The Indian pharmaceutical companies have been betting big on biosimilars for quite sometime in hopes to cash in on the potentially huge market. In 2017, the Indian biosimilars market was worth $2.2 billion and by 2030 it is expected to be worth $35 billion. As per CPhI’s bio league tables 2019, the growth potential of India in biosimilars is at 7.05 which is only slightly less than Germany (7.2), Japan (7.3), and the United States (7.8). India is also ahead of China (6.9) in terms of biosimilars.
This growth potential for biosimilars is also due to the support of the government subsidies and expiration of existing biologics patents.
India’s rising domestic market needs, potential of increased exports, and bio investments are the primary drivers of growth for the biosimilars industry. The country has over 70 approved biosimilars. The market penetration might be relatively low at the moment but it is expected to grow at a steady rate.
The big opportunity in biosimilars
According to a recent report, over nine drugs in the biologics category have either already gone off the patents or they will expire by 2025. The total revenue of these about to be expired drugs amounted to $62 billion in 2018. This inturn leaves a major opportunity for pharma companies looking to invest in biosimilars. It is expected that the revenue from these biosimilars will grow at a rate of 24 percent annually for seven years making up to $13.3billion by 2025.
It is predicted that by 2030, the global biosimilars market will be worth $240 billion and the Indian market will be over $35 billion. The global biosimilar market will also witness a steady growth. In the 2018-2023 period, the market is expected to grow at a compound annual rate of 36 percent.
But a lot will depend on other factors like regulatory guidelines, critical technology, and the price difference between biosimilars and the underlying biologics. For instance, in Europe, the difference between the two widened to over 60 percent for some drugs, from just 20 percent a few years ago. The bigger the difference, the easier it will be to adopt biosimilars.
The big pharmaceutical companies in India like Glenmark Pharmaceuticals, Zydus Wellness, and Biocon are actively focusing on biosimilars. Biocon alone was able to earn approximately Rs 1,517 crore from biosimilars in FY19, which is almost 28 percent of their overall revenue.
Here are some of the business models that the Indian pharma companies are adopting to take advantage of the biosimilars opportunity:
The gestation periods between initial investment and commercialization are long because of the capital intensive nature of developing biosimilars. To get rid of this problem, some Indian companies are adopting the partnership model where they develop and supply the drug and their partner companies make the necessary regulatory filings for the biosimilars and commercialise it. The companies then split the profits.
The partnership model definitely takes care of the financial, commercial, and regulatory burdens which is why most big pharma companies are now taking part in it.
Dr Reddy’s partnered with Fresenius Kabi, while Biocon partnered with Mylan and Novartis. The latter was able to move at a good speed by securing necessary approvals from the US and Europe regulatory markets.
Companies like Lupin that started late are now going solo for the development of biosimilars. Instead of gradually approaching the bigger markets, Lupin has directly undertaken clinical trials that allow it to launch biosimilars in markets like the US, Europe, Australia, and Japan. Although, it has partnered with other companies to help with the commercialisation.
Similarly, Aurobindo is another late company to enter the biosimilars domain. It has bought four biosimilars from a European company, TL Biopharmaceuticals, for global clinical development and global launches. While this is definitely a risky route, it saves time to market which in turn leads to higher return on investment.
Companies like Torrent Pharma and Cipla are following the in-licensing model to enter the biosimilar market. Under this model, the company’s license the biosimilars from other companies instead of developing it on their own and then launch it in India or other developing regions.
While Cipla has already discontinued the biosimilars development programme in the company, Torrent Pharma has no plans of developing biosimilars any time soon.
This allows them to save time which they can in turn use to market biosimilars in a faster and more effective way. The obvious limitation of this model is that the companies have to share their revenue and profits and they have no control over the supply or quality of the product.
The estimated cost of developing biosimilars in the global markets is around $75-250 million. The need to establish the safety and effectiveness of the drug means that the pharma companies have to spend millions of dollars on clinical trials. But the huge opportunity of biosimilars, especially in India is definitely worth the investment for pharma companies
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