Biologics worth $19 bn to lose patentGrant Thornton

Companies forging alliances in biologics or biosimilar products as it involes complexities

Twenty one biologics with a market value of about $54 billion will be losing patent protection by 2019 in the US alone. Of these, seven drugs with a market value of $19.4 billion would go off patent in the current year itself, said a latest Grant Thornton report on biosimilars, the approved similar version of biopharmaceutical products.

The bulk of global revenues for the Indian generic drug firms comes from the US market, and now a similar opportunity is also coming their way in the form of biosimilars, it said.

All the major Indian generic drug companies, including Dr Reddy's, have already made initial strides into this space in the wake of an impending patent cliff wherein the off patent opportunities in chemical drugs are expected to shrink substantially by 2016.

Though the present biosimilar products are confined to emerging markets, their subsequent entry into regulated markets like the US will make a big difference to the Indian generic drug makers.

A regulatory pathway has already been created by the US government for the abbreviated approvals of the biosimilars under the Biologics Price Competition and Innovation Act (BPCI Act). However, it is going to be quite tough to get such approvals as the product has to be highly similar to the existing biologic. Only minor differences in clinically inactive components in terms of safety, purity and potency are allowed.

In the light of complexities involved in developing biosimilars, including higher costs and access to regulatory markets, the companies, including Indian players, have been forging alliances specifically in biologics or biosimilar products.

The year 2009 marked the beginning of the biosimilar era with five key alliances. The collaborations continued for the next three years with 17 alliances in 2010, 12 in 2011 and 15 in 2012. While 30% of the alliances were structured as acquisitions, the others were collaboration agreements for developing, licensing and or marketing, according to the report. India accounted for 12% of these deals.

With rising healthcare costs, the impending patent cliff, and a relatively slow pace of development of generics the development of biologics is regarded as one of the most promising frontiers in pharmacotherapy with biosimilars expected to have a global market of $3.7 billion by 2015. One of the key drivers promoting the development of biosimilars is affordable alternative to originator medicines by 20-25% due to reduced number of clinical trials, it said.

However, the value generation opportunities of biosimilars is dependent on several factors, including speed of development, clarity in regulation, ease of access and particularly the role of all the stakeholders, says Mahadevan Narayanamoni, national leader, healthcare and life sciences of Grant Thornton India LLP.

"Potential aside, there remain regulatory challenges, success of clinical trials as well as safety and efficacy of tests, which are characterised by huge investment outlay," he stated in the report.