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European Biopharmaceutical Review

A Fork in the Road


Companies facing expiring patents are turning to ‘follow-on’ biologic therapies to fill the revenue gap. The question on everyone’s lips is whether it’s the low-risk approach of biosimilars, or the added-value offered by biosuperiors, that holds the key to success.

Analysts who have dared to peer over the ‘patent cliff’ currently looming before the biopharmaceutical sector have offered varying reports on the scale of the drop. The global worth of biologics due to go off patent by 2015 is estimated to be between $20 billion and $80 billion a year (1,2). Several big-earning biologics such as Humulin® (insulin isophane and insulin regular) and Nutropin® (somatropin (rDNA origin) for injection) have already tumbled over the precipice, and many more, including Epogen® (epoetin alfa) and Herceptin® (trastuzumab) are teetering on the edge. This widescale loss of patent protection offers both a threat and an opportunity for the biologic industry. While reduced revenue from high-earning original molecules may damage profitability, the removal of patent protection creates a whole new market for ‘follow-on’ biologics.

Today, at least 12 pharmaceutical companies (Pfizer, Sandoz, Merck, Teva and Hospira, among others) are racing to become early entrants in the biosimilar market, which is expected to grow from $243m in 2010 to $3.7bn by 2015 (3). Biosimilars allow drug manufacturers to generate modest profits at relatively low risk, but offer nothing new to the patients or healthcare providers in terms of efficacy, safety or ease of use. At best, they may offer an equivalent therapy to the innovator product at a reduced price. On the other hand, biosuperiors – sometimes called biobetters – have the potential to improve upon existing therapies, though at a greater development risk and overall cost to the manufacturer. Given the two choices, what is the future of the ‘follow-on’ biologics market? Is the focus on biosimilars, with their low risk and cost but no additional benefits, or biosuperiors with their higher cost and risk but greater potential rewards?

Regulations Guiding the Path Forward

The rationale behind the development of biosimilars is similar to the development of generic copies of off-patent small molecules. In practice, however, the process is far more complicated for biologic therapies. The difficulty in producing biologic copies is reflected in the complicated regulatory procedures surrounding the approval of biosimilar drugs. Whereas market authorisation for a small molecule generic drug will be granted after a small-scale trial demonstrates ‘bioequivalence’ to the reference product, the bar is set much higher for biosimilars.

Europe has led the way in the regulation of biosimilars. In 2003,the European Union (EU) was the first region in the world to adopt a comprehensive regulatory approval pathway for biosimilars. Then in 2005, the European Medicine Agency (EMA) developed guidance to govern the development and licensing of simple protein biosimilar products such as recombinant human EPO and recombinant somatropin (human growth hormone) (4). Since then, three biosimilars have entered the market – hGH, EPO and filgrastim. Similar legislation was introduced in the US with the Biologics Price Competition and Innovation (BPCI) Act of 2009. Japan, Canada and Australia have also introduced accelerated approval pathways for lower-cost versions of off-patent biologics

While less stringent than the regulations governing originator molecules, the approval pathway requires biosimilars to demonstrate similar standards of quality, safety and efficacy as the reference product. Unless the manufacturer of the biosimilar has access to the original molecule’s cell bank and manufacturing process, it is likely that any attempt to produce exact copies will introduce changes to the biologic’s highly complex molecular structure. Because of this molecular complexity there is a risk that even subtle changes in molecular structure may result in a different clinical and side effect profile to the original molecule.

In contrast to biosimilars, the development of biosuperiors has to follow the traditional biologics regulatory approval pathway, like the original products. This is because in essence a biosuperior is a novel molecule designed to have improved properties over the original product.

Biosimilars: Is it Enough to be Equal?

Biosimilars are the low-hanging fruit of the biotech industry. Regarded as lowrisk and relatively low cost to develop, biosimilars essentially copy an existing biologic molecule.

Designed to be as much like the original molecule as possible, biosimilars are submitted for regulatory approval based on their equivalence to an innovator product whose patent has now expired. To gain approval they must match the originator in terms of pharmacokinetics, mechanism of action, route of administration and safety.

In recent years, some simple biosimilar drugs, such as insulin, erythropoietin and interferon have been successfully developed and launched. However, producing biosimilars for more complex molecules with highly specialised manufacturing processes, such as monoclonal antibodies or Fc fusion proteins, appears to be almost as difficult, time-consuming and costly as producing the original molecules themselves. The comparison of structural complexity among chemical, simple biologic and complex biologic is shown in Figure 1. A monoclonal antibody is a lot more complex than a simple biologic like insulin or chemical compound like Taxol.

This situation has led, somewhat, to the lack of substantial cost savings we had expected with biosimilars. Unlike small molecule generics, which can be marketed at prices 80 per cent lower than their original branded drug, biosimilars appear unlikely to offer a dramatically cut-price option. In Germany, where the biosimilar market is particularly advanced, price discounts typically run at around 25 per cent (5). Without substantial discounts, it may be difficult for biosimilars to carve out a cut-price brand in the way that small molecule generics have done. Indeed, the first US-approved biosimilar, the human growth hormone Omnitrope from Sandoz, is reported to have only a ‘low single-digit’ share despite being on the market since 2006. Given that biosimilars cannot maintain market exclusivity, their indications are often narrow and their market acceptance is poor, it could bethat they do not represent the ‘quick win’ that was originally expected.

Biosuperiors: An Ideal Risk-to-Benefit Ratio

Rather than simply copying the effects of an innovator product, biosuperiors are designed to improve on them. Directed toward molecular targets that have already been validated in Phase 2 clinical trials or beyond, biosuperiors use cutting-edge biotechnologies such as protein engineering (see Figure 2), and novel drug formulation and delivery approaches to offer tangible benefits over and above those offered by the reference product.

For example, several drugs on the market, including Amgen’s Neulasta® (pegfilgrastim) and Pfizer’s Somavert® (pegvisomant), make use of PEGylation technology, which involves the attachment of a polymer to increase the half-life of the molecule in the body. Increasing a drug’s half-life may prolong its benefits in the body, potentially leading to a decrease in dosing frequency and improved efficacy. Biologics can also be re-engineered to provide a more patient-friendly dosing route or to reduce side effects. Such products would provide patients, physicians and healthcare providers with the essential ‘value added’ element that is likely to appeal to healthcare commissioners.

Clearly the development of a biosuperior is more ambitious than that of a biosimilar, and comes at the price of higher R&D costs and a greater risk to a company’s pipeline portfolio. Nevertheless, the manufacturing process of biosuperiors need not be tied to the originator’s process, unlike biosimilars which ideally should use a process as close as possible to the originator’s to ensure the drug’s ‘similarity’. Moreover, many biosuperiors have the potential to become best-in-class products, thereby seizing a sizable proportion of market share at a cost and risk lower than that incurred during the development of a first-generation product. Unlike biosimilars, a biosuperior going the full approval route would be patentable and have 12 years of marketing exclusivity (in the US).

Translating into R&D Investment Strategies

Most of the fast starters in the race to enter the ‘follow-on’ biologic marketplace have opted for the biosimilar route. The temptation to follow suit is clear. Biosimilars seem to offer an opportunity to enter a new product category with relatively little investment and at low risk. A biosimilar programme can allow a company to ‘pep-up’ its product pipeline and achieve an economic return that may help ease the pain of those lost patents.

Certainly, for companies that are new to biotechnological innovation, it may be that biosimilars offer a welcome entry-level option to the biologic marketplace. But for companies with the heritage and biologic research infrastructure already in place, it may pay to take a bolder approach.

As manufacturers turn their attention to biologic molecules of increasing complexity, it seems clear that biosimilar manufacturing costs may not be quite as low as originally hoped. And while a biosimilar’s journey to market may be relatively swift, the lack of exclusivity at the end of it will significantly reduce its returns.

Undeniably, the biosuperior route comes with greater risk. However, the returns on that risk may turn out to be worth it. Biosuperiors offer stronger, long-term incentives to purchasers as they have the potential to provide patients with additional clinical benefits, whether that is a more effective therapeutic option, a better safety profile, or a more convenient dosing schedule. At the same time, biosuperiors that gain patent protection can help to generate a more substantial return on investment for the developer, and many companies convinced in the importance of biosuperiors have increased research and development investment in biosuperiors as part of overall investment strategies to maintain a sustainable pipeline.

Conclusion Pharmaceutical R&D is a high stakes endeavour in which fortune is not guaranteed to favour the brave. While it is only right that researchbased companies continue to focus on discovering new disease targets and creating first-in-class therapies for patients, it is equally important to offset the risks that such activities bring. The development of biosuperior drugs strikes the right balance between providing life-changing medical treatments for patients and maintaining an innovative pipeline for continued business success.


  1. Bethencourt V, Merck joins the biotech game, Nature Biotechnology 27(2): p104, 2009
  2. Pharmaceuticals and Biotech Industry Global Report 2011, IMAP Healthcare, available at healthcare.cfm
  3. Visit pharmaceutical-key-trends-2011- biosimilar-market-overview.html
  4. EMEA Guideline on Similar Biological Medicinal Products, CHMP/437/04 London, 30 October 2005
  5. Emerging Health Care Issues: Follow on Biologic Drug Competition Federal Trade Commission Report, June 2009, available at: P083901biologicsreport.pdf

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Herren Wu is Vice President at MedImmune, the global biologics arm of AstraZeneca where he serves as Head of Biosuperiors and Head of Antibody Discovery and Protein Engineering. Herren is leading the company’s expanded concentration on biosuperiors discovery and development and focusing commercialisation on US, European, Japanese and other markets supporting biologic products. Email:
Herren Wu
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