Seeking More Value, Less Cost

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.

COMMERCIAL JOCKEYING

In a conversation with Pharmaceutical Executive, 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.

Johanna DeYoung

"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."

PATH STILL BUMPY

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.

Meera Kanhouwa

"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 industry leader, healthcare, and chief medical officer, Slalom, tells Pharm Exec. "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."

ALL ABOUT EDUCATION

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 Pharm Exec. "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."