Biosimilars in Emerging Markets

September 5, 2011 10:16 AM

Emerging markets are nations with social or business activity in the process of rapid growth and industrialization. Economists have different lists of countries indicating the emerging markets but in pharmaceuticals, China, Brazil, Russia, India, S.Korea, Mexico, Turkey and Thailand can be considered as “Pharmemerging” according to the IMS Health. More countries like Venezuela, Argentina, Vietnam are also added to this list last year.

The next big thing in the pharmaceutical industry will definitely be biosimilars and figures from the market analyses show that, emerging markets will have a big role in this area.

Figures from the “Prioritising the Emerging Market Opportunity” report from Insight Strategy Advisors suggest that, even in the emerging markets, the annualised cost of a course of therapy with biologic agents ranges significantly and can raise to the USD 40,000 level. Given the fact that the annual GNI per capita in many Emerging Markets is in the range of USD 4,000- 12,000, most of the biologic therapies are out of the majority of the potential patient population. Even if a biosimilar is priced at half that of the innovator (i.e. Dr.Reddy’s Reditux in India), uninsured patient ability to pay the therapy will still be very limited.

The Insight Strategy Advisors’ report indicate that reimbursement schemes for these biologic agents range from 0% (e.g. Brazil) up to 50-80% in certain markets (e.g. Korea, Singapore). Also in some markets like Turkey, high cost mAb innovator molecules can be fully reimbursed under special conditions.

Other markets, which have not yet financed these high cost agents may be willing to finance biosimilar versions if;
1) the quality, safety and price of the product is acceptable
2) the molecule’s therapeutic area is identified as a priority by the competent authority.

Launching strategies for biosimilars
Countries which already finance innovator agents: Even in the emerging markets, negotiating for a therapy’s inclusion on a national reimbursement list is a complex process that requires years and sufficient sources; in order Rituxan/Mabthera to be added to the national SUS tables in Brazil and fit within the treatment budget, Roche agreed to provide a discount of approximately 60% of the initial list price.

a)      Nationally funded originators: If the country has shown interest to make the therapy accessible to its population, there will be more interest in biosimilars because of the financial issues. But these markets will likely be the most crowded markets from a competitive standpoint; currently there are more than 8 rituximab biosimilars under development.

Additionally certain governments like Brazil and Russia take this step further and actively invest in developing a biosimilar for their own markets.

b)      Regionally funded originators: If the country has a decentralized healthcare system, individual regions can fund high-cost medicines with their own budgets; i.e. Sao Paolo, Brazil, finances several oncology monoclonal antibodies, in addition to the nationally-funded rituximab.

These are generally the country’s wealthier regions and tendering can become the most important barrier in these regions.

Countries which do not finance innovator agents: Many emerging markets do not finance the innovator, high-costed biologic therapies. Some only finance specific agents due to the either lack of a convincing economic argument or to a limited budget. In these markets, financing a cheaper biosimilar agent can be discussed with the local authorities.

a)      High incidental cost of the innovator: Erbitux reimbursement application was rejected by S.Korea’s health technology assessment body due to its pricing. These kind of markets, which are trying to evaluate the cost-effectiveness of new treatments may be positive against biosimilar entries.

The price of the biosimilar agent will be more critical in these markets and a discount which is within a range of 50-70% of the innovator will likely to get approval.

b)      High budget impact of the originator: Not only the individual price but also the cost of the treatment is critical to gain reimbursement for an innovator. Cost-effectiveness of biosimilars will be critical in these cost-sensitive markets.

c)      Low therapeutic area priority: In Russia, breast cancer is becoming a national focus and Avastin and Herceptin are included in the reimbursement lists. But on the other hand, some diseases are relatively low in some countries and governments/reimbursement bodies do not need to fund originators with high prices.

d)     Markets which innovators do not launch: A biosimilar entrant may become first to market if the innovator does not want to launch their product due to reimbursement and/or registration conditions. An indication restriction or an aggressive price discount can be a reason.

In China, etanercept biosimilars (actually biogenerics) were launched before the originator, Enbrel. Notably, due to the aggressive price discounts mandated by governments in S.Korea and Turkey, similar situations may occur in the future.

Most of the Emerging countries can be considered as semi-regulated when compared to regions/countries like EU and US. But due to the importance of these markets, they take attention of most of the pharmaceutical companies and lack of intellectual property rights in certain regions, help biosimilar manufacturers to grow in these markets. With the entry of biosimilars of mAbs, these markets will have more importance for the manufacturers in the near future.

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