BIIB - Biosimilars expected to save $180B over next five years as more gain approval

2023-03-12 10:00:00 ET

Biosimilar medication, generic versions of typically expensive biologic-based drugs, are set to save patients and the health care system $180B over the next five years as even more hit the market.

New launches and an expected increase in uptake of biosimilars will likely boost overall spending on them to $20B–$49B in 2027, IQVIA estimates in a new report.

Between 2023 and 2027, at least 10 biologics are slated to face biosimilar competition.

As of the end of 2022, the US FDA approved 45 biosimilars for 14 reference products since 2006. However, only 31 biosimilars since 2006 have actually hit the market.

This year has already seen the introduction of one of the most anticipated biosimilars, one for AbbVie's ( NYSE: ABBV ) blockbuster Humira (adalimumab), which contributed $21.2B in revenue in 2022.

Amgen ( NASDAQ: AMGN ) launched Amjevita (adalimumab-atto) at the end of January. Samsung Bioepis and partner Organon ( OGN ) are set for a July launch . Of the 10 biosimilars expected to launch in 2023, eight are adalimumab biosimilars.

Market Dynamics

IQVIA projects that in 2023, 15% of biologics will face biosimilar competition. That number is poised to increase in the coming years as the U.S. biologics market has grown 12.5% annually, on average, over the last five years on an invoice-price basis.

IQVIA noted that there are 178 biologics without biosimilar development, representing $86B in sales in 2021. Of this number, 145 have exclusivity protection and generated $77B in spending. A large number of these biologics are relatively new, and biosimilar development has yet to start on many of them, though this could change in the future.

While the other 33 are off-patent, they generated $9B in sales. IQVIA said biosimilar development for these is unlikely due to lower potential sales.

Although insulins provide healthy revenues for companies, biosimilar launches and development of them is relatively small as they are difficult to manufacture and market discounts would limit financial returns.

IQVIA noted that smaller companies are taking a growing share of biosimilar development. In 2020, these pharmas and biotechs sold 9% of biosimilars. This figure rose to 23% in 2022 and is estimated to reach 30% in 2023.

Pfizer ( NYSE: PFE ), Amgen ( AMGN ), Viatris ( NASDAQ: VTRS ), Novartis' ( NVS ) Sandoz unit, and Teva Pharmaceutical Industries ( TEVA ) are among the larger companies that have launched biosimilars.

What's Impacting Biosimilar Uptake

Recently launched biosimilars have seen excellent uptake. These have taken a 60% share of the brand biologic volume share within the first three years of launch.

Three oncology biosimilars that launched in 2019 -- generics of Roche ( OTCQX:RHHBY ) Genentech unit's Avastin (bevacizumab) and Herceptin (trastuzumab), and Genetech/Biogen's ( BIIB ) Rituxan (rituximab) achieved uptake of 82%, 80%, and 67%, respectively, over the their first three years on the market.

In contrast, biosimilars of Johnson's & Johnson's Remicade (infliximab), approved for a variety of autoimmune conditions, reached just 13% uptake after three years. However, after six years, it jumped to 44%.

IQVIA found that how a drug is marketed can also greatly influence uptake. "Buy-and-bill" scenarios, where providers handle acquisitions and distribution has led to stronger biosimilar uptake compared to "white bagging," where pharmacies handle distribution. This is because providers often see higher reimbursement rates for prescribing the biosimilar over the brand product.

Biosimilar uptake has also been faster in professional settings, such as physician offices, compared to institutional settings, such as hospitals or skilled nursing facilities. In the former, uptake reached 36% of new patient market share after six months and 50% after 12 months, compared to 23% and 43%, respectively, for the latter.

Volume and Price Impacts

While the introduction of a biosimilar is cheaper than the biologic brand counterpart, it also leads to a price reduction in the brand as well. But the price reductions for biosimilars and originators can vary significantly.

For example, Avastin and Herceptin have had the most rapid decline in molecules cost per unit (includes both originator and biosimilar) due to significant biosimilar uptake. Meanwhile, biosimilars of Remicade saw a slow uptake initially. However, biosimilar uptake  and the increased use of a less expensive authorized generic have resulted in a 50% decline in overall infliximab costs about six years after biosimilars became available.

IQVIA found that there is a correlation between originator price reduction compared to a biosimilar cost. A smaller decline in originator prices has resulted in higher volume losses for them.

Looking ahead, IQVIA's base case scenario projects a 34% biosimilar share of molecule volume achieved after 24 months along with a 30% price reduction compared to the originator.

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