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Indian drugmakers see unique opportunity in biosimilars

Generics producers bet big on a market projected to hit $12.1bn in 2020

A Biocon employee tests drugs in one of the company's pharmaceutical labs. (Courtesy of Biocon)

BANGALORE/NEW DELHI Indian pharmaceutical companies, which dominate the global market for generic drugs, are gearing up for their next big opportunity: developing an innovative class of complex drugs when the original products, which generate sales of up to $60 billion a year, go off patent in advanced industrial economies.

The new drugs, called biosimilars, are an alternative form of biologic medicines made from living organisms. To be cleared for sale, makers must show that the biosimilars have no clinically meaningful difference with their biological reference products in terms of safety, purity or potency.

"The U.S. and Europe are finding biologics increasingly expensive and so there is a compelling self-interest for these economies to seek biosimilars" to lower costs, said Kiran Mazumdar-Shaw, chairman and managing director of pharmaceuticals group Biocon. "Margins are rich in this segment, and I think that's a compelling reason why people want to get into biosimilars," she said.

A worldwide shift is underway. "The global life-sciences industry is moving gradually from chemical-based drugs to biologics," said Utkarsh Palnitkar, head of the Indian life sciences practice at consultancy KPMG. His company projects that the list value of annual biosimilar sales will rise to $12.1 billion in 2020, from $2 billion last year.

Within India, the market is expected to grow in that period to $1.1 billion, from $186 million. "The domestic biosimilar market is looking attractive given the launch of new products, growing acceptance of biosimilars and the entry of many new players," Palnitkar said.

Biosimilars are far more complicated to manufacture than synthetic generic drugs. Companies need to deal with complex national regulations and higher clinical trial costs.

According to the U.S. National Center for Biotechnology Information, the investment needed to develop a generic drug ranges from $1 million to $4 million. That compares with $100 million to $250 million for a biosimilar.

The center puts the general cost savings for biosimilars, compared with biologics, at 15% to 30%; generic drugs, by contrast, cost 50% to 90% less than branded drugs.

Earlier this month, the World Health Organization announced a pilot project to "prequalify" biosimilar versions of two drugs: rituximab for chronic leukemia and trastuzumab for breast cancer. This will make such biosimilars eligible for distribution in emerging markets and could help Biocon, Dr. Reddy's Laboratories and other Indian companies working on these formulations.

In February, the U.S. Food and Drug Administration launched a review of Biocon's biosimilar Pegfilgrastim, an alternative to Neulasta, a biologic made by Amgen that is used to reduce the chances of infection following chemotherapy for certain types of cancer.

Biocon's research and development center (Courtesy of Biocon)

Pegfilgrastim is one of six biologics Biocon codeveloped with U.S. pharmaceutical company Mylan. Recently, the Competition Commission of India ordered an investigation into allegations that Swiss drugmaker Roche tried to block maker access for the biosimilar to trastuzumab, made by Mylan and Biocon.

"Over the years, we expect biosimilars to contribute very significantly to Biocon's growth," Shaw said. "We are already supplying a large number of biosimilars to many emerging markets, and when we get regulatory approval in the U.S. and Europe, we expect biosimilars to contribute about 20% of our top line."

PATH TO MARKET Last June, the Central Drugs Standard Control Organization, the Indian equivalent of the FDA, announced new guidance for biosimilar drug development and eased procedures for taking drugs from clinical trials on to market.

This has sparked a race among Indian companies. Generics producer Cipla has earmarked $130 million for biosimilar development. Aurobindo Pharma has doubled its research budget to $80 million, with a focus on biosimilars.

Reliance Life Sciences bought the global rights for biosimilars of infliximab, a drug that treats arthritis, from bankrupt Boston-based Epirus Biopharmaceuticals last July. Zydus Cadila, another Indian pharmaceutical company, has tied up with Turkey's Eczacibasi Ilac Pazarlama to market biosimilar products in that country.

Biocon has partnered with Fujifilm Pharma to sell glargine, an insulin analog, in Japan. The drug, launched last July, was the first Biocon biosimilar approved for sale in a developed country and the first from an Indian company approved in Japan.

"Japan is very keen on embracing biosimilars as the path forward," Shaw said. "Because of the aging population and because of the need to keep health care costs down, they very much see biosimilars as a very integral part of the health care strategy."

While some of the companies developing biosimilars have raised concerns that U.S. President Donald Trump's protectionist stance could harm the industry's prospects, Shaw is upbeat.

"The U.S. health care system already depends a lot on generics, and they need affordable biopharmaceuticals to bring down costs," she said. "From that point of view I don't think we are placed badly. I believe that India is a strategic partner for the U.S. in its health care models -- in drug innovation, drug development and finally developing these affordable drugs for the U.S. market."

However, failures in trials, a lack of trained personnel and cost overruns are all potential hazards for biosimilars, along with competition from companies in China, South Korea and Turkey.

"If the regulatory path does not simplify, then [companies] will have to keep spending money," Shaw said. "But I believe that as the regulators in the U.S. and Europe gain more comfort with biosimilars, the pathway will likely clear and costs will come down."

Indian drugmakers are no strangers to U.S. regulatory tangles. According to a tally by Indian credit rating agency ICRA, the FDA issued around 50 warning letters to Indian companies for deviations in clinical procedures and product testing between 2008 and 2015. Of these, about 40% were converted into alerts against imports of the companies' products. Sun Pharmaceutical Industries, Dr. Reddy's, Cadila Healthcare and IPCA Laboratories all faced FDA pressure in 2015.

The FDA inspected Biocon's plant in Bangalore last month, noting processes that may constitute violations of U.S. regulations and alleged discrepancies with submitted information. Biocon said it has responded to the FDA's concerns.

Development of biosimilars may create relatively few jobs in India, since pharmaceutical manufacturing is highly automated, but it could intensify competition for talented workers across South Asia. "Even for Biocon, I don't think 'Make in India' is about huge [numbers of] jobs being created, but it is more about [gross domestic product] contribution," Shaw said.

"There is no excuse for India not to be good at doing what we are doing in this field," she said. "I think biotech and life sciences have a very rich talent pool, and I personally believe that if we don't leverage this rich talent pool in various ways, we are missing a huge opportunity."

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