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Strategies for biogeneric success
This article discusses the nature of generic
biopharmaceutical products, and the barriers to their entry
into the market. It concludes that there are substantial rewards
to be had for the first company to be successful, but that
market entry may take longer than many observers think. To
be successful a company must be able to make the product to
the required quality standards, to navigate the emerging regulatory
pathways successfully, and to market the product effectively.
In each case, the challenge is different, and more complex,
than that facing synthetic generic products.
What are biogenerics?
“Biogenerics” is a shorthand term for generic
forms of biopharmaceuticals — molecules developed using
biological processes, usually through modern biotechnology
activity. In the case of synthetic pharmaceutical products,
generics can be defined as those molecules which when compared
with the originator product:
Are chemically identical to their branded counterparts Are bioequivalent Have essentially similar activity Achieve market authorization through an abbreviated procedure following patent expiry.
Biogenerics are rather more difficult to
define. Taking recombinant human growth hormone (rh GH) as
an example, there are a number of different versions on the
market already, but these have not been tested for bioequivalence
and all went through the full procedure for market authorization.
It seemed last year that Omnitrop, Sandoz’ version of
rh GH, might be the first biogeneric in Europe when it was
recommended for approval by the CPMP (now CHMP) on the basis
of a somewhat abbreviated market authorization procedure,
but the European Commission, the ultimate authority, declined
to approve it on procedural grounds. This has cast serious
doubt on the European Commission’s ability to rule on
a case-by-case basis. However, if the ongoing dispute over
procedures between the CHMP and the Commission can be resolved,
Omnitrop could yet be the first true biogeneric in the European
market.
To take a further example, PEGIntron would not comply with
the definition of a biogeneric, since it did not go through
an abbreviated procedure to achieve market authorization.
Importantly it also displays different clinical characteristics
from the original recombinant human interferon alpha (rh IFN
alpha) and therefore is not bioequivalent. Instead, it could
be characterized as a second-generation biological product.
Recombinant human erythropoietin (rh EPO) is an example of
a product that could meet the biogeneric definition. Two companies,
Pliva and GeneMedix, have submitted proposals to the EMEA
for marketing approval of their molecules via an abbreviated
route. The EMEA has indicated that it is satisfied with their
approaches. So perhaps these may be among the first biogenerics
to enter the European market.
How big is the biogenerics market?
Europe and the US represent the largest pharmaceutical markets,
with the highest prices and therefore the potential for greater
profits. They are consequently becoming the focus of biogeneric
manufacturers’ plans. Figure 1 illustrates the size
of the market potentially available to the biogeneric manufacturers.
Who are the players?
When biogenerics were first under discussion there were probably
around 15-20 companies indicating their intention to become
involved in the market. However, there are now probably less
than 10, and possibly as few as five, serious contenders with
the ability to bring biogeneric products to the market in
Europe and the US in the foreseeable future. In the past few
years, the environment for potential biogeneric companies
has changed significantly and consolidation has started. For
example, Sicor originally acquired Biotechna UAB, Lithuania;
then in late 2003, Teva acquired Sicor. In 2002, Novartis
purchased Slovenian generics company Lek, the third largest
player in European generics.
There seems some consensus that the main biogenerics companies
in Europe will be Novartis, Pliva, Teva and BioPartners and
possibly BioGeneriX. In the US, the main contenders are likely
to be Cangene and Transkaryotic Therapies. Companies which
are beginning to identify themselves as protein manufacturers
such as GeneMedix may not be successful on their own; they
may be too small and will need to partner to remain in the
competition. There is also the question as to whether any
of the Indian companies, such as Wockhardt and Ranbaxy, will
be successful in penetrating Western markets with biogenerics.
So, when will biogenerics reach the market?
The first companies will take time to gain entry to the market;
but once this has happened, the biogenerics market will evolve
more rapidly. The biogenerics market will be different from
the generics market. There will be fewer players because of
consolidation, reflecting the complex manufacturing processes,
difficulties in gaining approval and the high cost of successfully
marketing products. It will be three to four years before
the limited numbers of main players have their first products
on the market. Most consider that these main players will
have the market to themselves for the first few years.
The earliest that biogenerics are likely to come to market
is 2006, for the simpler-to-make products, such as rh G-CSF,
rh GM-CSF and first-generation rh EPOs. The possible exception
to this could be Omnitrop, although the uncertainty about
market authorisation remains.
There is plenty of potential for delay along the route:
Uncertainty about the regulatory procedure and the
nature of preclinical and clinical evidence required, in both
Europe and the US. Innovators employing delaying tactics aimed at preventing
biogenerics from taking shorter routes to approval. Development of second-generation products that are
significantly better than the originals, meaning that original
product are unlikely to take significant market share.
Which markets?
Many companies appear to be focusing their efforts on Europe,
because they see the regulatory and intellectual property
environments as less inhibiting than the US. However, even
within Europe, there are still significant barriers to market
entry. It is likely to be several years before generic competition
has a significant effect on the market, probably longer than
most potential players acknowledge in their public statements.
Public authorities might be expected to promote biogenerics,
encouraging price competition to ease the burden of payment
for biotechnology-derived treatments, which are usually viewed
as expensive. However, this is unlikely to be the strategy
that the early biogeneric entrants will wish to adopt, having
had to invest significantly to:
The investment required is substantially more than was envisaged
just ten to fifteen years ago, when companies began to consider
their involvement in this area. In addition events in 2003,
mainly the controversy involving the safety of rh EPO, may
have raised the risk aversion of both EU regulators and clinicians.
The general view is that the US will represent a harder market
for biogenerics to access. The “big pharma” lobby
and the originator companies are influential, and patent expiry
is typically later. The regulatory situation is complex and
becoming increasingly legalistic. The biotechnology innovators
are likely to challenge every change in legislation and every
decision of the FDA, essentially employing effective delaying
tactics. Changing current regulations will need strong political
intervention. While there is some evidence that this is starting
to occur, the process is unlikely to be completed quickly.
How to be a success in the biogenerics market
Success or failure in the Western biogenerics market will
depend on avoiding or circumventing the barriers to effective
market access that currently exist,and employing the best
business strategies.
To succeed, companies must be able to answer three questions,
which each encompass both barriers and strategies (see figure
2):
Can you make the product?
Production of biopharmaceuticals remains a relatively complex
science. Many argue that subtle differences in the genetic make
up of these products, caused by slightly different manufacturing
processes, place a question mark on their safety. Thus, there
is a very real requirement to ensure that the conditions and
manufacturing base are correct. Many companies are already manufacturing
biopharmaceuticals worldwide, although not all will be carrying
out the necessary processes to GMP standards. Some companies
are working in relative secrecy. Once patents have expired and
interest can be declared, it may be apparent that there are
more players on the scene, although not necessarily producing
to the required standards for the Western world.
Whilst improvements in science and technology have made it possible
for companies to gain entry to the biogenerics market, the need
to show compliance to GMP will limit the number of companies
approaching Western markets in future. If companies in less
regulated markets cannot demonstrate compliance with GMP, they
will not be able to take the first steps to enter the more regulated
Western markets.
There are a number of possible strategies interested companies
can adopt to overcome manufacturing barriers, including:
Acquire biopharmaceutical expertise. Collaborate to gain access to production technology. Gain production expertise outside the EU, with a view
to importing products Move production facilities initially established in
Eastern Europe, India or China inside the EU.
There are examples of all of these strategies:
In October 2003, Teva purchased Sicor, completing the
acquisition in January 2004 in a cash and stock deal worth US$3.4
billion. The deal was designed to gain Sicor's expertise in
generic injectable drugs and its capabilities in biogenerics.
Bill Fletcher, chief executive of Teva's North American operations,
said after the acquisition
“Sicor sells only a few injectable biotechnology medicines,
including an interferon sold in China. But Teva is eager to
get the expertise needed to make far more such ‘biologic’
medicines. We need to get the science of biologic drugs inside
Teva so we can have a dialogue with regulators and politicians,
to help them see that generic versions of them are safe and
effective." In the 2001 collaboration between Stada and DSM, DSM
provides the technology and production knowledge, whilst generics
manufacturer Stada will take care of the approval process and
the product marketing. The Indian company Wockhardt has established a biotechnology
park in Aurangabad, designed according to US FDA standards.
This facility houses a range of new biotechnology products that
are at various stages of development. At the same time, Wockhardt
is building up its presence in both European and US markets
via a series of acquisitions. GeneMedix has moved production of its rh EPO, initially
developed in China, to a dedicated GMP plant in Ireland. GeneMedix
is using the development program for rh EPO at this Irish plant
as the basis of their negotiations with the CHMP regarding data
requirements and size of clinical trials required for authorization.
The company estimates that its rh EPO could be on the European
market in 2006. (However, GeneMedix has retained its rh G-CSF
production plant in China, and has made significant investments
to bring this plant up to the standards required for Western
markets.)
Can you bring the product to market?
After solving any production issues, the next barrier is in
gaining access to the market. The two key barriers are:
Regulatory barriers Innovator strategies.
Regulatory barriers
In the past, the EU regulatory authorities have been more flexible
than those in the US. In their public pronouncements, they have
taken a more liberal position on the biogeneric approval process
since 2001. In addition, unlike the US situation, the basic
regulatory framework and processes are the same whether a pharmaceutical
product is of biological or synthetic origin.
The EMEA has been considering how to implement an abbreviated
procedure for biogenerics. A consultation document was issued
in July 2002, followed by a Directive in June 2003 (Directive
2003/63/EC), which for the first time makes specific reference
to the licensing of “similar biological medicinal products”.
In December 2003, the CPMP gave final approval to “Guideline
on comparability of medicinal products containing biotechnology-derived
proteins as active substances — non-clinical and clinical
issues”. This guideline came into operation in June 2004.
The document is intended to give further guidance on the non-clinical
and clinical data that might be required in situations where
comparability might become an issue.
Essentially the EMEA appears to be moving towards a requirement
for increased post-marketing surveillance of safety, specifically
including consideration of immunogenicity issues. This increased
focus on immunogenicity will look for clinical data in the majority
of cases; there will need to be further investigations over
any difference in quantity or type of antibody generated. A
pharmacovigilance plan and specification will also be a future
requirement for biogenerics manufacturers as part of the approval
process
In the US, early biopharmaceutical products were regulated under
standard pharmaceutical legislation under the control of the
Center for Drug Evaluation and Research (CDER). These early
products were governed by the Food, Drug, and Cosmetics Act,
and later Hatch-Waxman. A separate process was then developed
specifically for biological products, supervised by the Center
for Biologics Evaluation and Research (CBER). Approval for market
for most biotechnology drugs is therefore under the Public Health
Service Act (PHSA), used to regulate vaccines and serums in
the early 1900s.
In June 2003, the FDA transferred oversight for many new biotechnology
therapies from CBER to CDER. The move provided FDA with an opportunity
to examine its policy on generics. Much of the continuing debate
in the US hinges on whether biogenerics should go through the
simplified approval process allowed under section 505(b)(2)
NDA. This is a controversial hybrid statutory approval mechanism
established by the Hatch-Waxman Amendments to the Drug Price
and Competition and Patent Term Restoration Act of 1984. Section
505(b)(2) was initially drawn up to cover synthetic generic
pharmaceuticals rather than biologicals.
The FDA has announced that the Section 505(b)(2) pathway is
permissible for approval of ‘generic’ versions of
biological products that were originally approved under an NDA
as opposed to a biologics license application (BLA). Many generic
companies are advocating a 505(b)(2)-like approach to approval
of generic versions of more complex biologics originally approved
under BLAs. Such a system might resemble certain aspects of
the recent guidance by the EMEA (Directive 2003/63/EC, June
2003).
There are many arguments for and against the proposed moves
by the FDA. The complexity and details of a stringent rule-based
system such as that seen in the US means that it is always open
to legal challenges, which will inevitably delay changes. The
FDA has indicated the direction that it wants to take. Inevitably,
implementation of any new arrangements will take longer than
hoped, as the producers of the original biopharmaceuticals try
to protect their own interests.
Innovator strategies
As a general industry strategy, the incumbent biopharmaceutical
manufacturers would be expected to employ delaying tactics to
prevent the early entry of biogenerics. This is particularly
true in the US but also to some extent in Europe. It is also
true of particular biotechnology companies such as Amgen and
Genentech, which need to protect their huge and continuing investment
in innovative products.
The innovator companies are likely to react to the imminent
introduction of biogenerics with patent litigation, price cuts
and the introduction of second-generation products. Such second-generation
products, rather than patent litigation, may be a more important
feature of innovator strategy in future.
Can you make a profit?
The final question, once the production hurdles have been overcome
and market authorisation has been achieved, is can the product,
now packaged and on the shelves, actually make enough money
to be worthwhile?
At least initially, the market for biogenerics is unlikely to
resemble the conventional market for generic pharmaceuticals.
There remain significant barriers to a profitable business:
The need to gain clinician acceptance The marketing spend required The appropriate pricing strategy for biogeneric products.
Few of the current successful generic companies have the necessary
range of skills and capabilities. To reach the goal of profitability,
biogenerics companies will therefore need to find the right
strategy. Successful strategies will include:
In conclusion
To be successful, a company involved in development of biogenerics
will need to:
Be well financed Possess sufficient technical capability and be operating to Western GMP standards Be sufficiently focused on only one or two products,
since the company will need to understand the market it is entering
and have sufficient finances to operate in the chosen market Have developed or be developing effective working relationships
with the regulatory authoritie Have a strong market presence, since
Marketing biogenerics will not be like marketing standard
generics There will be a need to develop relationships with clinicians,
this will require a sales force to effectively alter clinician
prescribing habits An effective marketing capability will be essential.
For a biogeneric product to be successful there should be:
No intellectual property barrier (in principle all
biological products have the potential to become successful
biogenerics, but in practice the development of “second
generation” products by originators will restrict the
opportunity for some products) The right market characteristics — the questions
which must be asked here are:
Is the market big enough? Is there potential to make a worthwhile
profit in this area? What is the competition like? Are there many entrenched players
in the market already? Are there many other biogenerics players likely to enter this
market? Are biogeneric players already producing this product to GMP
standards outside the Western markets?
The biogenerics market will be a difficult one to crack —
the biology and chemistry are complex, the regulatory approval
approaches are multifaceted, and market acceptance may be difficult.
But for those willing to take up the challenge, the potential
rewards for the successful company and successful product are
great; and the market is likely to be wide open, at least for
the first few years.
This article is based on the report “Strategies for
Biogeneric Success” by Jim Furniss and Helen Durrant,
available for Pharmalicensing. For details see www.pharmalicensing.com
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