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Biosimilars: Can Big Pharma Have its Cake and Eat it, Too?

FDA’s approval of Amgen’s Mvasi, a biosimilar version of Roche’s Avastin, illustrates the ongoing contradiction of large biotech and pharma companies developing biosimilars while they simultaneously attempt to block others from marketing biosimilars of their own products.

The industry is full of disputes between biosimilar developers and innovator firms. Even some regulators, whose decisions will set precedent and policy for future approval pathways of many of these biosimilars, have been drawn into some conflicts. As many of these disputes develop inevitably into lawsuits and lengthy court battles, large biotech and pharma companies are betting on both sides.

One on hand, many large biopharma and pharma companies (Merck, Pfizer, Merck, Amgen, AstraZeneca and others) are investing heavily in development of biosimilar versions of competitors’ product. On the other hand, the same large biopharma and pharma companies are fiercely defending their own products from copycats, often through submarine patents that seek to extend patent protection.

The results of these upcoming court cases will have a big impact on both the cake and who gets to eat it.

At the same time, these legal decisions will have a big impact on those who manufacture biosimilars – companies utilizing existing internal capacity as well as those using contract manufacturers.

CMOs worldwide are experiencing record demand for their capacity, partly due to the current biosimilar race, which is leading to some of the highest capacity utilization rates we’ve seen in a long time.

Biosimilars may indeed succeed in lowering drug prices. Lower prices might expand worldwide markets for particular therapeutics. But competitors developing biosimilars are each using their own best-case scenarios for potential demand for their products. Not surprisingly, demand models prepared by the marketing departments within big biopharma companies often reflect best-case scenarios. These optimistic projections of product demand mean operation supply chain teams are scrambling to secure more and more capacity.

The result? Prices for contract manufacturing, responding to high demand and limited capacity, will shoot up, which in turn, will drive up the cost of goods – ironically, the opposite effect of the whole biosimilars undertaking.

When the dust settles, it will be interesting to see if the results of these critical biosimilar court battles actually impact long-term capacity utilization. There will undoubtedly be winners and losers as the supply pendulum swings back and capacity becomes abundant once again.

Needless to say, it will be an interesting race to watch. Our view is if that biosimilars truly reduce costs, allowing markets to expand, it may still not be enough to fill all the capacity.

Blog article by: Lisa Cozza and Tom Ransohoff