Healthcare management is one of the most fundamental and relevant topics for discussion worldwide. Drug regulators across economies and geopolitical boundaries continuously strive to meet the healthcare needs of those they serve. The challenge unifying all these regulators is the ability to ensure maximum utility of the healthcare systems while controlling costs.
This challenge however presents numerous complexities owing to the high cost involved in research & development of a single drug and the patent exclusivity obtained from it. Once a company successfully develops a new drug, they can introduce it in the market attached with tremendous costs as they have an exclusive patent on it.
The Drug Price Competition and Patent Term Restoration Act, informally known as the Hatch-Waxman Act offered a solution to this problem by allowing pharmaceutical companies to copy the branded drug and sell it at a nominal price as a generic – once the patent expired. This act allowed a reduction in the cost of patient therapies, without significantly affecting the revenue of the developer of the branded drug.
Notably, a generic drug is a low-cost substitute for the consumer as the manufacturer’s cost is reduced in a generic development. This can be attributed to minimal requirement for research & development and the fact that the approval pathway is much shorter for a generic as compared to newly launched drugs.
The shift of the pharmaceutical industry towards biologics has opened new avenues in the field of generics and presented new obstacles. Biologic is an umbrella term to define all therapeutic products of a biological origin. These are extracted and made from living cells, animal or microbial rather than being chemically synthesized. They tend to be larger, more complex compounds than traditional drugs, proteins and fragments thereof constituting majority of the biologics segment.
Biosynthetic “human” insulin was first such substance approved for therapeutics. Presently, majority of the approved biologics are antibodies and all these therapeutics fall in the high-cost category. For example, Trastuzumab (Herceptin® by Roche) used for the treatment of breast cancer costs between $1,800 and $1,955 per 440 mg vial. The implications of the high cost are that a full course of treatment with Trastuzumab is about $70,000. 
The development and the approval pathway for biologics are comparatively complicated and thus the biologics cannot be mimicked with the same ease as a traditional pharmaceutical drug. A replication process for biologics without trials and approvals is not yet possible.
A need for lower-cost alternatives combined with differences in their replication process paved the way for biosimilars. The FDA recognizes biosimilars as biologic’s version of a generic drug, i.e., biologic drugs that are similar but not identical to the original biologic. Unlike a generic, a biosimilar is not an identical copy of the original biotherapeutic and thus has to go through a stricter regulatory process before its launch into the market.
Therefore, biosimilars are still quite expensive and time consuming to develop. Whatever cost cutting is achieved is due to the reduction in number of clinical trials needed to prove the drug is safe and effective. Companies making biosimilars are mimicking a biologic having established efficacy and toxicity profiles and thus have to only prove that biosimilar has the same route of administration, dosage and strength as the original product, while maintaining all the safety mandates. This eliminates a significant number of clinical trials, thus reducing the cost of development. 
With the end of this decade, majority of the best-known biologics patents face impending expiration dates. This sets the biosimilar market on a road of continuous growth. McKinsey estimates the biosimilars market to potentially triple in size to $15 billion by 2020, or closely thereafter.  Biosimilars provide low-cost alternatives in the market for life saving drugs and thus this downward price pressure creates intense competition in the biologics market.
The two major pharmaceutical markets: Europe and the U.S., demonstrate a stark contrast in growth of biosimilars. While the European market is continuously growing supported by increasing acceptance regarding their efficacy and safety; the U.S. market tends to be flat. 
Biosimilars in Europe are growing steadily, both in terms of development and sales. This can be attributed to the increase in acceptance of biosimilars as an alternative to original biologics with faith in their competence relating to their safety, efficacy, and immunogenicity when compared to their patented counterparts. The biosimilar market in Europe reached a value of $2,934.6 million in 2018, with around 36 biosimilars approved by 2018. The market is further projected to reach a value of $11,663.1 million by 2024, growing at a CAGR of 24.9% during 2019-2024. 
The advance in the biosimilars field is not evenly distributed throughout Europe. The market is majorly segmented into Italy, Germany, the United Kingdom (UK), France, Spain, Norway & Denmark with regions like the UK and Italy representing the largest market. However, countries like Norway and Denmark show a significantly higher uptake of biosimilars owing to widespread promotion of biosimilars by health authorities and national tenders for development. The current European regulatory guidelines foster a neutral or positive environment for biosimilars relative to originator biologics and supports sustainability. 
The European biosimilar market represents the most mature market in the world and is expected to continue advancing robustly in the next five years bolstered by biosimilars of at least five new reference biologics, including high-value molecules such as Adalimumab and Trastuzumab. 
The first biosimilar approval in the U.S. was for Zarxio (filgrastim-sndz), a biosimilar G-CSF myeloid growth factor used in supportive cancer care, which was approved back in March 2015. Since the approval of the first Biosimilar in 2015, the U.S. biosimilar market has seen a slow growth and the market is still in its nascent stage. 
Fig.2: Biosimilars approved in the U.S. 
Most of the biosimilars face delays and take a long time before they can enter the market. Even with around 18 biosimilars approved – only four of these are available for sales, owing largely to challenges created by the branded drug companies such as counter-detailing and unfair & complex contracting practices that limit the acceptance and the price advantage of a biosimilar entering the market. 
These problems are compounded with the fact that the manufacturer of a biosimilar has to face the hurdles posed by high development costs – approximately $100 to $200 million per product and considerable uncertainty about risks and costs related to regulatory approval and market access before it even enters the market. 
Another obstacle faced by biosimilars in the U.S. is the prevalent concern about the idea of switching patients from well-known biologics to less familiar biosimilars. In most cases, patients have been switched to biosimilars only after brand-name biologics lost efficacy or brought intolerable toxicities. 
Overall, the U.S. market offers multiple opportunities and yet is riddled with various practical challenges.
The pharmaceutical industry is rapidly shifting focus towards new developing countries. This industry has not only embraced globalization but is emerging as one of the front-runners of globalization largely due to flattening growth patterns of pharmaceuticals in developed markets amidst stagnant economies and patent plateaus. Developing geographies, on the other hand, are providing high-growth opportunities and thus can be seen as the emerging markets. 
The emerging markets are identified not by overall sales numbers but their potential for growth. The developed world still dominates the market in terms of overall revenue, however the fast-paced raise in GDPs of the developing countries such as China, India and Mexico is responsible for this new-found interest of the healthcare sector in the developing world. Another factor strongly influencing this global shift is the fact that 70% of the world’s population resides in these countries and their governments are continuously striving and struggling to provide universal healthcare to their citizens. 
The daily growing population of the world, especially the developing world and the significant dearth of healthcare facilities and options have created a huge gap of unmet requirements. This is potentially the most important factor supporting biosimilar growth. However, it is not easy for the big pharmaceuticals to easily reach the remote corners of the world. The penetration of these markets by big pharmaceuticals is also riddled with problems of stringent regulations and a general distrust of the western pharmaceutical sector. 
The future success of biosimilars is not dependent on major markets like the U.S. and Europe alone. The success of biosimilars will be decided by their acceptance in high-need countries, and the need is greatest in Asia. Thus, the emerging markets influence the worldwide situation and will be the fastest to adopt biosimilars. 
The regulatory authorities of developing countries are starting to focus on development of indigenous products and the foreign investors are mandated to favour local manufacturers and invest in infrastructure and manufacturing development. This, complemented with the new available option of biosimilars, has paved the way for local manufacturers to produce the required therapeutics indigenously – thereby reducing the dependence on imports and increasing their mark on the overall pharmaceutical revenue map.
China, India, Brazil, South Korea, Turkey and Russia, among others, already have one toe in the marketplace and are gearing for a full dive into the market. India and South Korea are the fastest emerging markets for Biosimilars with both the countries having more than 10 biosimilars already approved. Also, most of these geographies have a well-established regulatory environment that favours biosimilar growth. 
Fig. 4 Key regions in emerging markets
Source: Various articles and Gabionline.net
*The data for Russia and Turkey is only indicative of approximate numbers as the regulatory guidelines are not well established and thus not all non-originatory biologics present in the market can be considered as biosimilars.
India has long established its presence in the chemical generics market. It is well known that the Indian pharmaceutical market is largely dependent on its chemical generics manufacturing capabilities, but the biosimilar market is not far behind. As compared to the U.S., the biosimilar market is well established in India, with the first Indian biosimilar being approved in 2000.  Over the years, Indian pharmaceutical companies have led to the development of a mature and sophisticated ecosystem and regulatory environment for biosimilars.
New data from CPhI shows that India’s biologics market is set for robust growth in 2019 driven by biosimilars production.  According to some estimates, Indian biosimilars market will be worth $40 billion by 2030. 
Fig. 5: Indian Biosimilar Market 
As seen earlier, India has more than 50 approved “similar biologics” (Indian market term for biosimilars) in the market and about 19 biosimilars are in the development pipeline. The market is expected to grow at a CAGR of 14-16% by 2021. 
On 19 June 2012, India announced the release of draft regulatory guidelines for ‘similar biologics’ at the BIO industry conference in Boston, USA. The guidelines outline a simple abridged procedure for evaluation of ‘similar biologics’ which have been approved and marketed in India, Europe or USA for more than four years. 
Indian pharmaceuticals have the advantage of reduced facility and developmental costs when compared to peers in western countries and also enjoy the fruits of partnerships with larger MNCs when it comes to clinical trials and regulatory approval processes. Moreover, the Indian regulatory environment is conducive to biosimilar development and thus drives these players in achieving the high market share that they possess. 
Dr. Reddy’s Laboratories are the pioneers for Biosimilars in India with their biosimilar of rituximab (Reditux) receiving approval in 2007.
Indian players have adopted an all-rounder approach by focusing on types of available biologics ranging from monoclonal antibodies to Streptokinase. Participation of the Indian industry in regulated markets [U.S. & Europe] is witnessing a steady rise. European markets are relatively more encouraging; with some biosimilars such as Intas Pharmaceuticals’ Pelgraz (pegfilgrastim) and Accofil (filgrastim) who have already secured EMA approval. The U.S. market is comparatively difficult to penetrate but Indian made biosimilars have already seen the light of day in U.S. 
Biocon became the first Indian pharmaceutical to have a biosimilar approved by the USFDA. It partnered with Mylan to co-develop Ogivri, which is a biosimilar for Roche’s drug Trastuzumab – marketed as Herceptin and used in treating certain breast and stomach cancers. This approval by the FDA puts India on the global map of biosimilars and will serve as a precedent for various Indian pharmaceuticals to enter highly regulated markets.
Fig. 6: Indian Players in the Biosimilar Market with number of Biosimilars 
The thrust of the Indian biosimilars market is likely to continue with the various biosimilars still in the pipeline. As per our estimates, around 20 biosimilars are to be approved in India in the upcoming next-wave of biosimilars. If you’re interested in knowing the upcoming Indian Biosimilar Market Trend, then download our report here.
In terms of regulation, the market for biologics and biosimilars falls into three broad clusters: the regulated markets (US, Europe, Japan and Canada); the semi-regulated markets (dominated by China and India) and the unregulated markets. The unmet need for cost–effective alternatives to biologics manifest the growing demand for biosimilars and will be the driving factor for the expansion of the market in the regulated and the semi-regulated markets. However, there remains a colossal gap between the number of approved biosimilars between the regulated and semi-regulated markets, with China and India having over 50 approved biologics and US having none. Among the regulated markets, Europe has been way ahead of others despite having similar regulatory requirement in US.
The surge of the biosimilars in the semi-regulated markets can be owed to biosimilars- conducive yet streamlined regulations and increasing market acceptance. For example, the Indian government offers subsidies to Indian biosimilar manufacturers and funding companies that enter into public-private partnerships. Such steps secure the availability of affordable biosimilars both in domestic and export markets; and ensure that the Indian biosimilar landscape remains competitive.
Looking five to ten years down the road, India seems to be on a route to market expansion. The ability to expand beyond the domestic markets however will be contingent on the strategies adopted by the developers. Unlike in India, where price is the deciding factor for the success of a biologic/biosimilar; the prominent factors in the western markets include quality, clinical data and safety. Prescribers in the western markets have limited faith in the products manufactured by developers of the semi-regulated markets.  Thus, forming strategic partnerships with multi-national manufacturers that elevate the manufacturers’ profile – a tactic that the Indian companies could consider adopting if they wish to enter the international markets.
– Harsha Agarwal