For quite some time, providers, public and private payers, policy-makers, pharmacy benefit managers and patients have hoped the arrival of biosimilars would usher in a new era of competitive drug prices. However, as the U.S. market prepares to welcome its second biosimilar, Celltrion’s Inflectra, the future of biosimilars in this country remains unclear.

Barriers that could limit the market potential of biosimilars still exist. These include regulatory concerns pertaining to labelling, naming and interchangeability; reimbursement uncertainty; and insufficient education and evidence to support physician decision-making. In turn, some key stakeholders have adopted a more sceptical view of biosimilars’ short- and long-term impact on the healthcare industry, including their promise of cost savings.

Regardless of whether biosimilars ultimately offer stakeholders the financial relief they’ve been hoping for, one thing remains clear—the biosimilar pipeline is strong, creating both opportunities and inherent risks for manufacturers. This article provides an overview of the biosimilars market and some of its uncertainties. Included are strategies that both biosimilar and originator manufacturers should consider for success.

Market Potential of Biosimilars

Many stakeholders remain optimistic about the prospects for biosimilars. During the past few years, questions about the underlying technology and market acceptance have begun to resolve themselves in a positive manner. Regulatory pathways are being defined and the need for these continues to grow as a number of patents on leading biologics are set to expire.

The magnitude of the biosimilar market’s true potential can be illustrated by two simple measures: The substantial growth of biologics in recent years, and the number of expected patent expiries for originator drugs. Biologics have become a very significant part of the global drug market, growing from just $20 billion in 2000 to over $234 billion today.1.2 Currently, more than 200 approved biologics are on the global market today and hundreds more are in clinical trials or awaiting regulatory approval—all of which could be future targets for biosimilars.3 Thus, it’s not surprising that by 2020, biologics are expected to account for up to 28% by value of the global market for pharmaceuticals ($390 billion).4 This information alone is enough to warrant a bullish sense of optimism, not only for the innovator biologics market but for biosimilars as well.

Now consider a looming patent cliff for many of these blockbuster drugs. By 2020, 11 biologic products representing revenues of approximately $71 billion are expected to lose exclusivity in one or more markets and become biosimilar candidates.5 Global biosimilar sales amounted to only $2.5 billion in 2014; that base is projected to grow to $26.3 billion USD by 2020 according to some estimates.6

Potential Surge in Biosimilars in the U.S.—A Reason for Hope

With U.S. drug prices in the national spotlight spurring policy-makers and payers alike to find solutions capable of driving down healthcare costs, stakeholders continue to hold out hope for biosimilars. However, for biosimilars to create the necessary competition to check the rising cost of biologics, the follow-ons must first hit the market.

With just two approvals (Sandoz Inc.’s Zarxio and Celltrion Inc.’s Inflectra) and only one drug launched (Zarxio), the U.S. biosimilars market lags far behind that of Europe, which blazed the first biosimilars path more than a decade ago. By way of comparison, the EU has approved 22 biosimilars to date.Nevertheless, as patents for some of today’s blockbuster biologics, such as Humira, Remicade, Rituxan, Herceptin, and Avastin expire, the U.S. is on the brink of a potential biosimilars explosion.8 Currently, 60 proposed biosimilar products for 19 different reference products are enrolled in the Biosimilar Product Development (BPD) Program and nine of these have been submitted to the FDA for biosimilar approval.9

Anticipating the significant cost savings that could potentially be realized if these biosimilars were to hit the U.S. market in significant numbers, lawmakers continue to scold the FDA for its go-slow approach to shaping the biosimilar approval pathway. However, before the U.S. biosimilar market can reach its full potential and provide meaningful savings, a lot of uncertainty needs to be cleared up—and much of it extends beyond the FDA’s purview.

Barriers to Realizing Full Market Potential

While biosimilar competition in the EU has resulted in price decreases of 20% to 30%, the only biosimilar in the U.S. launched with a list price 15% below its originator.10 Concurrently, U.S. prices for several biologics facing near-term patent expiration continue to rise, offsetting future savings.

Because competition drives lower prices, there is the expectation that the more competition there is in the biosimilars market, the greater the savings will be. Over the years, payers have learned how to adroitly play medicines off each other for market access and formulary placement. Just look at how they managed Gilead’s Sovaldi when AbbVie’s Viekira Pak hit the market.

However, payers may not be able to apply the same pressure in light of biosimilar competition until there is greater confidence in how well these alternatives work. As seen in the traditional pharma market, the more complex a drug is, the more difficult it is to create a drug that mirrors its efficacy and can serve as a substitute. In the case of biosimilars, clinicians and regulators alike are applying greater scrutiny when it comes to drug substitution, thereby limiting payers’ ability to use competition as a mechanism for driving down prices.

While public and private payers in the U.S. may realize substantial savings from the use of biosimilars, these savings may not be passed on to all patients. In fact, under the Centers for Medicare & Medicaid Services’ (CMS) current reimbursement policy, Medicare beneficiaries may be subject to significantly higher out-of-pocket costs when taking biosimilars compared to their reference products.11 Already dealing with concerns over the safety of biosimilars, higher costs would certainly discourage patients from using these products.

Implications for Manufacturers

Unknowns still exist with respect to biosimilars, making it difficult to assess whether the potential cost-savings of these drugs will actually materialize. However, one thing remains clear: As established biosimilar markets continue to grow and as the U.S. biosimilar market begins to flourish, manufacturers on both sides will want to be positioned to capture and/or retain market share.

Biosimilar Manufacturers

While clearly an attractive market, manufacturers of biosimilars face multiple potential challenges in their effort to take market share away from incumbent branded biologics. In order to appeal to the full range of stakeholders and promote product adoption, manufacturers must be able to articulate what they are bringing to the table aside from just a lower cost alternative. Unless physicians truly understand the clinical and economic implications of biosimilars, they will most likely limit their use with patients.
What this means for R&D functions is that they will need to generate data demonstrating how long-term use of the biosimilar and switching between the branded and biosimilar agent affects efficacy and safety. In the absence of this data, already skeptical physicians and patients may be unwilling to make the switch.

Commercial and medical affairs functions will also have an important role to play in educating opinion leaders around product nomenclature, product attributes, and comparisons to reference drugs. Educational initiatives should aim to dispel the misconception that biologics and biosimilars are structurally and therapeutically identical to their reference drugs, and to promote a better understanding of their differences in order to improve patient care.

At an organizational level, biosimilar manufacturers will need to determine the extent to which they should offer the same wrap-around market support programs that makers of branded biologics currently provide. Value-added services have become a means of differentiation for biologics, particularly those in crowded therapeutic areas, while also raising the bar for biosimilar manufacturers looking to gain market share. These services include patient education programs focused on product use and storage, compliance programs aimed to help physicians maximize outcomes, payment assistance programs, as well as additional services supporting pharmacists and the supply chain. Thus, success for biosimilar manufacturers requires not only that their product be equally effective and safe, but that their marketing strategy must also include similar services and value-adds as well.

Originator Manufacturers

As biosimilars flood the market and as biosimilar manufacturers generate the necessary economic and clinical data to support the use of their products, originator companies will need to protect their branded product’s market share. Some of these organizations are already putting barriers in place to delay biosimilar market entry and/or restrict biosimilar market access. These efforts have included: 1) patent litigation or extension; 2) debates regarding nomenclature and product labelling; 3) legislation to prevent pharmacists from switching to biosimilars; and 4) campaigns seeking to raise concerns about the safety and efficacy of biosimilar products while highlighting the benefits of their own products. While these strategies have yielded short-term success for some organizations, they are not sustainable.

Another strategy that branded biologic manufacturers have pursued to safeguard their market share is the development of biobetters or upgraded versions of their off-patent biologics. Following traditional product line extension approaches, many of these biobetters are sustained-release formulations of the existing drug, which can provide enhanced convenience and prolonged effect. While this strategy may slow share erosion, it is not an effective bulwark against price erosion. As markets become more crowded and competitive on price, added benefits such as these are unlikely to justify premium reimbursement, let alone their placement on formularies.

Moving forward, manufacturers of branded biologics will find value in conducting a thorough review of their patient, physician, pharmacist, and supply chain support programs to identify opportunities for implementing valuable, hard-to-replicate services. The focus should be on offerings that enhance clinical outcomes and strengthen relationships with key stakeholders. Taking this approach will raise the bar on what it takes to be “market similar” by forcing new entrants to demonstrate how their product adds value through both its therapeutic benefits and service characteristics.


1. Credit Suisse. “Biosimilars: The Good, The Bad and The Unknown.” Barron’s. November 5, 2014 Accessed December 10, 2014.

2. BCC Research. “Biologic Therapeutic Drugs: Technologies and Global Markets.” Jan. 2015, p. 2.

3. Walsh, G. “Biopharmaceutical Benchmarks 2014.” Nature Biotechnology. October 2014; 32(10): 992-1000.

4. IMS Institute for Healthcare Informatics. “Global Medicines Use in 2020: Outlook and Implications.” November 2015.

5. Pfenex Inc. “Fiscal 2015 Annual Report.” March 31, 2016.

6. Allied Market Research. “World Biosimilars Market to Hit $26.3M by 2020.” May 26, 2016.

7. Alliance for Health Reform. “Biosimilars: Unpacking Complex Issues.” August 2015.

8. Bioworld. “Biosimilars: A Global Perspective of a New Market Opportunities, Threats, and Critical Strategies 2014.” 2014.

9. Brennan Z. “Updated: Biosimilars in the U.S.: Panel Discusses Tricky Balance of Building the Market With Necessary Precautions.” June 20, 2016.

10. Fuhr JP. Biosimilars: “Prospect for Competition and Saving.” Presented at Campbell’s Pharmaceutical Seminar Services, Rutgers University School of Business. Nov. 4, 2015.,%20Joe%2011.4.15.pdf.

11. CMS. “Part D Requirements for Biosimilar Follow-on Biological Products.” Academy of Managed Care Pharmacy website. Published March 30, 2015.

  • Mike Kuchenreuther

    Mike Kuchenreuther, PhD is a Business Analyst at Numerof. Mike brings his life sciences and biomedical research insights to the solution of business problems for clients in healthcare delivery, global pharmaceutical, and medical device manufacturing.


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