In conversation at the FT’s Global Pharmaceutical & Biotechnology Conference last month, Sandoz CEO Richard Saynor outlined the current status of the biosimilars industry, the differences between the European and US markets, the advantages of being part of a large science-based innovator like Novartis, and why competition in biosimilars will not be the same as in generics.
The European biosimilars market: “In many ways behaving like classic generics”
Asked about progress in access and savings for biosimilars in Europe, Saynor explained that, after many years of physician and patient education, biosimilars are today very well accepted in Central-Western Europe.
“Patients are getting access to biologics that they could not have dreamt of a few years ago,” he said, adding that every biologic that Sandoz has filed in Europe has been approved and very well adopted.
In Europe, he stated, generics and biosimilars supply 90 percent of the volume for 10 percent of the cost. “They offer huge savings; the price disparity in biologics is massive.”
Biosimilars adoption in Central-Eastern Europe, however, is slower “because the paying systems are brand-driven rather than centralised, but even there we have seen increased adoption.”
“In Europe, the days of having to explain a biosimilar are pretty much gone, [they are] extremely well tolerated. In many ways, [biosimilars] are behaving like classic generics… taking a significant proportion of the molecule’s share.”
The United States, ten years behind Europe
While acknowledging that the United States is the largest biologics market in the world, the Sandoz CEO asserted that “the US is probably ten years behind Europe,” when it comes to access, although biosimilars are getting better adoption there.
“There has been progress in the last couple of years in the US,” he said, arguing that misinformation about the quality and substitutability of biosimilars remain a concern, as well as institutional hurdles.
US Challenges: patent framework and “perverse” incentives
In the US, Saynor said, the patent landscape makes it difficult for biosimilars producers. “In the US you have to challenge a patent, like we did with our biosimilar Erelzi (etanercept-szzs) where we had to go up to the Supreme Court… The patent landscape prevented us from bringing it to the market, which means that patients are paying significant premiums for the product.”
“Patents were never designed to be immortal, the whole point was to reward over a period for innovation… Some companies use evergreening, filing new and complex patents around processes, manufacturing, and formulations; that is as old as the hills in this industry, but it gets more complicated with large molecules.”
Another big challenge for biosimilars in the US market, according to Saynor, is related to the private nature of the healthcare system. “Because hospital systems are rewarded on discounts from originator medicines, sometimes there is a perverse incentive that looks for higher price products rather than lower.”
“Incentives are an issue within the US healthcare system. We will continue to bring biosimilars to the market and continue challenging the legal systems to make sure patients get access,” he said, adding that he is “encouraged to see that the situation is starting to change.”
High development costs will make it a market of few
Asked about the future of the biosimilars market, Saynor pointed to a significant number of biologics going off-patent soon, creating a “pretty attractive market.”
Not mentioning specific molecules, Saynor revealed that there are “obvious, big biologics” that “everybody is chasing,” but, looking to put the industry’s competitive landscape in context, explained that “everybody” is in reality a short list of companies.
“It costs you several hundred million dollars, and probably 8-9 years, to develop and bring a biosimilar to market; it is not cheap. A small molecule takes you about 5 years and [costs] 2.5 million dollars. The number of players is lower, and the breadth of the portfolio is getting wider, so the competitive intensity is not as great as it is with small molecules.”
The Challenges of biobetters
Quizzed on the potential in the field of biobetters field – new-and-improved version of existing biologics with molecular or chemical modifications to improve safety, enhance efficacy, and even reduce toxicity – Saynor struck a cautious note. “[Biobetters are] difficult because of how quickly they can become NCEs (new chemical entities), [which makes] proving that your product is better difficult and expensive,” he admitted.
The advantages of being part of a large science-based innovator
After stating that the strategic review of Sandoz announced by Novartis – which might lead to the division being spun off – will decide who is the right owner for the division and will take about a year, the CEO said that being owned by Novartis gives them clarity of purpose. “There is no point in Sandoz trying to be an innovative company. Novartis is a great science-based innovative company. It makes our priority a purpose; we want to be the best generics company in the world.”
Saynor added that Sandoz is run autonomously from Novartis, “Operationally, we run independently, having our own supply chain and R&D…Our ability to develop biologics has benefited from being part of [Novartis]; it gives us access to science, talent and capital to invest.”
At the end of the session, Saynor was asked about antimicrobial resistance (AMR) since Sandoz is one of the world’s largest producers of antibiotics. “It is already a serious issue. As the company with the biggest manufacturing of anti-infectives globally, we are looking to produce them clean, green and efficiently without adding to the resistance problem.”
For older antibiotics, “it is about the right use; educating physicians, prescribers and patients.” As a possible solution, he explained that Sandoz is looking at different payment frameworks. “You need to encourage [physicians] not use them. We are looking at how the industry offers drugs of last resort that, in a way, does not encourage high volume use that can result in AMR.”
“It is complicated and highly critical. As a global leader, we have a significant responsibility.”