In part 1 of this two part paper, we indicated that even as the western markets are opening up to mAb biosimilars, Indian biosimilar companies have focused on home turfs. In the absence of a crystal ball and presence of several caveats, there is no telling how the market will shape up. The Indian market has been very receptive to biosimilars and the local biopharmaceutical companies have jumped on the bandwagon. As “present” are the big names such as Wockhardt, Biocon, DRL, Cadila etc. as local biosimilar market leaders, they are conspicuous by their absence in western markets. There seems to be no rush to enter the coveted US/EU markets. The BIG question – Is it strategy or is it incapability? We will explore this question in the second part of the paper and hopefully leave you, with a meaningful conclusion to draw.
Indian pharmaceutical players have built strong networks and market presence globally in the small molecule generics. It is quite evident that the key biosimilar developers such as DRL, Wockhardt, Zydus Cadila, are interested in leveraging existing capabilities and brand equity, in traditional markets of strength.
I attended a 2015, 7th Virtue Insight Biosimilar Conference in Mumbai, India with representatives from all the leading biosimilar developers in India . A key revelation was the acceptance that ex-US/EU markets are being prioritized over US/EU markets for developing and commercializing biosimilars. Several conversations with the meeting participants indicated that such an approach, has two advantages. First, the real-world experience and evidence to support their biosimilar claim and second, a rather early cash-flow to support high investments of the developed world owed to the ease of entry in India and similar EM countries.
At present the Indian companies seem to have missed the first wave of mAb biosimilars in US/EU markets. However, an accelerated entry can be, and is being made with strategic partnerships. Biocon is the front-runner, and has filed for approval of its trastuzumab biosimilar (MYL1401O) in both US and EU, along with partner Mylan [2, 3]. The company is also moving aggressively with its pipeline of bevacizumab, filgrastim, and insulin biosimilars. Such partnerships act as learning platform for the Indian companies and serve to mitigate the risks associated in a complex molecule product development. DRL also partnered with Merck Serono in 2012 . In a recent event, Merck sold its biosimilar unit to Fresenius . It remains to be seen how Fresenius and DRL will continue and/or modify the partnership and the impact of the same on DRL´s ambition of competing in the developed markets.
Other companies like Wockhardt, Zydus-Cadila and others have indicated an ongoing engagement with regulatory agencies and reaffirmed their intent of a US/EU play without promising any specifics on timeline and/or business model. Given the equivocation of the Indian biosimilar companies regarding US and EU, we see the following two scenarios for the future biosimilar play of Indian companies
Scenario 1: Biosimilars to become a Biogenerics Market
The overall strategy of the Indian biopharmaceutical companies is predicated on the belief that “biosimilars will become biogenerics”. Pioneers like Amgen, Sandoz, Pfizer will shape the nascent biosimilar market in US and EU. The Indian players will wait for biosimilars as a product class to become commoditized as the stakeholder experience, confidence and cost-savings related expectations increase. Leveraging the lowered barriers to entry e.g. development and commercialization costs and low-cost manufacturing, the Indian biosimilar developers will leverage cost leadership as a differentiator in the commoditized biosimilar market. In essence – enter late and play cheap!
This strategy hinges precariously on the assumption that India´s advantage as a low-cost manufacturing locale will persist in the coming five (or ten) years. The business model here remains in line with that of the small molecule generics – pricing.
Scenario 2: A Niche Semi-Branded Market For the 2nd Wave
This scenario is predicated on the belief that “biosimilars will evolve into a moderate margin, niche market”. Being fast-followers (of sorts), the Indian biopharmaceutical companies will enter the developed markets after 2020, with the second wave of mAb biosimilar products (e.g. Lucentis®, Kineret®, Campath®, Enbrel®, etc.)
The scenario is hinged on the assumption that the first wave of biosimilars will shape the market and create the necessary learnings for the Indian companies to compete, just in time, for the next wave of biosimilars. Indian players will develop new skills as it relates to branding and differentiated product development in due course of time.
This approach also assumes that market would not become overly price sensitive in the coming 5-10 years and that overall competitive dynamics will be well established and even late biosimilar products for Rituxan®, Avastin®, Humira® will be commercially viable if differentiated enough from the first wave of biosimilars, in US and/or EU.
Figure 1: Comparative view of the two comparable scenarios. A RAS LSS Consulting analysis.
The above market scenarios are just that – scenarios. It is evident that Indian companies have a safe-play in biosimilars. They intend to benefit from the current non-availability and/or poor access of innovator biologics in the semi- and non-regulated markets, leveraging their existing presence.
Is There a Gold Rush Somewhere Else?
We assume by default that US and EU represent the most attractive markets. But is it true for Biosimilars as well? Considering the macroeconomic factors (such as growing GDP, increasing per capita income, increasing healthcare awareness, ageing population etc.) will it be really necessary for Indian biosimilar companies to step out of the home turf for sustenance and growth? On the contrary, given the evolving market dynamics, how long would it be that innovators and pioneers from the western world will make a serious entry into the markets of historical strengths for Indian biosimilar companies? One could argue that India and other Emerging Markets represent a pot of gold, big enough and spread wide enough to keep the Indian biosimilar players busy for a long time. But then, one could equally argue that the winners of the here and now riches of the western markets will shape the global markets far more than local/regional players can ever will. Either way, it seems to us that Indian biosimilar companies have chosen to wait and watch before entering the western markets. The question is not “if”, its “when” and “how”. Stay tuned…