07/04/2014 Biological/biotechnological and biosimilars market: the global outlook with special focus on Europe Biosimilar Medicines: 12th EGA International Symposium London, April 3rd 2014 Agenda • The Global Biologic Market − The increasing importance of biosimilars in the pharma portfolios − Recombinants shaping the industry • The Macro Biosimilars Environment − NOB Players in emerging markets − The biosimilar pipeline a focus on RA • Policy Implications • The trade-off between access and innovation 2 1 07/04/2014 Biologics growth continues to outstrip growth rate of total pharma Such a trend is putting additional financial pressure on healthcare budgets Biologics – Share of sales Global market trends Sales and Growth 8.4% 200 12% 7.9% 49.7% 180 10% 140 8% 120 100 6% 80 4% 60 40 12.6% Growth, LCUS$ Sales, US$ billions 160 21.4% Japan Pharmerging 13.1% 59.4% 0% 2008 2009 2010 2011 Biologics Sales 2012 US 5.3% 2% 2007 EU5 Biologics – Share of growth 20 - ROW 2013 10.0% Biologics Growth 12.3% Total Pharma growth Source: IMS Health, MIDAS, MAT June 2013 3 © 2013, IMS HEALTH Key therapies in today’s world LoEs have reset the stage from small molecules to biologics Europe Top 10 products 2008-13 2008 2009 2010 2011 2012 2013 1 LIPITOR LIPITOR LIPITOR SERETIDE HUMIRA HUMIRA 2 SERETIDE SERETIDE SERETIDE LIPITOR SERETIDE SERETIDE 3 PLAVIX PLAVIX HUMIRA HUMIRA HERCEPTIN ENBREL 4 HERCEPTIN ENBREL ENBREL ENBREL ENBREL HERCEPTIN 5 ENBREL HERCEPTIN HERCEPTIN HERCEPTIN LIPITOR MABTHERA 6 ZYPREXA HUMIRA LOVENOX LOVENOX MABTHERA REMICADE 7 LOVENOX LOVENOX AVASTIN MABTHERA LOVENOX LOVENOX 8 GLIVEC GLIVEC MABTHERA AVASTIN REMICADE AVASTIN 9 PANTOZOL ZYPREXA GLIVEC REMICADE AVASTIN LUCENTIS 10 SYMBICORT MABTHERA ZYPREXA GLIVEC SPIRIVA LYRICA Small molecule products Biologic products Source: IMS Health, MIDAS, MAT June 2013 4 2 07/04/2014 It’s the loss of exclusivity that drives interest. 12 compounds represent US$ 73 billion in sales All these products will lose patent protection by 2020, except Enbrel (US patent extended until 2028) Global Sales (MAT 09/2013), US$ billion 9.4 7.8 7.5 7.5 5.6 5.6 2016 Etanercept (Enbrel) 2015 2028 (extended) Infliximab (Remicade) 2015 2018 2014 2015 Rituximab (Mabthera) Expired 2018 Bevacizumab (Avastin) 2019 2019 Expired Expired 2015 2016 2014 2019 2017 2014 2015 2015 2016 2016 Insulin Aspart (Novomix, Novorapid) 5.4 Interferon Beta-1A (Avonex, Rebif) 5.1 Total ~ US$ 73 billion 4.8 4.3 4.3 Trastuzumab (Herceptin) Glatiramer Acetate (Copaxone) Pegfilgrastim (Neulasta) Ranibizumab (Lucentis) 5 US expiry date 2018 Insulin Glargine (Lantus) 6.2 0 EU expiry date Adalimumab (Humira) 10 Not considered existing biosimilars such as Epoetin Alfa expired in EU, but still patent protected in the US Source: IMS MIDAS, 09/2013, IMS Patent focus 5 Agenda • The Global Biologic Market − The increasing importance of biosimilars in the pharma portfolios − Recombinants shaping the industry • The Macro Biosimilars Environment − NOB Players in emerging markets − The biosimilar pipeline a focus on RA • Policy Implications • The trade-off between access and innovation 6 3 07/04/2014 In Europe, biosimilar usage exhibits different rates with Italy and Spain now catching up $US Millions Biosimilar sales across EU5 QTR 03/2007 – 12/2013 ($US) EU 5 countries 490M $ MAT 12/2013 40 Fast uptake at launch 35 Consistent uptake 30 Cultural resistance at first but change undergoing 25 20 15 10 5 0 Mar-07 Sep-07 Mar-08 Sep-08 Mar-09 Sep-09 Mar-10 Sep-10 Mar-11 Sep-11 Mar-12 Sep-12 Mar-13 Sep-13 France Germany Italy Spain UK Source: IMS MIDAS, MAT Dec 2013 7 Filgrastim excels in each major EU market Almost resembles small molecule generic efficiency in some countries Biosimilar uptake across TA/Countries MAT 12/2013 (Volumes, SU) Values, M$ 130 104 102 86 56 SPA UK % Uptake, SU 80% 70% 60% 50% 40% 30% 20% 10% 0% ITA GER ALL Filgrastim FRA Somatropin Ep. Alfa Source: IMS MIDAS, MAT 12/2013 8 4 07/04/2014 Dynamics differ not only by molecule and country but also by channel Biosimilars and originals breakdown (molecule vs. molecule only; and only reference products) Mar-13 Mar-12 Sep-12 Mar-11 Sep-11 Mar-10 Sep-10 Mar-09 Sep-09 Mar-08 Sep-08 Mar-07 Sep-07 Mar-06 Sep-06 Mar-13 Mar-12 Sep-12 Mar-11 Sep-11 Mar-10 Sep-10 Mar-09 Sep-09 Mar-08 Sep-08 Mar-07 Sep-07 Mar-06 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Sep-06 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% BIOSIMILAR PRODUCTS (R) ORIGINAL (H) Mar-13 Mar-12 Sep-12 Sep-11 Mar-11 Sep-10 Mar-10 Sep-09 Mar-09 Mar-08 Sep-08 Sep-07 Mar-07 Mar-06 Mar-13 Mar-12 Sep-12 Sep-11 Mar-11 Mar-10 Sep-10 Mar-09 Sep-09 Mar-08 Sep-08 Mar-07 Sep-07 Mar-06 Sep-06 ORIGINAL (R) Sep-06 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% BIOSIMILAR PRODUCTS (H) Source: IMS MIDAS Q2 2013. Analysis in DDD (Defined Daily Doses). 9 The temperature is rising again, biosimilar events are warming the global agenda ROW Market trends Regulatory 2012 Remsima (Infliximab Biosimilar) launched in Korea FDA approved Tbo-filgrastim but filed in the U.S. as BLA 2nd GSF approved in Japan 2013 Sandoz Omnitrope to be sole subsidised somatropin from Jan 2015 in NZ Teva announce launch of GRANIX in USA Herzuma (Trastuzumab bs) approved in Korea Jun Mar Jul Nov 2014 Europe Italy, largest Biosimilars market in EU* Market trends Regulatory N° of Biosimilar applications (EMA) all-time high (8) Biosimilar G-CSF (Zarzio) prescribed more than originator Inflectra# (Infliximab Biosimilar) approved EU Lilly & BI submission for insulin glargine biosimilar Follitropin alfa biosimilar approved Source: Secondary research. List not exhaustive. (*) at ex-manufacturer price levels, not including rebates and discounts. (#) Recommended for RA (Rheumatoid arthritis), CD (Crohn’s disease), UC (Ulcerative colitis), AS (Ankylosing spondylitis), PA (Psoriasis), PsA (Psoriatic arthritis) 5 07/04/2014 Relaxed regulatory requirements drives proliferation of Non Original Biologics in emerging markets Biologics Non Originals Originals True Innovator Type • Efficacy/safety improvements • Disruptive Description technologies, big advances in efficacy • Less stringent comparability • Affordable, high quality • Same target but • New drug against differentiated new target (e.g. Better efficacy, safety, administration) Target Non Original Biologics Biosimilars Bio-betters • Drug aiming at copy innovator • Clinical equivalence and comparability to originators • Focus on patient access, EMs Example 11 © 2013, IMS HEALTH Major opportunity exists in BRICs where NOBs account for 91% of the 16 markets Biologic size, $US Mn Retail only 0 1° CN 2° BR 3° RU 4° TR 5° MX 6° IN 7° TH 352 8° ID 177 9° VN 119 1° AL 238 2° AR 232 3° SA 165 4° EG 104 5° PK 96 6° VZ 62 7° CO 14 Recombinant NOBs uptake 16 Pharmerging markets NOBs 2.000 4.000 6.000 60% 40% 20% 37% 4.162 CN 2° BR 10° RU 4° 1% TR 14° 2% MX 13° IN 3° TH 6° ID 7° VT 1° AL 15° AR 9° SA 16° EG 8° PK 5° 2% VZ 12° 3% CO 11° 6% 3.923 23% 2.544 1.305 Russia 1.000 534 338 Turkey Pakistan Algeria Thai Egypt India Mexico VN China 44 Brazil 82 18% 41% 0% 30 Indo 130 30% 13% 927 6% Vietnam 0% 9% Argentina 22% Bubble size: NOBs 2012 $US Mn Rk 0% Retail only Rk BRICs countries account for 91% in value of the NOBs Pharmerging market. Three of them also come on top with regards to NOBs penetration Source: IMS MIDAS Dec 2012. Data is retail only for Algeria, Argentina, Colombia, Egypt, Pakistan, Saudi Arabia, Venezuela. (*) Size of NOBs could be underestimated in Mexico and Brazil due to panel coverage. 12 Uptake is based on recombinant and synthesised molecules. © 2013, IMS HEALTH 6 07/04/2014 NOBs have made significant impact in major biologic therapy areas Oncology Anti-TNF • Reditux was the world’s first non originator mAbs • Launched in 2006, one year before Enbrel, Yi Sai Pu had the highest anti-TNF sales in China, with ~$41m in 2012 • In 2007, it was priced at $243 for a 100 mg dose in a 10 ml vial, about 50% lower than the price of originator Mabthera (Roche)* • China has one the lowest RA prevalence in the world (undiagnosed contribute). As its population continues to grow, monitoring RA cases and biologic’s use important • Between 2007 and 2012, Reditux achieved in India 81% CAGR, it is now the 2nd largest oncology product in India (not considering Roche) • Yisaipu is also the least expensive among Anti-TNF Interferons • Launched end 2010 by Laboratorio Tutuer (AR) • Genfaxon won back market share from direct competitors (Rebif and Avonex) in tenders for Multiple sclerosis products within 7 Nosologies program (high cost part of DLO) • Genfaxon is now the 5th biologic product in Russia (PPG 90%) Source: IMS Health, MIDAS, MAT Dec 2012. AR: Argentina (*) Bloomberg 13 © 2013, IMS HEALTH The global playing field continues to expand with players finding niches Players differ not only in geographical spread but also a wider biologic portfolio # Pharmerging markets only International Reach Government backed players Emerging markets players Serving 2+ countries Domestic players Serving domestic market only* Source: IMS Health, MIDAS, MAT Dec 2012. (*) restricted to MIDAS sales data and recombinant and synthesised prods only. 14 © 2013, IMS HEALTH 7 07/04/2014 RA biosimilar development is a hive of activity Preclinical rituximab for unknown indication infliximab Avetux (Avesthagen) BioXpress Amgen/Watson Richter/Stada Harvest Moon AP052 (Aprogen) Coherus/Daiichi Sankyo – Early phase GS071 (Aprogen) Harvest Moon Tocilizumab rituximab for NHL BOW 015 (Epirus) Phase 3 Harvest Moon MabionCD20 (Mabion) CT-P10 (Celltrion) Golimumab Inflectra (Celltrion/Hospira) GP2013(Sandoz) rituximab for RA CT-P10 (Celltrion) Filed in EU/approved Harvest Moon TL011 (Teva) MabionCD20 (Mabion) MK-8808 (Merck) GP2013(Sandoz) PF-05280586 (Pfizer) SAIT101 (Samsung/Quintiles) BioXpress LBEC0101 (LG Life Sciences) TuNEX etanercept Certolizumab Harvest Moon BI-695501 (BI) Avent (Avesthagen) Biocon/Mylan Adalimumab Harvest Moon Coherus/Daiichi Sankyo BioXpress Biocon/Mylan BioXpress PRX-106 (Protalix) Source: IMS consolidation from public data Harvest Moon The list is not exhaustive Trials may have moved forward or being discontinued 15 Amgen/Watson Harvest Moon BioXpress Abatacept © 2013, IMS HEALTH Could we soon see the introduction of biosimilars shortly after patent expiry in this area? Each LOE could be closely followed by a biosimilar entry Inflectra (Remicade –Celltrion*) Rheumatoid Arthritis market GP 2013 (Rituximab - Sandoz) GP2017 (Adalimumab - Sandoz) New European market Entrants (estimate) 2013 Patent Expiries in EU5 (France, Germany , Italy, Spain & UK) 2014 2015 2016 2017 Remicade Rituxan Enbrel 2018+ Humira Cimzia Orencia Simponi RoActemra * Approved Sep 2013 Source: IMS Knowledge Link, PADDS Products in Phase 2 or 3 may not receive approval; pipeline view does not necessarily align with the projected competitive landscape in a given year 16 8 07/04/2014 Anti-TNF and MAbs are the key RA biologics Surveyed physicians estimate only around half of RA patients are currently still receiving their first line therapy Mild Moderate Severe NSAIDs 35.1% 35.0% 36.8% Cox-2 inhibitors 17.2% 16.7% 17.5% Traditional DMARDs 64.4% 67.7% 66.9% Biologic TNF inhibitors 8.6% 28.5% 40.7% Biologic non-TNFs 3.9% 12.2% 19.9% Novel small molecules 2.1% 3.9% 5.8% 19.3% 18.8% 19.0% Traditional Chinese medicine Traditional Herbal Medicine Corticosteroids 3.8% 1.5% 1.5% 15.8% 22.3% 37.8% First-line Second-line Third-line Fourth-line Fifth-line Sixth-line or more IMS primary market research, 2013(n=210), Countries included: China, Spain, Italy, France, UK, Brazil, Germany, Japan, USA Source: IMS Health Disease Insight 17 Thus a high rate of treatment switching exists in RA After 2 years, physicians estimate ~50% of RA patients switch to another therapy...an opportunity for biosimilars? Percent of RA patients switching from brand (%) 50 45 3 months 6 months 2 years 40 35 30 25 20 15 10 5 0 Methotrexate Enbrel Remicade Humira Rituxan/MabThera IMS primary market research, 2013(n=210), Countries included: China, Spain, Italy, France, UK, Brazil, Germany, Japan, USA Source: IMS Health Disease Insight 18 9 07/04/2014 One key understanding should be the role of medicines within overall cost of treatment Cost RA treatment cost distribution, 2008 25000 20000 15000 10000 5000 0 The per-patient cost of RA biologic treatment is high, with biologics representing ~22% of direct medical costs * Source: Access To Innovative Treatments in Rheumatoid Arthritis In Europe, 2009 19 New biologic launches continue and represent an ongoing challenge for upcoming biosimilars Superior clinical results will gain clinician and patient attention whilst associated costs will prove problematic for payers Originators Biosimilars adalimumab cetuximab New modern insulins Gazyva infliximab interferon beta etanercept New biologics rituximab Perjeta (pertuzumab) bevacizumab Lonquex (lipegfilgrastim) trastuzumab insulins 20 Kadcyla (trastuzumab /drug conjugate) SC Herceptin and Rituxan © 2013, IMS HEALTH 10 07/04/2014 Agenda • The Global Biologic Market − The increasing importance of biosimilars in the pharma portfolios − Recombinants shaping the industry • The Macro Biosimilars Environment − NOB Players in emerging markets − The biosimilar pipeline, a focus on RA • Policy Implications • The trade-off between access and innovation 21 Payers and policy-makers rise as biosimilar advocates Biosimilar strategies & business model will shape future scenarios Stakeholder drivers Payer / Government Physician Patient Aspiring player Originator Impact on biosimilars market • Healthcare rationalization • Ensure safety and clinical efficacy • Leverage macroeconomic growth through biosimilars Strong barrier Neutral • Safety and clinical efficacy concerns • Need to build learning curve on biosimilars • Reaction to differ by therapy area • Looking for broader and affordable access • Likely to be influenced by physician advice • Massive capital invested on biosimilars • Branded players bringing in R&D capabilities • Growing specialization along the value chain (CRAMS providers) • Lifecycle management • Patent disputes • Active players in the biosimilar arena EU, 2013 22 Strong driver EU, 2018 © 2013, IMS HEALTH 11 07/04/2014 The Biosimilar market of mature countries faces a paradox The largest biologic market potential and cost burden Low overall current impact of biosimilars Next wave of biosimilars will be challenging There are several indications that the status quo is about to change • The US and European biologic markets comprise the majority of value size and growth, we expect this to continue • As such, the majority of biologic cost burden falls on these markets –and potentially the most attractive non originals opportunity • Despite 7 years of biosimilars in the EU, and recent FDA guidelines, biosimilars comprise a very small % of the mature markets • Significant impact in certain TAs and countries, low overall • MAbs for oncology and autoimmune pose incremental acceptance and uptake challenges • Originators seek to move standard of care on bio-betters • We are entering an era with great potential for change in the biosimilars market... • Marked by the LoE of complex compounds used in large populations and foreshadowed by a number of "firsts" in what is being brought to market, by whom, and where. Will payers push for greater BS adoption as costs escalate? What adoption do we expect for the next wave of BS? To what extent is BS experience an indicator of future dynamics? To what extent is competition intensifying? 23 © 2013, IMS HEALTH The potential exists for a reverse innovation business model producing a threat to R&D in the West Biopharmaceutical industry Globalization Step 1 Step 2 Biologics R&D in mature markets and made in mature markets for EMs Biologics R&D in mature markets but made in EMs for EMs  Classic biologics R&D in mature markets Reverse Innovation Step 3 Biologics R&D in EMs and made in EMs for EMs  Emcure/Roche deal to  Molecules marketed manufacture antiin EM but not in cancer drugs in India Western markets for India (e.g. Ninotuzumab)  MedImmune JV with WuXi to develop novel biologics for China Step 4 Biologics R&D in EMs and made in EMs for the world  Celltrion’s bioinnovative pipeline CT-P19 (rabies virus)  Celltrion developing an armed antibody? Threat to major Western Biopharma Source: Model readapted from Vijay Govindarajan. The Economic Times. Nomura. 24 12 07/04/2014 IMS Health Thank You Alan Sheppard, [email protected] Stefano Di Biase, [email protected] Disclaimer The analyses, their interpretation, and related information contained herein are made and provided subject to the assumptions, methodologies, caveats, and variables described in this report and are based on third party sources and data reasonably believed to be reliable. No warranty is made as to the completeness or accuracy of such third party sources or data. As with any attempt to estimate future events, the forecasts, projections, conclusions, and other information included herein are subject to certain risks and uncertainties, and are not to be considered guarantees of any particular outcome. All reproduction rights, quotations, broadcasting, publications reserved. 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