Masters of Science in International Strategy and Influence

SKEMA Business School, School of Knowledge Economy and Management

France, China, United States and Brazil

REGULATORY ISSUES ON THE DEVELOPMENT OF BIOSIMILARS

Research Question:

Which regulatory framework could foster the market development of biosimilars

in Europe? And which strategic positioning for the originators

manufacturers?

Student: Joseph Pategou

Tutor: Healthcare expert at Boston Consulting Group

Co-Tutor: Dr. Benjamin LEHIANY, Research Associate Polytechnic School Paris and

Scientific Director, MSc. International Strategy & Influence

Year: 2014 – 2015

2014/2015 – Joseph Pategou | Which regulatory framework could foster the market development of

biosimilars in Europe? And which strategic positioning for the originatorss producers? 2

TABLE OF CONTENT

Acknowledgement ............................................................................................................................ 3

Executive summary .......................................................................................................................... 4

2014/2015 – Joseph Pategou | Which regulatory framework could foster the market development of

biosimilars in Europe? And which strategic positioning for the originatorss producers? 3

ACKNOWLEDGEMENT

I want to thank all those who gave me their help and their support during my

scholarship and in the preparation of my graduation memory.

First, I want to thank in France, the LEEM, the GEMME, the Association France

Colon, the Maison des MICI, the French Society of Cardiology, the French Society of

Rheumatology, the French National Society of Gastroenterology and IMS Paris for their trust

and availability.

In Great Britain, I thank the Medicines and Healthcare Products Regulatory Agency,

the Association of the British Pharmaceutical Industry, National Institute for Health and Care

Excellence, the British Society for Rheumatology and IMS London for their support and

availability.

I want to thank the Italian Federation of Cardiology, the Confederation of the three

Italian Societies of Gastroenterology and the European Federation of Crohn's & Ulcerative

Colitis Associations for their valuable assistance on regulation in Italy.

I am grateful to the Drug Commission of the German Medical Association and the

German Society of Rheumatology.

Thanks to the European Medicines Agency, European Generic Medicines Association

and European Biosimilars Group for the incredible support they have given me in the

realization of this research.

I express my gratitude to Professor Benjamin Lehiany and the Boston Consulting

Group for allowing me to work on this exciting subject.

My sincere acknowledgment to my family for their encouragement.

I also wish to thank the teaching staff of Skema Business School for the teachings and

support.

2014/2015 – Joseph Pategou | Which regulatory framework could foster the market development of

biosimilars in Europe? And which strategic positioning for the originatorss producers? 4

EXECUTIVE SUMMARY

Nowadays patients and physicians can have access to three types of drugs: a

originators, a generic or a biosimilar.

Those drugs have different regulatory systems that apply in Europe; moreover the

biosimilars regulation is evolving and may change. Regulation is an important factor that can

give more confidence to patients and healthcare professionals. As a consequence,

biosimilaires will grow.

Therefore the question we shall ask ourselves is

Which regulatory framework could foster the market development of biosimilars in

Europe? And which strategic positioning for the originators producers?

To bring the most accurate answer to this question, we will study the regulation

framework in France, Germany, Italy and United Kingdom.

I. METHODOLOGY

To understand the regulatory issues on the development of biosimilars in France,

Germany, Italy and United Kingdom:

We first determined the main differences between generics and biosimilars using mainly

secondary data, focusing on regulation and market trends.

Then, we concentrated on regulation of biosimilars, by doing 22 interviews of 4 types of

organizations (Authorities, National and European pharmaceutical unions, Learned Societies

and patient associations); we established a questionnaire of 10 questions based on five main

topics:

Naming Labelling

Clinical trials /extrapolation Switching/ substitution

Quotas/ tenders

All interviewees received the same questions; we made cross analysis between countries and

actors in order to draw the best lessons.

Finally, we looked which strategic positioning could have a originators producer to face

biosimilars and to maintain its position in the market by studying 13 companies.

2014/2015 – Joseph Pategou | Which regulatory framework could foster the market development of

biosimilars in Europe? And which strategic positioning for the originatorss producers? 5

II. EMPIRICAL CONTEXT : COMPARISON BETWEEN

GENERICS AND BIOSIMILARS

Biosimilars and generics are drugs which enter the market at the end of the originators

patent; our observations help us to see the main differences in terms of regulation and market

trends between these two types of drugs.

Generics have simple chemical structures and are considered to be identical to their

reference medicines. In comparison, a medicine which is developed to be similar to an

existing biological medicine is a biosimilar (see table 19).

Table 19: Comparison of difference and common points between biosimilars and generics-

Structure

KEY POINTS BIOSIMILARS GENERICS

Nature Drug extracted from a biological

environment

Chemical drug

Molecular size Up to 270,000 Da 100 to 200 Da

Development Comparative studies Bioequivalence studies

Duration of development 5-7 years(500 patients) 2-3 years (20-50 patients)

Cost of the development 200-300 million dollars 2-4 million dollars

On regulation, we observed dissimilarity, for example the Marketing Authorization of

generics is mainly based on bioequivalence studies or for biosimilars on comparative study

(see table 7).

Table 7: Comparison of difference and common points between biosimilars and generics-

Regulation

KEY POINTS DIFFERENCE IDENTICAL

Naming x

Labelling x

Substitution x

Quotas and tenders x

Marketing authorization x

Moreover, biosimilars regulation is part of important debates in many countries,

compared to generics drugs.

2014/2015 – Joseph Pategou | Which regulatory framework could foster the market development of

biosimilars in Europe? And which strategic positioning for the originatorss producers? 6

Eight major world markets accounting for 84% of their global sales drive the generics

(United States, Germany, France, Britain, Canada, Italy, Spain and Japan). The first market is

the United States with 42% of global sales (global sales $123.85 billion in 2010 and will reach

$231.00 billion in 2017).

When you talk about biosimilars, the EU is the most advanced market, accounting for

80% of global spending (Global market: $2.6 billion in 2016 to $25 billion in 2020). We

observed 19 biosimilars in Europe representing 6 actives substances. In terms of volume and

value, Germany is the largest; followed by France, Italy and the United Kingdom.

All these elements clearly show us that between these two drugs we have different

market trend (see table 13)

Table 13: Comparison of difference and common points between biosimilars and generics-

Market trend KEY POINTS DIFFERENCE IDENTICAL

The leading countries x

Market value x

Number of product x

Production cost x

III. RESULTS AND ILLUSTRATION

Those 22 interviews we made helped us understand the position of Authorities,

National and European pharmaceutical unions, Learned Societies and patient associations in

four European countries (France, Germany, Italy and the United Kingdom).

On a topic like naming, the role of regulation, substitution, market shares, price

evolution of the originators and biosimilars, we have a global consensus between actors.

Positions are more variable between actors on regulatory issues such as summary of

product characteristics, interchangeability and extrapolation.

We made an historical benchmark of 13 companies from 2000 to 2015. And observed

10 levers, which were taken by originators manufacturers facing biosimilars and generics

competition.

2014/2015 – Joseph Pategou | Which regulatory framework could foster the market development of

biosimilars in Europe? And which strategic positioning for the originatorss producers? 7

Price Prescription

Patent Market saturation

Legal action New market

Cooperation Environmental strategy

Product Brand strategy

Some of these levers seem to be used in the context of biosimilars and others in presence of

generics (see table 18).

Table 18: Comparison of levers used by originators producer to face biosimilars and generics

competition

Levers Biosimilars Generics

Price X X

Patent X X

Legal action X X

Cooperation X X

Product X X

Prescription - X

Market saturation - X

New market X -

CONCLUSIVE DISCUSSION

The research on France, United Kingdom, Italy and Germany allows us to understand

the regulation of biosimilars and the issues regarding this new type of drug.

One of the lessons is the fact that the regulation of biosimilars is not clear and still in

discussion in many countries, on topics like naming, role of regulation, substitution, summary

of product characteristics, extrapolation and interchangeability.

Our interviews helped us to have a clear vision on those topics:

For the naming system, the World Health Organization suggests a four-letter code

attached at the end of every drug name.

2014/2015 – Joseph Pategou | Which regulatory framework could foster the market development of

biosimilars in Europe? And which strategic positioning for the originatorss producers? 8

Concerning the label (SmPC) of a biosimilar, it must be in concordance with the label

of the reference product.

In term of extrapolation, biosimilars have the possibility to be used in several

indications like the reference product.

Regarding the substitution of biosimilars by pharmacists, there is a global consensus

on the fact that it is impossible and not allowed at the moment. But in some countries

discussions are in place to allow substitution by pharmacists, for example in France.

One of the hottest topics on biosimilar regulation, interchangeability is still in

discussion. Germany and United Kingdom have accepted the principle of interchangeability

unlike Italy and France who have refused this principle.

The economic situation in OCDE countries is an important element that biosimilars

and originators manufacturers need to bear in mind. Due to the economic crisis, the total

spending of health is declining since 2009 in several countries.

According to the Panorama health 2013 of the OECD, it is essential in this context that

countries make their health systems more productive, more efficient and more affordable.

The countries have sought to reduce spending by lower prices of medical goods,

particularly pharmaceuticals, and by budgetary restrictions and wage cuts in the hospital

sector.

For example, in France and Germany the costs in percentage of GDP evolved from

10% to 12% between 2000 and 2008, then decreased to reach 11% of the GDP in 2011.