A sustainable biosimilars industry?

The four types of biosimilar sustainability

It’s hard to talk about biosimilars in 2018 without hearing the word “sustainability”. It’s clear that the entire industry is thinking about this issue, but it’s less clear that all of the stakeholders mean the same thing when they talk about sustainable biosimilars. Sustainability doesn’t just mean one thing – it’s a set of questions that all players in the biosimilar industry are right to be concerned about. In order to make strategic decisions, we need to clarify what the major questions actually are and seek insights about each of them.

As we see it, there are actually four different sustainability debates:

Sustainable pricing: This is the most obvious and most discussed of the four big questions. Pricing becomes a sustainability problem when the need to compete on price alone drives biosimilar prices down too quickly after new biosimilars are introduced. This makes developing new biosimilars less profitable because producers can’t keep the pricing at levels that make development remunerative. If this pattern does cause biosimilar manufacturers to be wary of new markets in the long run, it will decrease competition and keep originator prices high. That will in turn discourage originators from continuing to develop new biologics after their first success, since the initial blockbuster will be very profitable for a much longer time. Removing biosimilar competition is, in the longer run, also bad for the biologics pipeline and bad for patient health.

Sustainable regulation: This is another question much in the news, but it isn’t often discussed in this context. Currently, biosimilar introductions are hamstrung or at least rendered less certain and predictable by the welter of regulatory and legal procedures across markets. There is a growing perception that hard data on efficacy and substitutability are less relevant to the marketing of biosimilars than local regulations and potential legal complications. In the US in particular, the ongoing legal wrangles create the impression that biosimilar development is risky and marketing is unpredictable, which discourages new developments and hurts the overall industry’s future.

Sustainable relationships: This is the most crucial issue for market researchers in biosimilars. Healthcare stakeholders other than biosimilar manufacturers are often under-informed about biosimilars, and about the data supporting their effectiveness and substitutability with the originator drugs they are based on. This lack of information creates an environment where prescribers and patients feel their medicines are mere substitutes for the originator drugs. The tendency for biosimilars to compete on price alone and the price-focused policies of payers exacerbate this problem, keeping stakeholders’ relationships with the biosimilars they use fairly weak. Without creating stronger brand identities around both efficacy data and ancillary benefits, biosimilar manufacturers face a marketplace that very quickly becomes commodified. The cost and effort that goes into developing and testing biosimilars is often not followed through with sufficient effort at creating brand identities for them. In areas where prescribers tend to be conservative, such as dermatology, the lack of strong identities for biosimilars may actually inhibit adoption.

Sustainable pipelines: All of these concerns feed into the question of pipelines. The current pipelines for biologics and biosimilars are very healthy, with major growth areas in oncology, gastroenterology, and dermatology. Meanwhile, the data on existing biosimilars and their efficacy and safety continues to come in, making the case for their use. The future looks rosy for both manufacturers and patients, but pressures at all points in the process could make biosimilar development less attractive in the future.

Pricing remains the main driver of biosimilar adoption, and this is as it should be. After all, lower prices are what drive adoption and patient access! We risk ignoring deeper questions about long-term strategy, however, if price is our sole focus.

Biologic drugs are improving the quality of patient care across healthcare disciplines, increasing access to treatment breakthroughs in many areas of medicine. In order to make sure that these advances are accessible to patients, we should seek to fully understand what drives stakeholders’ behaviour and fuels the long-term trends in the market. Decisions driven by insight are the key to building a biosimilars market that is truly sustainable.