By Anna Rose Welch, Director, Cell & Gene Collaborative
It feels as though I’ve spent the past few weeks pre-and post-holidays living simultaneously within the biosimilar past, present, and future. As you may have already read, I published my 2020 Top 5 Biosimilar Developments article (always an industry favorite). This article appeared in parallel with another top performing series — the 2021 outlook series — showcasing the Biosimilar Development editorial board’s thoughts on the most celebrated past milestones and their expectations for the future. That’s why it only makes sense to put a bow on all this reflection with one final forward-looking article exploring the “Biosimilar Company of the Future.”
Since Biosimilar Development launched in 2015, there have been an unfathomable number of evolutions, and the biosimilar business model has been no exception. Many of the primarily pureplay companies I spoke to in the early days of this publication no longer exist in the biosimilars realm — or at all — today. If you look at the current market breakdown of active competitors, it’s almost exclusively dominated by a few large Big Pharma/Big Generic players.
But that business model is potentially taking a new shape for the future. In the upcoming years, there will be a more economically diverse pipeline of biologics approaching the patent cliff. Similarly, companies are more carefully selecting their target markets and refining their overall product selection and commercialization strategies to best fit those markets. Stepping back into the spotlight are what I’ve (affectionately) termed “the dreamers” — the small and mid-sized companies — creating differentiation strategies for themselves while also reducing cost of goods to better compete against non-blockbuster biologics and other, larger biosimilar companies.
As we watch and wait to see if their efforts take root, we’re once more questioning the future makeup of the biosimilar market. In the next five to 10 years, what will define a leader in the biosimilar space? Which skills will be the most important to long-term growth in the biosimilar space, and what do companies need to be considering today to remain at the forefront of this crucial industry? I could think of no better person to address these questions than McKinsey & Company Partner, Jorge Santos da Silva. During our conversation, five specific best practices emerged for any company looking to be — or remain — a leader in the biosimilar space.
How To Build The Biosimilar Company Of The Future
- Be Fast
When I asked da Silva what characteristic comes to mind first when I say “biosimilar company of the future,” he emphasized the word fast. This term obviously can be applied to many different aspects of the biosimilar business. However, first and foremost da Silva singled out that efficiently developing and manufacturing biosimilars will be a central factor in gaining market share.
Though the biosimilar competitive market is quite different from the small molecule generics space in terms of pricing, the market patterns we’re observing today are highly similar (pun intended). So far, the first two to three biosimilar players to market are experiencing the greatest commercial success. Not to mention, as one analyst shared last fall, the sweet spot for launching after the first-to-market biosimilar and garnering market share seems to be five months or less. That doesn’t leave biosimilar companies a whole lot of wiggle-room.
“The time to market capabilities in a biosimilar company are critical,” da Silva explained. “Within the current development paradigm, any company that can design a slightly smarter Phase 3 clinical trial and/or that can more efficiently enter Phase 1 trials will be better equipped to lead a product onto the market.”
In addition to developing fast, da Silva called out the ability to lead fast. To garner sufficient market share in any country, a company must know the different sites of care and stakeholders well, including their motivations and pain points. This has been clearly observed in the successes and failures we’ve observed in the immunology and oncology therapeutic areas unfolding in the U.S. While many of the biosimilar commercial leaders today are larger companies, we have seen one smaller company gain a leading edge in the pegfilgrastim market because of its ability to meet the needs of the channels/stakeholders overlooked by other competitors.
Targeting these channels also requires a sophisticated knowledge of competition in this space. “Arriving on the market early is one thing; but understanding the complexity of the channel and the different sales models is key,” he added. “It’s also important for players — especially those that may be later arrivals to the market — to realize that the key to success is not offering a significant discount to sway the market toward your product. This isn’t the generic model; you need a sales model to support it.” In fact, we’ve also seen that having well-established site of care support programs (e.g., biosimilar benefits verification) can be a boon for a biosimilar’s uptake.
- Establish A System Of Care
Success in the biosimilar space will not just depend upon being one of the first to market, but also on a company’s ability to establish what da Silva calls a “system of care.” To do so, companies may have to acquaint themselves with setting more targeted market intentions, at least to start. This may mean tackling a small handful of states or countries to build the case for their product(s) and then scaling out from there. In addition, companies and their leadership will also need to establish a more holistic approach to key account management as opposed to managing the stakeholder communities or sites of care separately. For example, da Silva pointed to integrated delivery networks which, because of their integrated nature, inherently require working across the board with physicians, patients, pharmacists, and the contracting teams.
Because of their work engaging all necessary stakeholders in the biosimilar conversation today, a biosimilar company is in a great position to play the role of facilitator in creating an integrated system of care. Though the Kaiser Permanente-like IDNs of the U.S. have been upheld as the ideal models of biosimilar uptake, access, and savings, the conversation has shifted in recent years to how manufacturers, non-IDN sites of care, and local payers can work together to create systems aligned around the common goal of increasing biosimilar usage.
- Invest In Remote Engagement
It goes without saying that the pandemic has improved companies’ remote communication capabilities. There are innumerable discussions about how many of those technological capabilities will remain commonplace in post-pandemic society. In the biologics and biosimilars space in particular, companies should be keeping their eyes on specialty physician communication preferences moving forward. As da Silva offered, we may see that specialists are more inclined to keep their relationships with pharma companies digital.
Overall, it will behoove biosimilar companies to pursue and scale-up new models of engagement to reach medical professionals and market access stakeholders. The biosimilar world knows just how important it is to promote and engage in scientifically accurate discussions with all stakeholders to increase awareness of and trust in biosimilars. Having the digital capabilities to carry out and expand these discussions can also be an important way for companies to better control their marketing costs and, in turn, overall profitability.
- Build Fast & Embrace Your Strengths
In addition to developing quickly and leading nimbly, da Silva singled out one other area he feels deserves alacrity — and that’s developing the capabilities to build fast and bring new products into the pipeline. Even as discounts on the product(s) increase over time, a biosimilar company can continually be adding to the business, scaling the development team, and improving manufacturing, da Silva explained.
The companies entering the biosimilar space over the past few years (and today) can be broken down into three archetypes. Many of the leaders today comprise the Big Pharma companies tackling both innovative and biosimilar development, which da Silva identifies as “the commercializers.” But as the industry becomes more stable, we’ve also seen the emergence of smaller companies — or “the developers”— which typically outsource a bulk of the early stage PK/PD package, clinical stage manufacturing, and the Phase 1 trial for their product(s). Finally, there are a number of companies boasting localized or geographic-specific business models (i.e., exclusively producing for an emerging market).
How each of these models evolves will obviously be dependent on the size and breadth of their resources. Many of the larger companies will likely boast large pipelines developed both in-house and through acquisitions. The smaller company model may keep itself going in the long-term by selling assets or striking up royalty-producing licensing deals to help feed both novel and biosimilar future pipeline investments. There are also opportunities for mid-size developers to make the decision to buy into the biosimilar space by purchasing a development engine or acquiring specific products that fit well into the product lineup.
Ultimately, the best way companies can create the most value for the biosimilar space is to embrace what they do best, whether that be developing the early stage assets, being a market access partner, or building/operating a full-scale development and commercialization engine.
- Don’t Underestimate The Market Potential For Smaller Revenue Products
It’s becoming a well-known fact that the biologics facing patent expirations in upcoming years are (to some extent) a more diverse bunch in terms of annual sales. While there are certainly high-earning blockbusters that will likely draw a larger swath of developers, there are even more products making less than a billion per year in annual sales. In fact, a huge number of products that could use biosimilar competitors bring in less than $100 million a year. To many in the biosimilar industry, this poses a concern about a biosimilar’s return of investment — especially given the current need for large-scale comparability trials and, in turn, the seven to 10 year-long development timeline.
But should the industry be as worried as it is about pursuing some of these less lucrative — but still critical — biologic products? Da Silva emphasizes making sure you’re looking at the opportunity through the proper lens and in the right context.
“Current predictions and market sales don’t encapsulate the diseases that haven’t emerged yet and the first-second-third-line treatments we haven’t invented yet,” he offered. These estimates and concerns about cost of goods also assume a static state to the regulatory requirements for biosimilars in the long-term. While many in the industry will tell you the move to tailored biosimilar development is not happening quickly enough, the amount of scholarship and ongoing discussion between industry and regulatory agencies does promise movement in the future. This would be a significant reduction in development costs, which serves as a pressure release for companies concerned about investing in products with smaller market potential.
Secondly, as we learn more about the longer-term competitive dynamics (i.e., the number of biosimilar players a single market can truly sustain), the more selective companies likely will be or will need to be about certain products. “If the industry should come to realize that it doesn’t make sense to enter a market as the fourth, fifth, or sixth competitor, for example, biosimilar companies may choose to gravitate away from originators that are expected to or already have a certain number of candidates approved and marketed,” da Silva qualified. Similarly, choosing products with a smaller number of potential competitors could have its benefits. Sharing the market with the originator and either one or no other biosimilar products guarantees a bigger slice of a larger pie — as long as a company has the appropriate partnership and-or in-house knowledge to successfully commercialize the product.
“Maybe $3 billion is the next $17 billion for the biosimilar world, especially if companies choose candidates with fewer competitors in pursuit,” da Silva concluded.