In 2009, sales of branded biopharmaceutical products exceeded $125 billion and accounted for 17% of the worldwide pharmaceutical and biotechnology markets. There is little doubt among industry analysts that the biopharmaceutical market will continue to experience explosive growth over the next few years and that a larger percentage of drug pipelines will be composed of biologics and biotechnology products.
However, during the next 5 to 10 years, patents for blockbuster biopharmaceuticals such as Epogen (Amgen), Enbrel (Amgen), Avastin (Roche/Genentech), and others will expire. This has created a business opportunity for companies that develop noninnovator versions of biopharmaceuticals called biosimilars. At present, only the EU, Canada, Australia, and Japan have legal regulatory approval pathways in place for biosimilars. Since 2005, 13 new biosimilar products have been approved and are being sold in the EU. Despite their lower cost, the uptake of these molecules has been poor, and in 2009, sales of biosimilars was only around $89 million.
At present, there is no regulatory approval pathway for biosimilars in the United States. Although legislation has been introduced in the U.S. Congress, it is not clear when or if it will be adopted. Given the regulatory uncertainty of biosimilars in the United States, it was a surprise when in 2008 New Jersey-based Merck & Co formed a new division called Merck BioVentures (MBV) to compete in the biosimilar marketplace.
The person charged with running and divining a business strategy for MBV is its president, Michael Kamarck, Ph.D. He has cross-divisional responsibility for commercialization, manufacturing, and nonclinical late-stage development of Merck’s biosimilars pipeline and manufacturing responsibility for all of Merck’s vaccines and biologics. Prior to joining Merck, Kamarck served as president, technical operations and product supply for Wyeth Pharmaceuticals, where he was responsible for an organization of more than 16,000 employees in 25 countries. He received his undergraduate degree from Oberlin College and his Ph.D. in biochemistry from the Massachusetts Institute of Technology. Kamarck is the author of more than 20 issued patents and 50 peer-reviewed publications.
While the commercial success of biosimilars is still uncertain, Kamarck believes that MBV can develop and deliver safe, effective, and lower-cost biologics to patients who need them. In this interview, he shared his insights into developing and commercializing biosimilar products and focused on some of the hurdles that must be overcome to garner regulatory approval of these products in the United States and elsewhere.
Why did Merck decide to get into the biosimilar business?
Kamarck: We viewed the biosimilar market as a unique new opportunity in healthcare that is markedly different from traditional branded and generic products. The biosimilar market was attractive to us both financially and from a business perspective. And, it is our goal to develop a global portfolio of these new molecules. But, most importantly, we entered the biosimilar market because we believe it will improve patient accessibility to potentially lifesaving lower-cost drugs.
In the early days, we were moving back and forth between developing biosimilars and so-called biobetter or biosuperior products. In fact, we created a second-generation version of Epogen but decided against its commercialization because of the clinical and regulatory issues that subsequently arose about the safe use of recombinant erythropoetin EPO and related products.
Ironically, the legislative uncertainty of the 2009 Biologic Price Competition and Innovation Act — legislation that defines a regulatory approval pathway for biosimilars in the United States — actually helped us to more clearly assess business opportunities in the biosimilar space. This is because the debate over the legislation provided us with insights into the likely clinical, technical, and regulatory requirements for approval of these products. After some discussion, we decided to exclusively focus on biosimilars rather than biobetter molecules.
Although MBV focuses only on biosimilars, there are other divisions within Merck that are charged with developing new biotechnology products as well as biobetters. In other words, Merck has not jettisoned its efforts in the biobetter space; biobetters are no longer part of the MBV mission.
What products are being developed by MBV, and when will they reach the market?
Kamarck: Early on, so-called replacement products like EPO were the clear winners and darlings of the biopharmaceutical industry. However, it is becoming increasingly evident that monoclonal antibodies (mAbs) and related antibody fusion proteins are going to be a bigger and more tactical part of MBV’s business going forward.
As far as specific products are concerned, we have publicly announced that MBV is currently developing three biosimilar products: GCSF (granulocyte colony-stimulating factor), PEG-GCSF (pegylated-GCSF), and a biosimilar version of Enbrel. Generally speaking, I think that the greatest commercial opportunities for molecules in the biosimilar space are ones that modulate immunity or treat various cancer indications.
While there is still no certainty about the launch of our products, we expect them to be on the market by mid-decade — right around the time patents expire, and we have “freedom to operate.” I think there will be an explosion of biosimilar products on the market by mid-decade, and that the trend will likely continue at a brisk pace into the 2020s.
Which regions of the world represent the greatest business opportunities for biosimilar products?
Kamarck: The lack of regulatory guidelines in the United States is somewhat problematic. And, while there are well-established and clearly defined guidelines for approval of replacement biosimilar products in the EU, EMA (European Medicines Agency ) has not yet issued guidance on the development of biosimilar mAbs and related products. Interestingly, in recent months, both the FDA and EMA have signaled their intentions on what the guidelines will likely be for biosimilar mAbs. Further, the FDA and EMA are working closely with one another to develop clinical safety guidelines and technical guidelines for biosimilar mAb molecules and other new biosimilar products.
MBV has been meeting regularly with the FDA and EMA about our products, and after 10 or more meetings with both agencies we are starting to get specific guidance from them in response to specific questions for specific products. Because of this, I firmly believe they are signaling to us — and more than likely our competitors — where they feel the final regulatory guidelines are going to end up. Obviously, we are not waiting for the guidelines to be issued to move forward with our products. But, we think we have a good idea of where the regulations will land because of those meetings. This has been extremely useful from a new product development perspective.
From the regulatory, clinical, and business perspectives, I think the EU and the United States are the best-prepared markets to drive the uptake of biosimilar products. Geographically speaking, rollout of our products will likely first occur in the EU and United States, followed by introduction into emerging markets. Interestingly, emerging markets like India and China are becoming increasingly more regulated. And, I think the regulatory requirements for biosimilars in emerging markets may ultimately not be that much different from those already adopted in regulated markets.
One of the tougher issues that needs to be addressed is the cost model or pricing of these new products. At present, we don’t know how these products will be priced. But, biosimilar sales in Europe provide us with some idea of how the products must be priced to be competitive.
What are your thoughts on substitution and interchangeability of branded products with biosimilars?
Kamarck: From a regulatory point of view, substitution and interchangeability have been dealt with differently in Europe and the United States. In Europe, extant biosimilar guidelines do not mention substitutability nor do the regulations provide a technical path forward for it. Consequently, substitution or interchangeability of biosimilars for branded products is not possible or permitted in Europe.
In contrast, the possibility of interchangeability has been raised in the proposed U.S. regulatory guidelines for biosimilar products. Not surprisingly, the criteria to prove interchangeability are much higher than those required to show biosimilarity. Consequently, it may not be worth it for biosimilar developers to even attempt to prove interchangeability between their products and innovator molecules. For example, proving interchangeability would invariably require overly large clinical trials that are expensive and probably not practical in today’s economic climate. Nevertheless, the debate surrounding substitutability and interchangeability is likely to continue in both the United States and Europe.
In our view, we do not think that interchangeability or substitution is necessary for biosimilars to be successful. We believe MBV will be successful by developing and winning regulatory approval of high-quality, branded biosimilars that are proved to be as safe and effective as original innovator products.
The slow uptake of biosimilars in Europe is likely the result of a failure of the companies that introduced them to recognize that physician and patient education about the products would be necessary to ensure their use and ultimate financial success. Because biosimilars are so different from traditional generic medicines, European physicians didn’t understand them or their potential benefits and eschewed their use in favor of innovator products. The experience in Europe has helped us to better shape our biosimilar strategy, and hopefully, we will be able to avoid the same mistakes and pitfalls.
Do you think that biosimilars represent a threat to their branded innovator counterparts or can they coexist?
Kamarck: At least for now, we don’t anticipate that biosimilars represent a serious threat to branded innovator biotechnology products. This is because, at least for the foreseeable future, biosimilars will likely not be deemed to be interchangeable or substitutable for innovator molecules. Unless that changes, I think that biosimilars and innovator products can coexist in both established and emerging markets.
What will the biosimilars market look like in 10 years?
Kamarck: The biosimilars marketplace is currently in its infancy, and many potential players are eyeing the opportunity. As the market matures, we will likely see some of the early participants drop out.
In my view, those that do succeed will deliver greater value to customers in addition to offering price reductions relative to the originator. For patients and caregivers, these value-added services include improved delivery devices, training and education, and patient support services. For physicians, this includes clinical data to support evidence-based decision making regarding biologic options for their patients, improved delivery options, physician education tools, patient support, and when appropriate, reimbursement and third-party payer support.