Novartis Taps Biosimilar Experience in Europe to Snag U.S. Sales

  • Drugmaker to launch competitor to Amgen’s blockbuster Enbrel
  • Novartis plans copies of live drugs worth $44 billion in sales

Novartis AG, which just won U.S. approval for a lower-priced version of Amgen Inc.’s blockbuster arthritis drug Enbrel, estimates that the market for copies of biotechnology drugs could grow seven-fold by the end of the decade.

The treatment, Erelzi, on Tuesday became the second so-called biosimilar from the Swiss drugmaker’s Sandoz unit to win clearance from the U.S. Food and Drug Administration. Novartis last year began selling Zarxio, the first-ever biosimilar in the U.S., after an appeals court rejected a last-ditch effort by Amgen to protect its cancer drug Neupogen.

Novartis aims to build on its experience in Europe, which has approved more than 20 biosimilars in the past decade, compared with three in the U.S. since last year. The copycat drugs can slash the cost of treating diseases such as cancer, diabetes and rheumatoid arthritis, potentially saving health-care systems in the U.S. and the European Union more than 50 billion euros ($56 billion) over the next five years, according to IMS Health.

“There’s increasing pressure around the world on health-care systems,” Carol Lynch, global head of biopharmaceuticals at Sandoz, said by phone. “They’re looking at how they’re going to be able to manage to provide health care for aging populations into the future, and many of them I think would see biosimilars as one of the big levers there to help.”

Not Identical

The Basel, Switzerland-based company projects that global sales of biosimilars could grow to $14 billion by 2020 from about $2 billion now, as the U.S. market opens and top-selling drugs developed by companies like Amgen lose their market exclusivity, according to Lynch. Any early legal and regulatory hurdles will likely be overcome over a longer period of time, she said.

While simple medicines are easy to produce and copy, resulting in products known as generics, biosimilars replicate complex compounds made from living organisms. That means the original biologics can’t be precisely copied, stoking concerns among patient groups.

New Patients First

Novartis’s Sandoz plans to roll out five major biosimilars by the end of the decade, including versions of Enbrel and Neulasta, AbbVie Inc.’s Humira and Roche Holding AG’s Rituxan -- biologics that generated about $44 billion in 2015 sales globally, the company said in June.

Biosimilars tend to be introduced gradually as hospitals wait to treat new patients rather than switch existing ones, said Ariel Dora Stern, an assistant professor at Harvard Business School who focuses on the health-care industry. Studies have estimated savings from biosimilars, compared to the original drugs they mimic, to be 10 percent to 50 percent, according to Rand Corp., a nonprofit policy research organization.

Zarxio, offered last year at a 15 percent discount to the original, has captured about 20 percent of its category in the U.S., and its performance compared with the launch in Europe in 2009 is “beating all benchmarks,” Lynch said.

“Physicians not only have less experience with that particular biosimilar, they have less experience with the concept of biosimilars, so that will take time,” Harvard’s Stern said. “I think both more education and good clinical research about safety and effectiveness will of course help.”

Biggest Drug

Patient groups in the U.S. have raised concerns about what will happen when pharmacies and drug benefit managers switch patients from the brand-name original to the biosimilar, or between different biosimilars. Legal challenges, meanwhile, are another obstacle for developers of the drugs.

Amgen has “confidence in our patents related to Enbrel and are currently in litigation with Sandoz to enforce our patent rights,” it said in an e-mailed statement Wednesday. The U.S. company and Sandoz have agreed to a preliminary injunction, and a trial is scheduled to begin in April 2018, Amgen said.

Novartis plans to bring Erelzi to the U.S. market as soon as possible, the Swiss company said in a statement on Tuesday. Makers of biosimilars are required by law to give 180 days notice before they can start selling the products, Lynch said, declining to elaborate on the timing. The target, Enbrel, is Amgen’s biggest drug with $5.36 billion in sales last year.

“If you look at the assets that are leaving exclusivity, they are making up a large proportion of the top 10 selling products worldwide,” Lynch said by phone earlier this month. “From a health-care system cost perspective, there’s a much greater incentive on the commercialization side to drive adoption of biosimilars in order to achieve the savings potential that exists.”