Biosimilars: prospects and challenges

Kevin Bottomley, Achim Newrzella

The adoption of biosimilars varies from country to country, which is invariably linked to regulatory and market access issues. These differences have made it difficult for many investors to make decisions about entering the market with confidence. The situation should improve as more biosimilars reach the market, their benefits become embedded in healthcare systems, and regulatory pathways become more established.

In our latest white paper, Biosimilars: prospects and challenges, we look at how biosimilars are different to generics, why biosimilars are attractive for investment, who the key players are and the challenges they face as well as M&A, joint ventures and licensing deals in the space.

Our analysis predicts that the size of the biosimilars market will grow from US$ 4.4 billion annual sales to US$ 25 billion by 2023 at a Compound Annual Growth Rate (CAGR) of 34%.

Partner Kevin Bottomley says: “The market impact of biosimilars has been predicted for many years, but it is only recently that they have started to realise their potential for patients, and have a positive commercial impact. As the process and business case for developing and commercialising biosimilars is becoming better defined, investors have become more certain about the risks and rewards associated with these products”.

The report points out that each biosimilar has its own characteristics, and each market has its own dynamics. Pricing forms an important part of the launch strategy. Expectations in the US market are that biosimilars will need to provide discounts of 15-30% compared to the reference product while in Europe there have been examples of 30-40% cuts.

At the same time, originators have established defence mechanisms to incoming biosimilars through intellectual property portfolios, marketing strategies and the benefits of being the existing brand. However, since the creation of BPCIA in 2010 to establish a pathway for biosimilars, the process has become much smoother.

Despite evident challenges, the prospect of reducing treatment costs for payors support a positive future for biosimilars. The challenges involved in producing biosimilars provide opportunities for companies with the relevant know-how, capacity and financial resources to make products that meet regulatory requirements and can take market share from originator products.