Why Biosimilar Companies Should Look Inward

By Anna Rose Welch, Editorial & Community Director, Advancing RNA

If someone were to ask a crowded room of pharma experts about the biggest perceived risks biosimilar companies are facing today, I think we’d hear several common answers. These include litigation and the “Patent Dance,” stakeholder adoption, immunogenicity, and coding and pricing uncertainty. In addition, market dynamics have been flipped. While the U.S. has often been a leader in the pharma industry, it is lagging behind the EU and some emerging markets on the introduction of biosimilars.

But what’s interesting to note is that many of these concerns are externally focused, rather than company-focused. Having attended both the CBI Biosimilars Summit and the IQPC Biosimilars Analytical Similarity, Clinical Studies, and Market Entry conference, I had the pleasure of hearing Edric Engert, SVP of biosimilars at Teva, speak twice on the methods of developing a strong corporate strategy to navigate the biosimilar market. As he described, the external, market-based challenges are certainly important to address as an industry. “But to me, the internal questions and challenges are sometimes the most significant and so often overlooked,” said Engert.

And based on the number of competitors looking to earn market share in the biosimilar space in the U.S. alone (64 development programs for 23 different reference products), a company’s strategy could make or break its success in the industry.

I enjoyed Engert’s use of supporting quotes from a number of historical figures and contemporary business writers, including this one from Richard Pascale: “People are much more likely to act their way into a new way of thinking than to think their way into a new way of acting.” After listening to some of Engert’s cautionary tales, this quote emphasizes a particularly relevant struggle many companies might face as they set out to tackle the biosimilar space.

Get Familiar With Uncertainty

The pharma space is no stranger to uncertainty, whether it be the novel small or large molecule markets, or the generics and biosimilar markets. But uncertainty is a primary element of the biosimilar space given the aforementioned unknowns and risks.

As Engert pointed out, a company runs into many challenges or pitfalls because of mismanaged uncertainty. “If you mismanage uncertainty, it can lead to an improper risk assessment, or it can cause you to overlook certain risks,” he said. “This then leads to hitting an infinite pause button, which will always lead to loss.”

The first step to any big business decision is to determine the risks and the rewards. In an ideal scenario, there would be no second-guessing or uncertainty, and a company would enter a situation that had very low risk and high returns. But this is not relevant in the biosimilar business — or any other business, for that matter. In fact, the many concerns about race-to-the bottom biosimilar pricing suggest this is an area where the risks are high and the rewards could be low for certain players. Similarly, as the CBI audience demonstrated, it’s also a rarity to find an organization in which all employees have a united, certain, and accurate view of the risk-return balance for biosimilars.

Part of this has to do with ongoing discussions about how “genericized” the market may get. For instance, I’ve had a number of conversations with members of biosimilar and innovator companies alike discussing the long-term need for large Phase 3 clinical trials in biosimilar development. Though it’s unlikely Phase 3 trials are going anywhere anytime soon, their elimination would lower overall development costs, which could permit lower prices for biosimilars in the future. (But, of course, this is all theoretical and uncertain at this point.)

So, though I’m sure it doesn’t need repeating, biosimilar companies are facing an unclear path forward. But Engert expresses confidence that these evolutions in development or toward a more “genericized” market should not be feared. “We shouldn’t be afraid of market evolutions,” he argued. “We shouldn’t be afraid of the market becoming more and more generic; we should just be ready to pounce on it when it happens.”  

 “The Triad For Success”

One of the common mistakes Engert has seen the industry make is confusing the terms aspiration, objective, and strategy. Many companies attempt to jump straight into developing a strategy without coming to an overall agreement about what the company’s goals and objectives are. Jumping too quickly into proposing different strategies will, in Engert’s experience, lead to arguments over which option is better. Employees can get stuck in a “battle of opinions” rather than determining how to make a conclusive decision.

As such, one of the big questions to ask first and foremost is, “How are you going to make decisions?” Engert continued, saying, “Oftentimes, if I step into a politically charged situation, I don’t even talk about the strategy. We just sit down and discuss how we are going to make the decision and upon what factors that decision will be based.”

Engert relied on a graphic which he termed “The Triad for Success.” At the top of the triangle is clear strategy and vision supported by both adaptability and excellence in execution.

Obviously, the in-flux nature of the biosimilar industry today requires any company to be adaptable. One way to ensure adaptability is to rely on a range of different scenario models because it’s unclear how the market will evolve. Scenario modeling can help companies determine answers to questions about making new investments, terminating drug candidates, and preparing a company for a product launch.

“You have to think about the different paths you might be taking and what risks are associated with each of those paths,” he said. This ensures a company has established additional strategies to help carry the strategy forward.

By the end of this modeling, a company should be prepared to come up with work plans and implementation charts for the agreed-upon strategy. But the real challenges come for a company when it’s time to execute this strategy.

There are two specific aspects companies should be cautious about, one of which is ensuring strategic plans are made thinking in the long-term. Engert argued it’s ill-advised to come up with a strategic plan for just five years. “Oftentimes, five years, depending on what you’re trying to do, doesn’t even give you enough time to build up what needs to be built,” he said. And, “Even if you had just enough time to build it, five years doesn’t give you enough time to assess the progress that was made.” It all comes back down to certainty — or a lack thereof. Forecasting 10 or 15 years down the road might be complicated in a market like biosimilars. But Engert emphasized it’s less about becoming a “marksman” and more about aiming in the right direction and making the most disciplined shot possible.

Companies also must never overlook communicating the strategy, both company-wide and to external stakeholders. A company could have the best possible strategy moving forward, Engert described, but if there isn’t a solid communication plan in place, a number of adverse events can occur. For instance, some employees might not be aware that is the final strategy, mistaking it for just one of several still under deliberation. A lack of communication can also stifle relationships with investors, business development partners, equity analysts, and customers. “You have to be discreet about your plans to some extent,” Engert acknowledged. “But please don’t ignore the communication side of this.”

How To Be A Leader In The Biosimilar Space

A word we regularly come across in the pharma space is “leader.” Arguably, this is one of the most overused words in the space, which begs the question: a leader of what? Many companies might plan to be a market leader by releasing a new product. Leadership may also be based on achieving certain sales targets. But for the biosimilar industry, Engert argued biosimilar companies should be competing to be a leader in people. He supported this argument with a quote from Arthur Schopenhauer, “Talent is a target no one else can hit; genius is the target no one else can see.”

At the same time, leadership also has to do with a company knowing its limits. For the biosimilar space in particular, a company needs to pull together the best of both specialty and generics markets. But regardless of market, it’s important to recognize no company can do everything well. “Many of us in the biosimilar space are fully integrated where we actually already own every function and sub-function necessary for selecting the portfolio and managing its IP, the launch, and post-launch procedures,” Engert established. “But that doesn’t mean we’re great at everything.”

This is where partnerships can come in handy. The goal should be to find a business partner that has complementary skills, particularly in your company’s weakest areas. It might also be that a partnership can help each company address their own internal questions and challenges. “Don’t think that you have to somehow find a solution to your most difficult internal questions alone,” Engert offered.