Indian biosimilar market likely to touch $1 billion in three years

The Indian biosimilar market is poised for big growth, augured by the launch of new products, growing acceptance of biosimilars and the entry of new players like Aurobindo Pharma. It is expected to increase from $186 million in 2016 to $1.1 billion in 2020, according to industry estimates.

Indian life science firms are investing in biosimilar development to tap this growing opportunity. They are also establishing manufacturing facilities in other countries to serve the local and export markets. Several of them are opting for acquisitions and alliances to get biologics skills and the latest manufacturing technologies to be able to succeed in the complex regulatory environment.

Recently, Aurobindo Pharma has forayed into biosimilars development by acquiring four cell culture-derived products from Swiss firm TL Biopharmaceutical. With this, it is developing an overall portfolio of dozen biosimilars. Around 70 per cent of clinical trials of these products might happen in India, while the rest might take place in other countries.

The pharma major has established a research and development (R&D) centre for biologics development in Hyderabad. It is also setting up a manufacturing facility at the same campus, which would be ready by this September. However, the company did not disclose the investment details.

"With $60 billion worth of blockbuster biosimilar drugs going off-patent in the US alone, the opportunity for Indian players in this space is significant," Utkarsh Palnitkar, KPMG India head (life sciences practice), said.

Indian biologics has already established its footprint in global markets. The demand for biosimilars is bound to increase with more complex biologics going off-patent as compared to small molecules in the near future.

According to KPMG, the global life sciences industry is gradually moving from chemical-based drugs to biologics with the sales contribution of biologics expected to increase from 24 per cent in 2015 to 27 per cent in 2020. Out of this, the global biosimilar segment is expected to increase from the current $2 billion to $12.1 billion within the next three years.

Development of biosimilars is dependent on significant investments, not only in terms of time required to bring a single drug to market but also the cost associated with its research.

In 2013, Bengaluru-based biopharma company Biocon had collaborated with the US pharma giant Mylan for development and commercialisation of generic biologics. Last year, Hyderabad-based Dr Reddy's Laboratories had partnered with TR-Pharm, a start-up from Turkey, for three biosimilar products.

According to Ernst and Young's national leader of life sciences practice Hitesh Sharma, a company would have to spend around $50-150 million to set up an R&D centre in India, which would include other expenses such as clinical trials. This cost would be 10-20 times more in a regulated market like the US.

Aurobindo had incurred Rs 411.89 crore towards R&D expenses, which was around 3.5 per cent of its revenues during the last financial year. These expenses might go up to 5-6 per cent of the sales in the next couple of years, the company said.

The substantial opportunity offered by biosimilars would be challenged by regulatory hurdles along with the cost associated with conducting clinical trials in various geographies. Additionally, setting up and running a manufacturing plant for biosimilars is costlier than that for small molecules.