The $ 240 bn biosimilar opportunity: Buddy up to succeed

Biologics have offered patients significant promise. They are therapeutic proteins that are manufactured from natural sources and have led to solutions for several unmet clinical needs. As an increasingly popular source of new drugs, they now represent more than 20 percent of the pharmaceutical industry that is now valued at close to a trillion dollars. However, the high cost of biologic therapies is great burden on healthcare costs globally and implies that majority of patients in markets such as India cannot afford these drugs. 

Most biologic therapies cost at least a few lakhs with some of them stretching to thirty to fifty lakhs for the treatment cycle. Given this grave challenge of cost and affordability, biosimilars or generic copies of these biologic drugs offer a ray hope to patients across the world. Commercially too, biosimilars are an attractive opportunity and we estimate that it will be close to $ 240 billion by 2030. At that point in time, it is estimated that close to half of this market size will be in emerging economies, with Indian market itself could be as large as $ 40 billion. 

As this opportunity becomes more tangible and regulatory clarity emerges across global markets, it is time to ask how Indian industry can succeed in this globally attractive opportunity. Can we translate our success in small molecule generics to biologics and extend our ‘Pharmacy of the world’ crown to this segment as well? 

We stand on a very strong foundation today. More than ten large companies in India have focused investments in biosimilars and the country boasts of a very active development pipeline. More than 60 biosimilar drugs are already approved in India. However, despite such corporate commitment, there is a deep abyss between the current state of engagement and sustainable commercial success with a global footprint. The challenge is two-fold. 

Foremost, the investment barrier for regulated markets is hard to surmount and needs to be broken. Cost of clinical validation in regulated markets for each biosimilar asset is close to $100 million to $200 million. For a portfolio of about five assets, a company has to shoulder binary risk of $ 650 million to $ 1 billion. This quantum of binary risk is unpalatable for most Indian companies and is the largest deterrent to success in the world’s largest markets. 

Second, the level of current market expansion in emerging markets such as India is very discouraging and could erode the return on investment for the biosimilars segment. For most Indian companies, the domestic market is a low hanging possibility as level of investment required is relatively low. Affordable biosimilars hold the promise of expanding access to majority of population that would otherwise be cut off from high cost biologic therapies. Hence, one can would anticipate that the market could expand multifold on launch of biosimilars.

Sustainable financial viability of the Indian biosimilars market relies on such market expansion. As of now, though the market is expanding on launch of biosimilars, the reach after three years of biosimilars launch is still only to a fraction of the patient population that should be getting access to the therapy. This is not only disappointing for the nation’s healthcare but also implies that return on financial investments in biosimilars could prove elusive for Indian companies. 

These challenges call for attention to commercial strategy and pathway to market. Though seemingly complex, the barriers can be addressed with a simple mantra - collaboration. It is time to break down the walls of competition and work together as an industry to steer towards collective success. Individually, the level of investment risk might seem hard to fathom. Risk sharing co-investment models could help industry reach out to the highest value markets.

Collaborations with global companies or even a consortium of Indian companies can accomplish this objective. Brazil is replete with examples where leading companies have collaborated with each other to collectively create a formidable force in biosimilars. 

Similarly, the solution for expanding markets could also lie in setting competition aside and pooling prowess across companies to multiply the momentum of market expansion efforts. Such market expansion will be required for continued financial viability in India and industry needs to be drive this solution. A lot is at stake given size of the opportunity, intense global competition and level of industry investments. Time for Indian industry to set aside solo efforts, blue lines of competition and buddy up to succeed.
____________________________________________________________________________________________________
Pushpa Vijayraghavan, director of Sathguru Management Consultants, leads the firm’s healthcare practice and advises companies on strategy, M&A and strategic partnerships