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Kim Wagner is a senior partner and managing director at BCG's New Jersey office.

The business philosophy and tools that revolutionized Toyota could save the ailing drug industry a lot more than just time and money. But is pharma really capable of getting lean?

Lean Comes to Pharma

AbbVie Pedro Valencia ADCs

PE: How is AbbVie using novel cancer biomarkers to develop potential first-in-class ADCs for the treatment of advanced solid tumors?

We're constantly looking for biomarkers that can help us to do two key things. The first is to tackle cancer cells. and spare normal cells. We’re looking for specific antigens that are over-expressing tumor cells, and you see limited expression in normal cells. We want to make sure that target that’s over-expressed is critical for the survival of the cancer cell. Once you block it, you can actually drive a cancer cell death. That’s what we're looking for. In that perspective, c-Met is one of those biomarkers that is over expressing multiple tumor types such as lung, colorectal, gastric, and other GA tumors. We as an industry have tried to tackle c-Met in the past but have been unsuccessful. It would actually be successful to tackle what we call met, which is a gene inside the cell.

There’s this thing called met amplification, where the cancer cell produces multiple copies of the gene, and around 30% of patients have it. We can actually tackle that with small molecules. But once the gene becomes a protein and gets over-expressed in the cell, that over-expression is something we haven’t been able to target. For example, we know that on lung cancer, c-Met over-expression is about 25% to 50% in colorectal cancer, and it could be anywhere from 30% to 70% depending how you measure it, so it’s quite prevalent.

With ADCs, we’re trying to tackle c-Met over-expression on the surface of cancer cells. That was novel, and we can do it through ADCs. 706 has a target called SEZ6, and it’s a target that is over expressed in neuroendocrine cells or neuroendocrine neoplasms. When you think about it, multiple tumor types kind of have a subset of cells that are neuroendocrine driven. Small cell lung cancer is one of the few that has everything driven by neuroendocrine cells. The beauty of SEZ6 is over-expressing those cells and limited expression in normal cells. So, we can tackle it with an ADC and drive the results that we're seeing today.

PE: ADCs have redefined the treatment of cancer in recent years. Can you please discuss the promise of this emerging class and what the future may hold?

At the end of the day, ADCs work like a trojan horse. You have a good antibody that cancer cells are happy to receive, but once you hook into the cancer cell receptor, you deliver the payload, which is pretty much chemotherapy. It’s actually a highly potent version of the regular chemotherapy cancer patients are given on a regular basis. So, from that perspective, our goal is to replace chemotherapy. Our grand goal with ADCs is to replace good old, decades old chemotherapy that is really toxic for some patients. That’s how we see the redefinition of cancer treatment in the future with ADCs. So, what do we see in the future? Well, if you think about it, chemotherapy is being given in combination with other agents. In the future, we see ADCs being given in combination with chemotherapy. There will be one with other agents such as immuno-oncology agents. So, if you combine the ADC and the PD1s, you can start seeing that synergy come together and kind of start really dreaming about cures for the patients. All in all, we're super excited about ADCs replacing chemotherapy. 

In an interview with Pharm Exec Associate Editor Don Tracy, Pedro Valencia, VP, Solid Tumor Pipeline Strategy & Execution, AbbVie, discusses using novel cancer biomarkers to develop potential first-in-class antibody drug conjugates (ADCs) and the promise that they offer. 

Utilizing Biomarkers to Develop First-in-Class Antibody Drug Conjugates to Treat Advanced Solid Tumors

Building off of the first significant surge in its history in 2023, the market for biosimilar products in the US continued to rally in 2024—taking advantage of a confluence of drivers that are changing the healthcare value equation for innovator and competing companies alike.

Notably, following the approval of nine biosimilars for AbbVie's immunology giant Humira (adalimumab) in 2023, a 10th one, branded as Simlandi, was cleared by the FDA earlier this year. The Alvotech and Teva drug was approved as the third biosimilar officially deemed as "interchangable" to Humira, which posted $14.4 billion in full-year 2023 sales. Interchangeable products may be substituted at the pharmacy level without the intervention of the healthcare provider (HCP) who prescribed the reference product.

Through early December, the FDA has greenlit 18 biosimilars in 2024. Those include six follow-on biologics for Johnson & Johnson ulcerative colitis and Crohn's disease stalwart Stelara (ustekinumab; $10.9 billion in 2023 sales), including this month's approval of Yesintek, made by Biocon Biologics; and five of Regeneron Pharmaceuricals and Bayer's eye disease big-seller Eylea (posted $9.2 billion in revenue between the two companies in 2023). In total, there are currently 63 biosimilars approved in the US, 42 of which have launched commercially.

According to a November report by Roots Analysis, the global market for follow-on biologics is valued at $24.2 billion in 2024, and will grow at a compound annual growth rate of 16.5% through 2034. Driving those numbers, of course, will be looming patent cliffs on the horizon, notably in 2028, when Merck's PD-1 powerhouse Keytruda (the top-selling drug in 2023 at $25 billion) will start coming off patent, and in 2030. In all, by the end of the decade, about $236 billion in biopharma reference product sales are at risk. This reality has attracted large innovator organizations into the world of biosimilar development in recent years, seeking a new channel to replenish the sales erosion noted. Those companies have included the likes of Novartis, Biogen, Pfizer, and Amgen (the latter two have their own marketed biosimilars to Humira—Abrilada and Amjevita, respectively).

As of Nov. 1, there were more than 80 biosimilars in development across 22 molecules, according to data from Cencora. Seventeen of those candidates are targeting indications in oncology, but biosimilar efforts are also heavily active in areas such as ophthalmology and immune disorders, as noted, and also diabetes, bone health, and growth hormones.

, Johanna DeYoung, global industry lead, healthcare and life sciences with Slalom, a business and technology consulting firm, believes the growth of biosimilars on the market, in R&D circles, and increasingly becoming accessible to a larger number of patients, has influenced the decision-making and product launch planning of innovators in two distinct ways.

"Inventor companies are now more focused on competitive pricing strategies, and being more surgical about their value propositions to maintain their market share," she says, adding that such approaches have translated to price reductions, in some cases, of originator biologics (i.e., monoclonal antibodies, insulin, erythropoietin, and anticoagulants). "For launch planning, you're seeing the impact really accelerating the need for inventor companies to innovate and bring more products to market quickly. Also investing more in that lifecycle management strategy—developing next-generation biologics or new formulations to try to continue to differentiate among the competition."

DeYoung adds that amid these dynamics, innovator companies, such as those mentioned, are more conscious of diversifying their therapeutic portfolios to include both biologicals and biosimilars in a dual approach. They are doing so via organic means or pursuing partnership and licensing arrangements with smaller developers. For innovators, carving new territories for capitalization and market share by reaching into broader segments, such as biosimilars, represents a clear example of these companies adding more dimension to their growth strategies.

While a climate advocating aggressive pricing and cost efficiency, naturally, offers opportunity and potential advantages for dedicated biosimilar makers, DeYoung notes that Big Pharma is better positioned to seize on the biosimilars uptick in the US—due to their ability to contribute robust infrastructure and market expertise.

"They have established extensive resourcing and presence in the marketplace," she says. "When we look at the development of bosimilars being quite complex and costly compared to small molecules, Big Pharma typically can afford those associated higher costs that, yes, while smaller than the reference biologic, can still range from $100 million to $300 million. The startup costs, therefore, are relatively negligible for big pharma comparatively. I think this gives them an edge in quality and reliability."

Nevertheless, even as commercial strategies shift—and proven cost savings have resulted from biosimilars in recent years (PwC predicts $43 billion in US healthcare savings by 2027)—there remain several challenges limiting their wider adoption by HCPs and use by patients. Along with the inherent manufacturing, development, and administration hurdles, newer or simmering disruptors are adding to the mix. Those include market access and reimbursement barriers created by the rebate structure between pharmacy benefit managers and manufacturers; other limited or misaligned incentives for HCPs to switch to biosimilars; the uncertain fates now, following the US presidential election, of legislation such as the Inflation Reduction Act, which includes provisions designed to encourage biosimilar uptake and formulary inclusion; and the complex legal rights arguments that remain for originator drugs.

"Purists may say that biosimilars run afoul potentially of IP protections of the reference biologics that they are building from," Meera Kanhouwa, MD, FACEP, global healthcare industry leader, Slalom, tells 

. "But the fact of the matter is the US is spending more on healthcare than any other OECD (Organization for Economic Cooperation and Development) nation and more per capita than the other top OECD nations combined. A large portion of that dollar goes to spend on pharma. So there is a need for biosimilars and biologics [together]. It may cause our traditional markets to have to shift and adapt in ways that they may not be ready for yet."

To that end, Kanhouwa notes the clear differences in the investment and resource level needed to produce biosimilars (roughly two to three years and a $100 million to develop) versus the reference biologic (maybe five to 10 years and $500 million), and without necessarily always proven differences in efficacy, which can complicate matters further.

"There's variability in terms of how that information is gathered, and with very rare exception, providers may lag a little bit as they wait to see data on the efficacy overall on the medication before prescribing it to their own patient base," explains Kanhouwa. "That's part of the natural lag [in adoption]. Plus, providers tend to be more risk-averse; they will trend toward using the medications that they are comfortable and familiar with."

Thus, the educational and transparency component around biosimilars, particularly as it applies to HCPs and patients, is critical. DeYoung reminds that biosimilar penetration still accounts for less than 30% of all biologic utilization, as HCP and patient perception is still not close to being on par with traditional generics.

"I think biosimilars need to continue to win confidence in the marketplace, which longitudinal data will help do," DeYoung tells 

. "Trust and behavior change over time. There's still opportunity to build knowledge for healthcare providers on the usage of biosimilars. There's such a burdened population, so the need for continuous improvement and process change is very real, but it's only one of the many items vying for a physician's time."

Adding to the matter is the flood of data that HCPs are burdened with today. "I heard something like if you started a practice in 1950, it took 50 years for medical information to double. Today it doubles every three months," says DeYoung. "It goes back to the connection with the HCPs and bringing them into the conversation, no matter what the pharmaceutical disruptors are."

Kanhouwa believes artificial intelligence-mediated tools and approaches can help alleviate this issue for HCPs by "enabling better information at the point of care and the point of decision-making."

Overall, one thing appears certain: For the biosimilars market to truly thrive, it may simply come down to greater transparency—into the process, the actual costs and savings, and everything in between.

Adds DeYoung: "Let's use the data in healthcare and technology to create a world where individuals and their healthcare teams can know exactly the financial and health choices out in front of them."

The biosimilars market in the US is on the rise, but barriers to greater adoption remain.

Seeking More Value, Less Cost 

Explore the latest pharmaceutical validation developments with industry experts from Barry-Wehmiller Design Group, Kneat Solutions, No deviation, and PCI. You’ll gain exclusive data-driven insights and discover emerging trends from the State of Validation 2024 industry report that are reshaping the validation landscape.


Recent Developments in Pharmaceutical Validation

If somebody asked for evidence of how the healthcare landscape is rapidly changing, a primary exhibit would have to be the growing importance of Integrated Delivery Networks (IDNs) and health systems. The numbers more than back up this assertion: Between 1999 and 2019, the share of physicians integrated into hospital-based systems more than doubled, rising from 19.5% to 43.5%, according to a recent publication in the Journal of Health Services Research & Policy.

This rise in health systems across the US has significant implications for stakeholders across all of healthcare, and the impacts are especially acute for pharmaceutical companies and market access professionals. IDNs and health systems are pivotal players in the effort to reach patients, with the power to steer drug utilization within and across their vast networks. Manufacturers risk falling behind without a comprehensive understanding of these networks’ needs and a targeted strategy to engage with them.

This is a brave new world for the pharmaceutical industry. Historically, market access strategies have been highly concentrated on payers. That remains an essential and highly relevant focus, given payers’ role in determining formulary placement, pharmacy networks, and patient cost-shares.

Yet the influence of IDNs and health systems simply can’t be ignored. Proprietary primary market research finds that more than 70% of polled healthcare administrators and healthcare professionals say health systems hold as much—if not more—influence as payers when it comes to their ability to prescribe oncology regimens, such as cancer immunotherapies.

Importantly, IDNs and health systems operate under different incentives and constraints than payers, which require different strategies and insights to secure market access. In the absence of stringent payer controls, the priorities and needs of health systems play a major role in driving drug utilization.

The goal for market access professionals is to understand these dynamics to secure lasting partnerships.

A health system’s drug utilization decision-making process will, of course, be influenced by clinical and safety considerations. But it will also incorporate a dizzying array of factors, including, but not limited to, capitation arrangements, delegated formulary, and utilization management services, the 340B Drug Pricing Program, quality metrics, and risk-sharing arrangements with payers. In addition, health systems and IDNs are also directing sites of care, pushing drug administration to their preferred locations. They take a multifaceted approach in managing these dynamics, hiring dedicated experts such as revenue cycle management professionals, benefits investigation specialists, and provider relations representatives, among others. Their many initiatives include launching education campaigns with providers, managing utilization protocols and guidelines (which may include order sets/infusion plans), and controlling drug administration through site-of-care preferencing and in-house dispensing.

To secure market access, biopharma manufacturers will need a thorough analysis of health system accounts to tailor strategies for different field teams effectively. Assessing the alignment of various health system affiliates, understanding financial arrangements, evaluating turnaround times for utilization management, and examining the influence of different insurance types and reimbursement mixes on prescription strategies are all critical. So, too, are identifying key network professionals and understanding how provider fee schedules from payers might impact drug use—particularly in non-capitated environments where incentives can vary dramatically.

This environment demands more than just a cursory analysis. While claims data provides a basic foundation of insights, primary market research is indispensable for capturing the subtleties of physician behavior. Our proprietary market research finds that 60% of polled prescribers self-adjudicated their prescribing decisions for oncology regimens based on their perceptions of health system utilization management barriers,

 a strong indication of how IDN and health system policies are directly shaping prescriber habits.

Manufacturers can begin by assessing high-impact areas, such as determining how population-based healthcare is delivered and financed. In one case study, primary market research helped biopharma manufacturers streamline the tangled web of Assignment of Benefit insurance nuances, incorporating unearthed lessons from health systems into their hub services to help patients get the treatment they needed more quickly. These are the kinds of insights that can uncover direct ways of engaging with IDNs and health systems as they take on an increasingly critical role in the healthcare ecosystem.

, MHA, Principal; both of Formulary Insights

Luo, Qian Eric et al. “A more complete measure of vertical integration between physicians and hospitals.” Health services research vol. 59,4 (2024): e14314. doi:10.1111/1475-6773.14314

Formulary Insights, Proprietary Market Access Research, 2024

In today’s pharmaceutical market access landscape, payers are not the sole decision-makers in utilization management development.

Biopharma Needs a Health System Strategy to Secure Optimal Market Access

US-centric forecasts are often inadequate when assessing the value of pharmaceutical drugs. In this article, we discuss the relative importance of key global pharmaceutical markets and the need to consider their unique regulatory, pricing, and market access requirements in sales forecasting.

It is easy to see why the US market commands so much attention from pharma forecasters—after all, it is the largest in the world. According to estimates from Statista and IQVIA, the US accounted for 43% of the global pharmaceutical market in 2023, followed by Europe at 19%, China at 8%, and Japan at 5%. This trend is mirrored when examining the revenue distribution of some of the largest pharmaceutical companies globally, using sales data from annual reports and SEC filings. (See Figure 1 below.)

Overreliance on US-centric forecasts risks overlooking critical factors in key markets such as Europe, Japan, and China, which collectively account for a significant portion of worldwide sales. While US sales projections often form the backbone of global forecasts, extrapolating these figures without accounting for the unique characteristics of other markets introduces significant risks and errors.

WHY US-CENTRIC PHARMA FORECASTS CAN FALL SHORT

While the US remains the largest market, it represents less than half of global pharmaceutical sales. The 80:20 rule suggests that to enhance forecast accuracy, it is essential to consider a few additional, large markets—specifically Germany (as the largest European market from which extrapolation to the rest of Europe is reasonable), China, and Japan—while maintaining a practical scope for sales forecasting efforts.

Healthcare markets outside the US differ markedly. In the US, drug prices are predominantly set freely, despite recent legislation, such as the Inflation Reduction Act, allowing the government to negotiate a limited set of drug prices under government plans. In contrast, Europe, Japan, and China are governed by strict health technology assessment-like government authorities that control price and market access, leading to significant disparities. For example, a study by the US Department of Health and Human Services found that drug prices across 32 countries varied by a factor of 1.7 to 7.8 compared to US prices. This analysis likely underestimates the differences, as it does not include China—a key global market known for significantly lower prices than Western countries. Moreover, the regulatory landscapes in these regions differ considerably from that of the US. While price discrepancies are widely acknowledged within the industry, the impact of differing regulatory decisions is often underestimated.

NAVIGATING REGULATORY NUANCES IN JAPAN AND CHINA

The likelihood of achieving marketing authorization can vary significantly between the West and markets such as China and Japan, with important implications for sales forecasts. To estimate the probability of regulatory approval, analysts typically rely on technical benchmarks such as the availability of surrogate markers, historical success rates in the target indication, and scientific expert opinions on the target drug’s risk/benefit ratio. However, these considerations often focus primarily on the US and Europe, neglecting region-specific factors outside the West.

One critical aspect often overlooked is ethnic patient representation or inclusion of local trial sites in pivotal clinical trials, which is essential for regulatory approval in China and Japan. Local data on ethnic Chinese and Japanese populations is generally required, even for (ultra)orphan indications where conducting large, international trials may be challenging. This requirement can significantly impact the likelihood of achieving marketing authorization and, by extension, the accuracy of sales forecasts.

For instance, gene therapies targeting orphan indications have struggled to gain approval in China and Japan. Currently, none have been approved in China, and only three from a total of 17 are approved in Japan. In China, 16 out of 17 of the pivotal clinical trials did not include trial sites in mainland China, which can help rationalize why none of the drugs are approved yet. A case in point is Novartis’ Zolgensma, which received clearance from the Chinese Center for Drug Evaluation to run an additional Phase III trial for the drug in China, highlighting the requirement for local Chinese data rather than relying solely on international data. The only exception so far is Elevidys, which included Chinese patients in its pivotal clinical trial package; it is expected that a regulatory filing in China may occur in the future, as the drug only received conditional approval in the US last year and has not yet been approved by the European Medicines Agency.

Similarly, Japan’s Pharmaceuticals and Medical Devices Agency (PMDA) has stringent requirements regarding ethnic patient representation. There are only three gene therapies currently approved in Japan: one from a Japanese company and two from Novartis, namely Zolgensma and Luxturna. For both of these treatments, there was significant scrutiny, as the evidence package included only a few Japanese patients. In fact, the PMDA mandated the collection of additional data post-approval, citing the very low numbers of Japanese subjects for both products. Further highlighting the necessity for local data, three gene therapy manufacturers are currently running additional standalone Phase III trials in Japan, in addition to their existing international studies—specifically for Adstiladrin, Hemgenix, and Roctavian.

These examples illustrate how country-specific regulatory factors can significantly affect the accuracy of sales forecasts, especially given the substantial contribution of markets such as China, Japan, and Europe to the overall value potential of pharmaceutical drugs. While it is common practice to base global projections on US sales forecasts, relying solely on historical averages of price and volume differences across countries may fail to capture the complexities of ex-US markets. Overlooking nuances in regulatory requirements and pricing and market access conditions unique to each region can lead to significant sales forecasting errors. Notably, ongoing regulatory reforms in Japan, aimed at streamlining approvals, could further shift market dynamics and should be closely monitored by investors.

Given this landscape, we suggest three underlying strategies or messages in particular.

 Limiting forecasts to the US can lead to significant errors; incorporating key markets such as Germany, Japan, and China helps capture a broader range of regulatory, pricing, and access challenges that directly impact valuation models.

Regulatory approval hinges not just on efficacy data but also on ethnic representation and local clinical trial involvement. These factors are crucial and can be dealbreakers for approval, affecting market timelines and sales forecasts.

Pricing and market access challenges are highly variable:

 Unlike the relatively free pricing model of the US, strict payer controls in Europe, Japan, and China result in significant pricing and access disparities that can alter expected revenue projections. Understanding these market-specific barriers is critical for accurate forecasts.

As the pharma terrain continues to evolve, staying ahead of these regulatory and market dynamics will be crucial for forecasters and investors alike. The future of pharma is global—are your forecasts ready to reflect that.

Na Wie, Partner; Joerg Tritschler, Partner; Martin Slusarczyk, PhD, Director; All with Simon-Kucher’s Life Sciences division

The importance of expanding your pharma sales forecasting horizon beyond the US. Learn how to effectively navigate country-specific regulatory red flags. 

Pharma Forecasting: Key Markets Investors Can’t Ignore 

This study demonstrates high-throughput analysis of BTEX compounds from several matrices (air, water and soil). Detection limits in the single-digit part-per-billion concentration range (by volume) are readily achievable within seconds using SIFT-MS because sample analysis is achieved without chromatography, pre-concentration, or drying. We also present a calibration approach that enables speciation of ethylbenzene from the xylenes in real-time.


Kim Wagner

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