At first glance, it appears that the US market for biosimilars is ready for takeoff. In March 2015, the US Food and Drug Administration approved Zarxio from Sandoz, a biosimilar version of Amgen’s blockbuster Neupogen. Four additional biosimilar applications have been filed for FDA review. And between 2015 and the end of 2019, 39 biologics with combined US sales of $41 billion, representing 30 percent of the total market, will lose their marketing exclusivity, opening the door to the launch of biosimilar versions.2 Some estimates put the US market for biosimilars between $8 and $10 billion by 2020.
We believe that these expectations are overly optimistic. While the US market holds great promise for biosimilars, five challenges will hinder its growth in the near term:
- Regulatory uncertainty persists, with the FDA having yet to clearly establish rules for developing and marketing biosimilars, including rules governing interchangeability.
- Payers and policy makers will be cautious about requiring or encouraging patients to be switched to lower-priced biosimilars.
- Building up physician acceptance of biosimilars will not happen quickly.
- Originators—the companies that have developed and marketed the biologics on which biosimilars are based—will deploy strategies to slow the growth of these products.
- Most of the companies developing biosimilars will need to upgrade their biologics-development and product-launch capabilities in key therapeutic areas, which will take time.
The bottom line: the US biosimilars market may not reach critical mass until the mid-2020s. Companies that are developing products based on biologics whose exclusivity will expire before 2020 must therefore develop a plan that does not rely on significant near-term returns. And for those that have fallen behind or have yet to begin developing biosimilars, the market’s likely slow growth creates an opening for products based on biologics whose exclusivity will not expire until 2020 and beyond.