Are Biosimilars the Next Big Growth Opportunity for the Pharmaceutical Industry?

As top-selling biologics begin to lose patent protection, some drug makers are investing heavily to meet anticipated demand for biosimilars. Yet the high cost and complexity of these new drugs pose a risk to expected profits.






Key Takeaways

 

  • Biologics are a class of drugs derived from the cells of genetically modified living organisms. They’re orders of magnitude more complex than conventional, chemically synthesized drugs, and hence more costly to produce and to purchase.
  • Biologics are also generally more effective at treating serious medical conditions such as cancers and autoimmune disorders. Seven of the top ten best-selling drugs in the world in 2017 were biologics, including AbbVie’s Humira, the world’s top-selling drug by far.
  • As patents for biologics begin to expire, some drug companies are investing heavily in new production facilities in a bid to profit from the anticipated rise in demand for biosimilars—the cheaper copies of biologics. Yet entering this market represents a considerable bet because a biologics facility can cost five times as much as a conventional pharmaceutical plant. Success at developing a biosimilar is also less likely than a conventional drug.
  • Because the biosimilar industry is still nascent, it is difficult to discern whose investments will be profitable. On the other hand, makers of bioreactors, filtration devices, and other sophisticated equipment needed to produce biologics are the early beneficiaries of the investment boom.

Disclosures

 

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