An overview of the biosimilars space

Stefan Glombitza has over 28 years of experience in the pharmaceutical business, having long worked in the generics space before joining Formycon as Chief Operating Officer in 2016 and being appointed CEO in 2022.

Now, the Munich-based company’s first biosimilar is available in 20 countries, and two more of its products have been approved in the biosimilars space this year. Formycon is now gearing up to further expand its pipeline, backed by its uplisting to the Prime Standard of the Frankfurt Stock Exchange earlier this month.

In this Q&A with BioPharma Reporter, Glombitza discusses the unique opportunities and challenges of the biosimilars space, and why he thinks biosimilars are the future of the pharmaceutical industry.

How has the generics and biosimilars space evolved over the past two decades?​

Back at the start of generics, more than 20 years ago, there was quite some hesitation around equal quality, safety, and efficacy. Now more than 90% of small molecule prescriptions are for generics.

With biosimilars there’s a feeling of déjà vu — their adoption has progressed significantly in most countries in Europe, where we see market shares of 60% to 90%. In the US there was a bumpier start, as the first biosimilar was approved in Europe in 2006, and nine years later in the US. Nowadays there are market channels in the US, including oncology and ophthalmology, where adoption rates are similar to Europe. The rest of the US market is opening up now, so it’s only a matter of time until every biosimilar there reaches similar levels of market share.

What are the main differences you have observed over the years between the generics and biosimilars markets?​

The main differences are the investment required and the complexity of production. Small molecule generics are synthetically produced and therefore are identical to the reference product. That means that usually no phase 3 studies are necessary for approval. The developer costs are in the range of $3 million to $5 million, and at most $10 million for a very complex generic.

In contrast, biosimilars can never be fully identical since these are much larger molecules, up to 1,000 times bigger than a small molecule drug. Even from one batch to another of the innovator product is not identical, only highly similar. Because of this additional complexity, many more analytical steps are required to make sure the biosimilar is highly similar to the innovator. Then a phase 1 study is needed to show the pharmacokinetics are comparable, as well as a phase 3 study in a selected therapeutic indication.

Together with a much more complex production process that takes weeks or even months, you come with developer budgets of $150 million to $300 million per biosimilar.

One similarity is that the success chances are as high with biosimilars as they are with generics; I don’t know of any phase 3 study for a biosimilar that ever failed. If you did your homework right in the analytical characterization and process development steps you will have an almost 100% success rate with the phase 3 study.

What do you see as the biggest opportunities in the biosimilars space?​

First of all, there are predictions that biosimilars will triple in revenues by the end of this decade, or even earlier. The highest compound annual growth rate within the pharmaceutical industry is currently in the biosimilars space.

Number two is that regulatory authorities are heavily supporting biosimilars and removing the need for certain studies. For instance, there is no longer a need for studies to gain interchangeability status, and there are discussions about waiving phase 3 studies, since no phase 3 biosimilar study ever failed. This might come in the future at least for some indications, and it will dramatically reduce the costs for biosimilar development.

Another opportunity is also that there are increasing cost pressures in healthcare, and biosimilars are predicted to generate savings of more than $100 billion by 2026. Because of that, the adoption rate for biosimilars has been increasing and will continue to do so. 

Finally, the number of opportunities in the biosimilars space is very high — there are more than 300 biologics in the market, and currently there are only biosimilars available for less than 10% of them.

What are the main challenges biosimilars players currently face?​

There are two main challenges in biosimilars. The first one concerns biosimilar protection strategies used by innovators. If you think of Keytruda, which generates $25 billion per year for MSD, every year that they push biosimilar competition out is good for their sales.

Innovators do this through hundreds of additional patents that cover not just the molecule but also the formulation, production processes, specific treatment indications and new dosage forms. These patents prolong the exclusivity or shift the market to a new reference product. You can see it with drugs such as Eylea, with Regeneron introducing a high-dose version later on, or with Stelara, for which Johnson & Johnson launched a subcutaneous formulation.

The second challenge is that biosimilars have to be sold at a discount. That cost advantage is of course part of the DNA of biosimilars, but as the development investment is in the range of $150 million to $300 million per program, it is necessary to find a balance that is sustainable. If you look at the biosimilar introductions in the US so far, on average you see a price discount of 41% in the third year compared to the innovator product, and that goes down about 5% more every year until it flattens out.

To succeed in the biosimilars market you have to have the right product, and you need to be fast to be in the first launch wave to grasp a significant market share, and you have to be prepared to offer a price discount with a cost-competitive process. This is often possible thanks to innovations in manufacturing processes, which makes them much more efficient than the original manufacturing processes of a reference product that was developed 20 years earlier.

How much competition is there in the biosimilars market?​

There are probably 10% to 20% of the competitors in the biosimilars market compared to generics, where there are hundreds of players.

I would say in biosimilars there are a good dozen of serious players today, partly because there was some consolidation at the end of the decade.

At first, nearly every generics player wanted to enter the biosimilars space, but after realizing that the entry barrier in terms of investment and development complexity are so high we saw some consolidation.

What we see now is that the number of biosimilar developers is more or less stable after a lot of companies realized that it's not that easy to build biosimilar expertise out of the blue.

I would expect the landscape to stay pretty robust, which means there will still be a gap between the need for biosimilars and the existing development capabilities. More than 50% of potential biosimilars will remain untapped, so even if there were a few more developers joining the space there are so many development opportunities out there that I don't see this as high risk for established players like us.

What is Formycon’s strategy to continue expanding within the biosimilars space?​

Our business model is to work with commercial partners, including companies like Sandoz, Teva, and Fresenius Kabi. These big commercial player powerhouses get a license on our products and commercialize them in different countries. What plays into our favor is that more and more of these big commercial players strategically shift to in-licensing rather than doing their own development.

Here the mindset is very important — for us, everyday counts to be in the first launch wave with each product. That’s where we have a big advantage as a small speedboat versus the ‘big tankers’ which have huge capabilities but have decision-making processes that are much slower.

We now have seven programs in our pipeline, and our goal is to grow it to more than 10 programs by the end of the decade. It will continue to be our strategy to pick a mix of blockbuster and niche drugs to strike a balance between competition and target market size.

How do you expect the biosimilars market to look like in the coming years?​

Biosimilars will increasingly grow their share of the pharmaceutical market. This is already happening; take for instance Humira, which was the biggest biologic a few years ago with $20 billion in annual sales. While the first year there was only around 2% biosimilar penetration, it’s now already grown to 15% and will keep increasing.

We expect governments and regulatory authorities to push for getting biosimilars into the market. Healthcare budgets are increasing globally, with healthcare spending in the US in 2027 expected to grow to $660 billion for biologics alone.

At the same time, the opportunities will keep growing as more than half of the top 10 pharma players are biologics, and this number is increasing. Probably more than 40% of healthcare budgets are dedicated to biologics, meaning that the opportunity in biosimilars is much higher than in generics. Looking just at upcoming patent expiries of blockbuster drugs, there will be more than $200 billion of reference market target for biosimilar companies to tap into.