Biosimilar drugs: spot the difference

Big pharma groups crushed by patent expirations in the first decade of this century spent the second rushing into biotech. Biotech medicines - proteins grown from live cells - had effectively infinite patents. There was no regulatory route to market for copies of drugs with expired patents. In the US, the Affordable Care Act of 2010 set up a path. And finally, last month, the US authorities approved a biosimilar of Amgen's Neupogen, a drug with more than $1bn in annual sales.

There are still hard questions for regulators, health insurers and doctors. The drugs are complex; the original and the biosimilar are not identical. It is not perfectly clear if the differences matter. So should biosimilars of the same drug from different manufacturers have different names? Should pharmacies fill prescriptions for the original with its biosimilar? If a biosimilar is approved for one condition treated by the original, does the approval cover the other conditions, too?

Given these ambiguities - and the fact that biosimilars are tricky and expensive to become approved and to produce - the market has been sanguine about the impact of biosimilar competition on originators' profits. Shares in groups reliant on biomedicines with patents near expiry (AbbVie and Roche, say) appear unperturbed.

This relaxed view may be mistaken. Big companies with lots of biotech experience - Amgen, Roche, Biogen Idec - are committing piles of capital to biosimilars. In Europe (where these have been taking hold, slowly, since 2007) a biosimilar for Merck's blockbuster Remicade is starting to hit sales hard. Biosimilars will grow gradually, but the issue is less about market share than how a cheap alternative affects the original's price.

There is much work ahead. And originator companies will fight hard. But if the biosimilars work perfectly well (so far, they seem to) the economic pressure on all health systems will probably carry the day, in time. Liberum, a rare research house that takes biosimilars seriously, thinks these will keep Roche's margins flat for the next five years. Consensus calls for a big margin expansion. The next decade will be interesting.

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