beyond the scope of general corporate and securities counsel. WSGR has an experienced team of experts in key practice areas, including intellectual property, litigation, antitrust, FDA/regulatory, technology transactions, exports and FCPA, trade secret, and trademark and copyrights. Learn more at www.wsgr.

 

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