Market insights

The brave new world of biosimilars

23 January 2017 by Feng Zengkun

Patients in Asia with diseases ranging from diabetes to rheumatoid arthritis and cancer could soon get help from a class of drugs called biosimilars, with both Western and Asian firms racing against one another to be the first to supply the medicines to them.

Biosimilars are essentially less expensive, highly similar versions of drugs called biologics, which are derived from natural sources such as plant, animal and human cells and bacteria. Unlike conventional drugs, which are made of chemical substances, biologics often cause fewer side effects.

In the next few years, patents for more than 10 top-selling biologics will expire in the United States and Europe, opening up the field to cheaper, biosimilar versions of them. Consultancy firm Allied Market Research has estimated that the global biosimilars market could soar from US$2.6 billion (S$3.5 billion) in 2014 to US$26.5 billion by 2020.

Ramping up biosimilar capabilities in Asia

With Asia set to be a key growth market – the Asia Pacific region was estimated to be the second largest market for biosimilars in 2015, after Europe – both new and established pharmaceutical companies are setting up or expanding their presence in the region.

Swiss healthcare giant Novartis, for instance, will open a US$500 million manufacturing plant in Singapore in 2017 that can produce both biologics and biosimilars. It also sited the Asia Pacific headquarters of its Sandoz division, which concentrates on biosimilars and generic pharmaceuticals, in Singapore.

“Singapore has easy access to transportation routes serving Asia and the world,” said Novartis spokesman Eric Althoff. “It also has a business-friendly environment where companies can get highly qualified labour and support from public institutions such as the Economic Development Board.”

In 2014, Amgen, based in America and one of the world’s leading biotechnology companies, also opened a S$200 million biologics manufacturing plant in Singapore, its first in Asia. The firm currently has eight biosimilars in development, in addition to a biosimilar for inflammatory diseases that has been approved by the United States Food and Drug Administration (US FDA).

While the Singapore plant currently does not produce biosimilars, Amgen spokesperson Karen White noted that Singapore is well-positioned to support the company’s global growth.

“Singapore is Asia’s fastest-growing bio-cluster, and its stable government, good corporate governance practices, highly skilled workforce, global logistics connectivity and strong intellectual property regime and environment also make it attractive to companies like Amgen,” said Ms. White.

To bolster their position in Asia’s biosimilars market, Amgen and other Western companies are also inking collaborations with Asian firms. In July 2016, for instance, Amgen announced an agreement with Japanese pharmaceutical company Daiichi Sankyo to commercialise nine biosimilars in Japan. These include biosimilars of rheumatoid arthritis and cancer drugs.

Leading Asian companies themselves are ramping up their efforts in biosimilars research and development. In 2012, the South Korean electronics and healthcare giant Samsung Group joined forces with American biotechnology company Biogen to form a joint venture focused on biopharmaceuticals, called Samsung Bioepis.

To accelerate its development of a biosimilar version of Enbrel, a prominent rheumatoid arthritis drug created by Amgen, Bioepis set aside 100 bioreactors and assigned 300 researchers to oversee 1,500 experiments. The intensive effort paid off: In 2016, and after just four years of development, it was the first to introduce its etanercept biosimilar in Europe where Wyeth markets Enbrel. Most biosimilars take eight to 10 years.

In 2008, Celltrion, another South Korean company, took the plunge to develop its own biosimilars after years of manufacturing biologics for other firms. The contract work had enabled it to build up its own expertise and resources in the field, said a spokesman.

In April 2016, the US FDA approved Celltrion’s biosimilar version of American company Johnson & Johnson’s best-selling rheumatoid arthritis drug Remicade, paving the way for its entrance into one of the world’s biggest markets.

Opportunities beyond the obvious

While the giants in the pharmaceutical industry are staking their claims to the Asian biosimilars market, smaller and newer players are finding creative ways to carve out niches in the field as well. Primetrics, a contract research organisation based in Singapore, offers biosimilar testing services to other pharmaceutical companies.

SGS, a Swiss company, also provides such services in Singapore. It leverages on its extensive network of more than 1,800 laboratories and offices across Europe and the United States to help Western pharmaceutical companies expand into Asia and vice versa, using Singapore as a bridge. SGS’s work includes determining the exact genetic sequence of the biologic to be copied, comparability tests and clinical trials.

Mr Althoff, the Novartis spokesman, noted that Singapore has established itself as a hub for biotechnology, which includes biopharmaceuticals such as biologics and biosimilars. Many leading companies in the sector have set up operations or even regional headquarters in the country, including Swiss company Roche and American firm AbbVie, paving the way for research and development and other collaborations, as well as further expansions into Asia.

With biologics still greatly underused in Asia due to their high costs, the demand for their biosimilars is set to skyrocket in the near future. The opportunity for Asian and Western healthcare firms – and their investors – is one that is not to be missed. 

Edited by Liew Hanqing and Tan Yi Xuan