Biosimilars: Low cost + high approval rate = good return for Amgen

Amgen says biosimilars represent an opportunity to get to market without the risk or cost of a novel biologic, so long as you have the capabilities.

Within the biosimilar space, Amgen is curiously conflicted. It is one of the largest and most successful developers of such products, yet the firm is defending several of its novel blockbuster biologics from other biosimilar makers.

In the US, where, Amgen has three approved products, launching two of them – Mvasi and Kanjiti, versions of Roche’s Avastin (bevacizumab) and Herceptin (trastuzumab), respectively – in July.

Amgen is confident the US biosimilar market will open up in the US. Image: iStock/photovs

Compared to Europe, the US market biosimilar market has got off to a slow start, and there remains the question as to whether such products will ever make an impact in the US? But speaking at the Bank of America Merrill Lynch Global Healthcare Conference, Amgen’s EVP and CFO David Meline said the answer is “absolutely yes.”

“We feel confident that the evolution of the market will occur obviously delayed vis-à-vis the experience in Europe but as the first biotech company that faced competition from biosimilars [Sandoz’s 2013 entrant Zarxio is a version of Amgen’s Neupogen (filgrastim)], of course we have seen the impact and we do believe it’s developing as it should.”

His view that the industry will develop unaided reflects comments made in August by Amgen CEO Bod Bradway. During the firm’s Q2 2019 financial call, he said: “We think that what the country needs is a long-term vibrant competitive marketplace for biosimilars, and our fear would be anything that tilts the playing field [in favor of those biosimilar molecules].”

Oligopoly or open ‘generics’ style market?

Meline was asked how the US biosimilar space will evolve, and whether it will be controlled by a handful of companies or be more open like the small molecule generics industry.

“It will vary by product as to the number of competitors that come into the market. But given the size of the market, we think it’ll be attractive, and I think importantly for us, the barriers to entry are not insignificant which starts with the technical capability to improve biosimilarity which is not a simple task,” he said.

However, he continued, once abilities are in place, the biosimilar field can be a relatively cheap and quick way for Amgen and others to make profits compared to the risk and high costs of novel biologics.

“If I look at the innovative business typically a couple billion dollars to get to market with an innovative product maybe 1% likelihood of eventually getting to market and then a period of exclusivity and growth for a product when you have success, biosimilars, if you’re capable, you should have 100% chance to get the market.”

He added that Amgen invests, on average, about $200 million to bring a biosimilar to market. To bring an innovative biologic to market can cost five or ten times as much.

“So [there is a] much higher likelihood to get there, much lower investment to get to market but obviously, a more constrained opportunity once you’ve arrived in the market but especially in the context of having available capacity, we think the equation is a good one from a financial return perspective for somebody like Amgen.”