Strategic Positioning and Business

Potential for Japan and India in the Global

Biosimilars Market

11th April 2014

Aiswariya Chidambaram

CPhI Japan 2014

2

Focus Points

Focus Points

Global Biosimilars Market Overview

Key Market Drivers and Restraints Summary

Biologics Patent Expiry

Global Biosimilars Market – Timeline of Key Events

Competitive Landscape Analysis

Key Companies to Watch

Global Evolving Regulatory Environment for Biosimilars

Indian Biosimilars Market Overview

Strategic Partnerships between Indian and Global Companies

Japan Biosimilars Market Overview

Japan Biosimilars – Pricing Analysis

About Frost & Sullivan

Market Opportunities for New Entrants

Source: Frost and Sullivan

Partnerships and alliances are the major focus of firms entering the biosimilars market.

Non-pharma companies begin to

show increasing interest in biosimilars

Regional

Governments strive

to actively promote

growth of

biosimilars – South

Korea to capture

22% by 2020

The global biosimilars market was valued at $876.1 million in 2012, growing at 53.4%

Patent expiry of biologics worth $100 B by 2020. 2013 – 2015 considered to

be period for significant growth.

Highly concentrated market – top 3 players constitute 82% market share

Europe is the world’s largest biosimilars market constituting

44%. Europe seems a

favourable market due to

well established

regulatory guidelines

and increasing pressure

to control spiralling

healthcare costs.

While the US is under

penetrated presenting

huge opportunity

Global Biosimilars Market Overview

4

Comparative Analysis:

Generics, Biosimilars, and Biologics

Moderate (5075%) Low (~30%)

Biosimilars Generics Biologics

Mark

eti

ng

O

ther

Dyn

am

ics

Probability of Success

Time

Cost

Pricing

Marketing Investment

Point of Differentiation

Barriers to Entry

Product Operational Profit

Margins

Decision Makers

Competitors

Short (34 years) Long (812 years)

Low (~$5 million) High

($350$800 million)

Commodity pricing Premium (full pricing)

Low High

Group purchasing/

medical professional

organisations

Prescribers, patients

High,

less differentiated

Few,

well differentiated

Price,

breadth of portfolio Product profile,

marketing

Low

(cost efficiency)

High

(development process)

Low (~20%) High (~40%)

High (~90%)

Moderate (78 years)

$100$200 million

Lower pricing value

Payers, prescribers

Moderate

Few,

partially differentiated

Price, product profile, and technology

High (capital and development)

Mixed (2530%)

Pro

du

ct

De

ve

lop

me

nt

Source: Frost & Sullivan

United States

(Regulated)

0 Approved

Products under

New Framework

Europe

(Regulated)

~ 14 Approved

Products

Japan

(Semi-regulated)

5 Approved

Products

India

(Semi-

regulated)

~ 50

Approved

Products

China

(Semi-

regulated)

~ 2000

Marketed

Products

Number of Approved Products in Regulated and Semi-

regulated Markets

Source: Frost & Sullivan

6

Global Biosimilars Market – Product Segmentation

Segmentation is done based on existing biosimilar products and emerging biosimilar products, which

may differ among regions.

Existing Biosimilars: Existing biosimilars market

segments include those with approved products in

respective countries.

Emerging Biosimilars: Emerging biosimilars

market segments include those with products that

are being developed, coming up in the future, or

waiting for approval.

Total Biosimilars Market

Existing Biosimilars*

EPO

G-CSF

HGH

Emerging Biosimilars

Insulin

Interferons

mAbs

Total Biosimilars Market:

Market Segmentation, Global, 2012

* Biosimilars are not available in some regions. Source: Frost & Sullivan

7

Key Market Drivers and Restraints Summary

Key Drivers

Key Restraints/Challenges

Biosimilars Market: Key Drivers and Restraints Summary (Global), 2013-2018

Source: Frost & Sullivan

Lack of access to

process information

may affect product

quality

Emergence of new

market participants

expected to drive market

expansion

Time consuming

approval process may

slow down market

growth

Patent expiry of

blockbuster biologics

worth $79.0 billion by

2015 and 100 billion

by 2020

New provisions

introduced by

governments to

reduce medical

expenditure

Uncertainty and

reluctance of

physicians to adopt

biosimilars

8

2005 2010 2015 2020 2025 2000 2030

Epogen

2013

Biologics Market: Key Patent Expirations, US, 2000–2030

Year

Lantus

2015

Neupogen

2013

Herceptin

2019

Remicade

2018

Neulasta

2015

Erbitux

2016

Humira

2016

Rituxan

2009

(Expired)

Enbrel

2028 Avastin

2019

Pro

du

ct

HG

H a

nd

In

su

lin

m

Ab

s

EP

O a

nd

G-C

SF

Source: Frost & Sullivan

Biologics Patent Expiry – US

9

2005 2010 2015 2020 2025 2000 2030

Epogen

2004

Biologics Market: Key Patent Expirations, Europe, 2000–2030

Year

Genotropin

2008

Neupogen

2006

Herceptin

2014

Remicade

2014

Neulasta

2015 Aranesp

2016

Humira

2018

Rituxan /

Mabthera

2018 Enbrel

2029

Pro

du

ct

HG

H

mA

bs

EP

O a

nd

G-C

SF

Source: Frost & Sullivan

Biologics Patent Expiry - Europe

10

Global Biosimilars Market - Timeline of Key Events

Regulatory guidelines were the main focus in 2012, with pathways becoming clearer and new products

getting approved.

Total Biosimilars Market: Timeline of Key Events, Global, 2012 and 2013

Jan–Feb March–April May–June July–Aug Sep–Oct Nov–Dec 2013

January 2012:

EMA guidelines

released on

recombinant

interferon beta

February 2012:

US FDA

biosimilar

guidelines

released

June 2012: Finox

Biotech initiates

phase III clinical

trial for Afolia, a

recombinant follicle

stimulating

hormone (r-FSH)

July 2012: The

Ministry of Food and

Drug Safety

approves Celltrion’s

Remsima™;

awaiting European

final approval

December 2012:

EMA guidelines

released on

recombinant

human insulin and

mAbs

November 2012: First

G-CSF biosimilar

approval of Mochida

Pharmaceuticals and

development partner,

Fuji Pharma, in Japan

September 2012:

Sandoz begins

phase III clinical

trials in the United

States for biosimilar

epoetin alpha

September 2012:

Mexico released

biosimilar guidelines

July 2012:

India

announced

biosimilar

guidelines

June 2013:

First-time EMA

gives positive

opinion on 2

Mabs: Inflectra

and Remsima™

Source: Frost & Sullivan

Competitive Landscape Analysis

Biosimilars Market: Top Five Companies by Market Share (Global), 2012

Source: Frost and Sullivan

Rank

Company

1

2

3

4

5

The top three global biosimilars market participants

contributed 82.0% of the total market revenue with

Sandoz as a global leader.

Teva Pharmaceutical’s acquisition strategy has

allowed the company to stay ahead in the G-CSF

sub-segment.

Hospira has been active in the EPO biosimilars sub-

segment.

Competition will likely increase as new market

participants from emerging countries are penetrating

the market.

**Sandoz includes Sandoz and Hexal.

***Teva includes Ratiopharm and CT Arzneimittel.

12

Competitive Landscape Analysis (continued)

Source: Frost & Sullivan.

Sale

s a

nd

Mark

eti

ng

Str

en

gth

Lo

w

Hig

h

Low High Product Development Strength

Generics and

Specialty

Pharma

Big

Pharma

Biotech /

Biopharma

Potential

Entrants

Sandoz

Teva

Hospira STADA

Medice CT

Arzneimittel

Biopartners

Mylan

Merck

Eli Lilly

Pfizer

Astrazeneca

Zydus Cadila

Actavis

Dr. Reddy’s

Boehringer

Ingelheim

Biocon Cangene

Crucell

Reliance

Life Sciences

Companies with a strong integration of marketing and R&D is likely to succeed.

Total Biosimilars Market: Competitive Landscape Analysis, Global, 2012

Celltrion

Samsung

Fujifilm

13

Government Regulation and Policies

The Dynamic and Complex industry nature makes it difficult to formulate and

implement uniform regulatory guidelines for approval of new products

Divergent Interests Uncertain Long-term

Impact

Brand innovators

fear that the

widespread

adoption of

biosimilars might

hamper their

growth and have

questioned the

safety of biosimilars

In countries where

the regulatory

bodies have already

approved

biosimilars,

credibility of such

products as

equivalent long-

term substitutes for

originator products

is often debated

Complex Molecules

Molecular

complexity of

bitech-based

products has

traditionally driven

regulators to treat

biosimilars extra-

cautiously , often

requiring lengthy,

expensive clinical

trials , restricting

small players from

entering this space

Source: Frost & Sullivan

14

Global Evolving Regulatory Environment for Biosimilars

Region Regulatory Environment

• EMEA global leader in providing a formal path for biosimilars approval

• Regulatory guidelines vary on a country-by-country basis

• Regulation drafted by developed countries other than the US are often based

on EMEA approval standards

• FDA lags behind the EU in framing clear regulatory policies for biosimilars

• The Biologics Price Competition and Innovation Act (BPCIA, 2009, provides

a framework for biosimilars approval

• FDA is preparing to provide further guidance to companies seeking for

approval

• In 2009, WHO published Guidelines for Evaluation of Similar Bio-therapeutic

Products , providing high-level guidance for national regulatory agencies

• Though it targets developing markets , regulators’ ability to evaluate and

formally approve products remains limited

Source: Frost & Sullivan

15

Global Evolving Regulatory Environment for Biosimilars

(continued)

Region Regulatory Environment

• A National Biotechnology Regulatory Authority (NBRA) Bill is soon expected

to passed hoping to significantly streamline the approval process

• The current biosimilar approval process is quite complex requiring approval

from multiple government agencies

• Hence a clearer regulatory pathway is required to cut costs and time

• Despite having the maximum number of approved products domestically,

China lacks a specific approval process for biosimilars till date

• The bar set by the Chinese SFDA remains lower than that of the US and EU

• Guidelines for the Quality, Safety and Efficacy Assurance of Follow-on

Biologics was established by the PMDA on March 2009

• Currently existing regulatory policies are not on par with those of the

regulated markets

Source: Frost & Sullivan

16

Indian Biosimilars Market Overview

What are current market dynamics, and what are the primary challenges?

• The Indian biosimilars market as estimated to be worth $58.8 million in 2012

• Large companies develop not only biosimilars but also their own biologics

• Medium-size firms struggle to gain a footing in India

• Despite leveraging a large share in the global generic market, this segmnet

warrants a unique combination of generic and innovative drug industry

What are the key opportunities and risks for this

market?

Which companies are successful in this market

and why?

Opportunities Risks Leading Companies Overcome

challenges and

mitigate high risk and

costs associated with

drug development

and manufacturing

Importance of

strategic

partnerships has

been recognised

Patent expiry of 17

blockbuster biologics

between 2011 and

2019

Lower facility and

development costs

than developed

countries

Progress towards

achieving better

clinical capabilities

Tedious approval

(bioequivalence

studies), processes

and patent litigations

Cold chain

distribution – a major

hindrance to supply

chain

Source: Frost & Sullivan

17

Indian Biosimilars Market - Existing and Pipeline Products

Company/Product EPO Insulin HGH Interferon GCSF MAB Enbrel Streptokinase

Biocon

Intas

Biopharmaceuticals

Dr Reddy’s Labs

Reliance Life

Sciences

Bharat Biotech

Lupin

Wockhardt

Ranbaxy & Zenotech

Labs

ShanthaBiotechnics

(Sanofi Aventis)

Expected Global

Biosimilars Market

Share (2015)

11% 10% 4% 9% 10% 36% 12% <8%

Launched

product

Pipeline

product Sources: Frost & Sullivan, BioPharm International and IBEF.

18

Strategic Partnerships between Indian and Global

Companies

Product

Development Manufacturing

Clinical

Trials Partnerships Comments

Capabilities driven by

strategic alliances with

global leaders

First Indian company to

receive EU-GMP

Certification

Partnership with GSK to

assist in manufacturing

and marketing; have a

WHO cGMP facility

Have multiple cGMP

facilities in India in addition

to main plant in Ireland

Partnership for product

development. Evaluating

for marketing partners in

EU

5 manufacturing facilities

across India; emerging

capabilities in biosimilars

Sources: Frost & Sullivan and IBEF. Strong Weak

19

Strategic Partnerships between Indian and Global

Companies (continued)

Product

Development Manufacturing

Clinical

Trials Partnerships Comments

Bought 40% stake in Goa-

based Mab Pharm & 25%

stake in Bio Mabs in China

to grow mAb capabilities

Subsidiary Shantha West

in San Diego has

developed 4 mAbs; R&D

partnership with

International Vaccine

Institute

Ranbaxy holds 45% stake

in Zenotech Labs for

marketing biosimilars

N/A Recently opened a large

biotech park in

Aurangabad, designed

according to US and

EMEA standards

Sources: Frost & Sullivan and IBEF.

Strong Weak

20

Way Ahead for Indian Biosimilars Market

Strategic partnerships between global and Indian companies are expected to increase significantly

over the next five to ten years

Sources: Frost & Sullivan and IBEF.

Path forward for Indian Biosimilars Establish

partnerships with

local industry

leaders

Market to

physicians

serving the

emerging

middle class

Export to unregulated

and semi-regulated

markets

Huge

opportunity for

investment in

Indian market

Establish clear

pathway for

Regulatory

Approval

21

Japan Biosimilars Market Overview

What are current market dynamics, and what are the primary challenges?

• Japanese Biosimilars Market was estimated to be $26.2 million in 2012

• Generics constituted 23% by volume and 10% by value in 2012.

• Japanese Government strives to reduce healthcare costs and increase use of

generics

• Biosimilars are considered a sub-category of generics. Till date, 5 products

approved in Japan

• Slower uptake of generics is mainly due to quality and efficacy concerns

• Market is expected to grow gradually driven by patent expiry of biologics, increase in

demand and physician acceptance

What are the key opportunities and risks for this

market?

Which companies are successful in this market and why?

Opportunities

Risks Leading Companies Sandoz and JCR - early-

entrance companies that have

approved biosmilar products in

Japan since 2009; both filed

another biosimilar product for

approval.

Nippon Kayaku established a

strategic partnership with

Celltrion to develop few other

mAbs biosmilars.

Patent expiry of

original medicines

Government

prospective payment

system and incentives

for physicians,

pharmacists

Aging population

Regulatory

hurdles

Physicians’

perceptions

Stringent price

cut system

Source: Frost & Sullivan

22

Product Component Therapeutic

Indication Manufacturer

Reference

Product

Authorization

Date

Epoetin alfa BS epoetin alfa Anaemia, renal

anaemia

JCR

Pharmaceuticals Espo 20 Jan 2010

Filgrastim BS filgrastim

Cancer,

hematopoetic stem

cell transplantation,

neutropenia

Fuji Pharma

Neulasta 21 Nov 2012

Filgrastim BS filgrastim

Cancer,

hematopoetic stem

cell transplantation,

neutropenia

Sandoz Neulasta 24 March

2014

Filgrastim BS filgrastim

Cancer,

hematopoetic stem

cell transplantation,

neutropenia

Teva Neulasta 28 Feb 2013

Somatotropin

BS somatotropin

Growth Hormone

Deficiency, Turner

Syndrome

Sandoz Genotropin 22 June 2009

PMDA Approved Biosimilars in Japan

BS stands for biosimilar.

Biosimilars Market: PMDA Approved Biosimilar Products, Japan, 2012

Source: Frost & Sullivan

23

Market Opportunities for New Entrants

Competitive

Knowledge

Capital

Investments

Vision

and

Strategy

Scale-up

Production

Capabilities

Clinical and

Regulatory

Expertise

Marketing

and

Sales

Skills

• Clearly defined long-term vision,

commitment, and strategic fit

• Goals for in-house development,

marketing, and geographic focus

• Competitive intelligence

on biologics and

biosimilars market

• Competitor pipeline

analysis and competitor’s

R&D investment strategy

• Competitive regional

benchmarking

• Healthy finance infrastructure

for high upfront investments

• Ability to cope with high

manufacturing, maintenance,

and promotional costs

• Effective sales communication to

the scientific community

• Effective market activities for

commercialization of biosimilars

• Continuous promotional activities

and marketing relationships with

doctors and pharmacists

• Technical know-how for

clinical development

• Regulatory expertise on

guidelines such as EMA,

FDA, and

pharmacovigilance

expertise

• Stable multi-step reproducible

manufacturing facilities

• Proper supply chain management

• Standard testing control facilities

Strategic

Factors

for New

Entrants

Source: Frost & Sullivan

Questions

25

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