Results Healthcare, the leading corporate advisory firm focused on public and private healthcare and life sciences companies, today publishes its report looking at the clinical and commercial potential of biosimilars*. The whitepaper, Biosimilars: Prospects and challenges, argues that we have reached an important watershed moment in the clinical and commercial acceptance of biosimilars, creating opportunities for investors to acquire interests and partners in the growing sector. The analysis predicts that the size of the biosimilars market will grow from USD 4.4 billion annual sales to USD 25 billion by 2023 at a Compound Annual Growth Rate (CAGR) of 34%.
Commenting on the findings, Kevin Bottomley, Partner at Results Healthcare, said: “The market impact of biosimilars has been predicted for many years, but it is only recently that they have started to realise their potential for patients, and have a positive commercial impact. As the process and business case for developing and commercialising biosimilars is becoming better defined, investors have become more certain about the risks and rewards associated with these products.
Biosimilars present a number of opportunities, including the potential to offer more affordable and accessible healthcare. This growth is supported by a number of positive tailwinds including a continued growing demand for healthcare as the population grows and ages while at the same time payors increasingly emphasise cost reduction. For investors in the sector there are significant growth opportunities and potential high returns where blockbuster biologics products face patent expiration. In addition, complexities in manufacturing and regulatory approval create barriers to entry and economic moats.
Biosimilars finally in vogue
Recently biosimilars manufacturers have recorded increases in revenue, which are an indication of the biosimilar market being on a strong growth trajectory. The biosimilars market reached USD 4.4 billion in annual sales in 2017,with predicted double digit growth to reach between USD14 billion and USD 31 billion by 2023. Growth is spurred by a number of factors including increasing biosimilar approvals in the US market and payor drive towards reducing healthcare spending.
Achim Newrzella, Associate at Results Healthcare, and author of the paper, commented: “As the fundamentals remain supportive and approval processes, in particular in the US market, become better defined, the prospect for the growth of the biosimilars market should make it increasingly attractive for investment. Depending on the nature of the investor, this can be captured through investing in listed companies, private companies or partnerships.”
The report points out that each biosimilar has its own characteristics, and each market has its own dynamics. Pricing forms an important part of the launch strategy. Expectations in the US market are that biosimilars will need to provide discounts of 15-30% compared to the reference product while in Europe there have been examples of 30-40% cuts.
At the same time, originators have established defence mechanisms to incoming biosimilars through intellectual property portfolios, marketing strategies and the benefits of being the existing brand. However, since the creation of BPCIA in 2010 to establish a pathway for biosimilars, the process has become much smoother.
Despite evident challenges, the prospect of reducing treatment costs for payors support a positive future for biosimilars. The challenges involved in producing biosimilars provide opportunities for companies with the relevant know-how, capacity and financial resources to make products that meet regulatory requirements and can take market share from originator products.
