Where Einstein Meets Edison

Biotechnology Innovation: Emerging Opportunities in the Biologics/Biosimilar Market in the U.S.

Biotechnology Innovation: Emerging Opportunities in the Biologics/Biosimilar Market in the U.S.

Aug 12, 2010

“Generics” is a common term in the prescription drug business lexicon. Although generics market (Gx Market) sales have generally soared in recent years, the Gx market is predominant in countries with high healthcare expenditures. For example, in the US, healthcare expenditures reached over $2.2tn in 2007, accounting for 16% of GDP. Prescription medication accounts for over $200bn of that expenditure.1

The story of a generic pharmaceutical company (the proverbial ‘David’) attempting to overtake a large, branded pharmaceutical conglomerate (‘Goliath’) is an old tale, with deep roots dating back to the birth of modern medicine. With the confirmation of the Hatch-Waxman Act of 1984, policy guidelines defining bioequivalence of generic drugs to patented drugs were firmly established. Since then, generic drugs have helped mitigate the increasing cost of healthcare. In 2007, they accounted for 65% of total prescriptions, with steady growth (8-10%/yr).2  One can confidently state that generic drugs in the small molecule industry have been a proven success in US society.

Given this success and the overall benefit of generics in the US small molecule industry, why haven’t generics been adopted in the biologics industry? In order to fully understand this dilemma, one must have a full appreciation of the history of biologics. Unlike the long standing history of medicinal chemistry applications to drug development, biologics is a young industry.  It was introduced into mainstream medicine in the early 1980s, with the arrival of recombinant insulin, human growth hormone, and erythropoietin. Biologics is unique in that its manufacturing process is the key vehicle required for characterization rather than its precise composition. While traditional pharmaceutical products can be confirmed by exact analytical techniques such as mass spec, biologics are analyzed by less sensitive assays and rely on more variable components, such as cell lines protocol techniques. Therefore, by definition, two biologic agents from different production systems can never be identical, wherein lies the root problem for advances in biologic generics.3

The perfect storm is now brewing for biologic generics, referred to as biosimilars. A number of blockbuster biologics have or are expected to reach their patent expiration dates in the next five years. These intellectual property concerns, coupled with projections of a vast growth in market size ($76bn by 2020), point to a market boom in the next few years.

Yet, regulatory bodies continue to debate the merits of biosimilars and guidelines for evaluating these large molecules. The lack of regulatory consensus on safety and efficacy guidelines in biosimilars contributes to its adoption barrier. Currently, biosimilars require 10 years of research and development (including preclinical and clinical trials) and $100-200M. This estimate does not include the start-up cost of $250M-1B. In gross contrast, the average time for traditional generics is between 3-5 years at a cost of $1-5M, without clinical programs.4 Even with these extraordinarily high costs for biosimilars, there is still a significant cost savings that makes their existence in the market advantageous. Biosimilars have the advantages of being able to improve upon the experience gained and technologies used by the original biologic, and can therefore save time and money through more innovative technology, manufacturing practices, and clinical trial designs.

Legislation such as the Life Saving Medicine Act, The Biologics Price Competition and Innovation Act of 2007, and the current healthcare reform have attempted to address the issue of biosimilars’ adoption. Yet there have been no strong successes in paving the way for biosimilars. We will need to turn to our allies in Europe for guidance as to how to develop and implement successful regulatory criteria to evaluate biosimilars with respect to biologics.



  1. Brill, Alex M.  Proper Duration of Data Exclusivity for Generic Biologics: A Critique.  November 2008.
  2. Brill, Alex M.  Proper Duration of Data Exclusivity for Generic Biologics: A Critique.  November 2008.
  3. Genazzani et.al. Biosimilars Drugs: Concerns and Opportunities.  Biodrugs; 2007; 23(6) 351-356.
  4. Pharmaceuticals Key Trends 2010.  <Retrieved on April 2010, www.datamonitor.com>