Western healthcare systems risk being denied access to a new generation of high-quality biosimilar medicines that can dramatically reduce costs. Low and medium-income countries (LMICs) look set to reap the rewards, owing to a combination of new technology and lower development and manufacturing costs.
Barriers deter biosimilars in the West
Technological advances in biosimilar production and a raft of biological medicines approaching their patent expiry date promised a new era of low-cost, high-quality bioequivalent therapeutics that Western health systems need to treat their ageing populations.
But incumbent biotechnology companies that don’t want their products to be undercut on price, combined with inflexible regulators, threaten to lock out innovators from their markets in the West.
Biosimilar innovation and the opportunity in the East
Instead, innovators are looking East to LMICs such as India, where biosimilar manufacturing costs are lower and patent-protected reference products have never gained market share because consumers couldn’t afford them. At a lower price point, generic versions of these often life-saving biological therapeutics are finding a growing market that can expand across multiple countries immediately after they gain approval from regulators.
The irony is that Western health systems – where reference products generally originate – now face a worrying combination of being locked into highly-priced ‘monopoly’ products and creating a sterile climate for biosimilar development and investment. This could lead to increasingly fragile supply chains as biosimilar production flourishes elsewhere.
Cost barriers to biosimilar development
In the West, the cost of developing a biosimilar for a typical monoclonal antibody therapeutic is estimated to be around $150 million. The U.S. Food and Drug Administration (FDA) and the EU’s European Medicines Agency (EMA) still insist on Phase 3 trials for all biosimilars which account for about $50 million of the cost.
Bioequivalence submissions require a large number of batches, which cost tens of millions of dollars for developers who have to use expensive Chinese Hamster Ovary (CHO) cells. Adding to the overall bill for developing a biosimilar are Western-level consultancy fees, employee salaries, and overheads, all of which contribute to undermining the commercial case for biosimilar projects.
Thin margins deter investors
To gain and sustain market share in the West, challenger products offering bioequivalence need to be priced at a discount to the incumbent market leader. In attractive markets, other biosimilars are also likely to enter the market. While lower prices can still deliver attractive investment propositions, manufacturing many biological therapeutics, including IgG monoclonal antibodies, requires expensive CHO or other mammalian cells with limited scope for cost reduction. This leads to thin profit margins, which limits the use of pricing strategies to gain market share from reference products already firmly entrenched in their markets.
Biosimilar pipelines in the West are already suffering from the investor perception of being higher risk, with less potential upside. Clearly, investor money is being redirected elsewhere.
Patent thickets heighten risks
Another risk to biosimilar projects in the West is patent thickets. They typically consist of process and formulation patents that owners of the original reference molecules deploy to extend their effective monopolies beyond the usual 20 years. Incumbents also frequently litigate against new entrants to deter competition. Even when new entrants are willing to invest the legal fees to defend themselves, the result is often an out-of-court settlement that effectively neutralises the biosimilar threat.
Indian developers embracing new technology can lead the way
The EMA and Indian regulators take a similar approach to regulation, but the cost of Indian companies developing biosimilars for Indian regulation is a fraction of the cost of a Western program.
Despite this advantage, Indian companies still need to make the often complicated biological therapeutic involved which is usually protected by layers of technical know-how closely guarded by the owners of the original reference molecules. They also have to develop a sufficiently profitable means of manufacturing that is compatible with the lower prices LMIC markets can afford to pay.
Fortunately, a new approach using QTL technology can strengthen the case for investment in such projects. QTL technology uses the power of evolution through breeding, screening and proprietary genomic analysis to optimise baker’s yeast strains. This enables proteins and peptides to be made in yeast that were previously difficult or impossible to do. Yeast is a lower-cost manufacturing process, and QTL technology can optimise strains to raise titre while reducing downstream processing. This can make a critical difference in delivering profitable biosimilars at a lower price point that is compatible with what LMIC consumers can afford.
