Biosimilars Overview 18012007 v2

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www.stratycon.com

© Stratycon Business Solutions Pvt.. Ltd. 2005-07

Biogenerics – Overview and Outlook

http://www.stratycon.com/

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2© Stratycon Business Solutions Pvt.. Ltd. 2005-07

Contents

• Global Biomedicines Industry

– Background

– Geographic highlights

– Leading classes and products

– Biologics under development

• Biogenerics/ bio-similars/ follow-on biologics

– Background (what products come under this? )

– Accessing regulated markets (Regulatory Status US, EU, Japan)

– Foreseeing Competitive Intensity

– Business Options

– Hurdles & Opportunities

• Concluding Comments

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Biologics - Background

• Global biologics market is estimated to be ~$ 53 billion (excluding vaccines) constituting ~9% of global pharmaceutical market1

• ~125 biologics currently marketed3

• The innovation gap for big pharma is filled by biologics (# of NME approvals for biotech products have exceeded that of big pharma2 )

• >400 biologics in development constituting ~19% of all developments

• By 2010, biologics are expected constitute >15% of global pharmaceutical market1

Ref:: 1IMS Global Insights 2005; ET Dec 30 2006; 2E&Y Biotech Industry Report 2006; PhRMA Report 2006, IMS-New Markets & Products in 2005; Stratycon Estimates

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Biologics constituted ~9.4% of the total biopharmaceutical market

EU, $12.18

US, $32.80

Global pharma, $549

ROW, $4.43

Japan, $3.43 Other, 52.84

Ref:: Stratycon Estimates; ET Dec 30 2006; IMS Midas 2006;

• US is the largest market for biologics with >60% of global biotherapeutic sales, ROW constitutes ~8%

Notes: ROW- Rest of the world; Estimation for 2005

Sales Estimates – 2005

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Geographical Highlights

Ref:: IMS Industry in Figures 2005; JETRO, Japanese Patent Office Survey, Stratycon Estimates

• Current market for biologics ~$ 33 bio. • Growing at >17% YoY• EPO constitute major proportion of sales

• Estimated market size of biologics ~$12 bio• Biologics growing faster than US at around 20%• Germany constitutes 1/3rd of 5EU market• Human insulin, EPO constitute ~19%, 18%

• Estimated biologics market is ~$3.93 bio• The biologics market has been growing at 7.3%• EPO constitutes ~23%, followed by mAb (12%)

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But the growth of biotech has continuously outpaced that of pharmaceuticals

0%

5%

10%

15%

20%

25%

30%

2000 2001 2002 2003 2004 2005

YoY

Gro

wth

in %

Pharmaceuticals Biologics

Ref:: IMS Industry in Figures 2005; Stratycon Estimates

• 23% of total industry growth in 2004 came from biotech products

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# of block buster biologics have significantly increased over the last 5 years

3 3

67

11

20

24

0

5

10

15

20

25

30

2000 2001 2002 2003 2004 2005 2006

# of

Bio

tech

Pro

duct

s w

ith >

$1bi

o sa

les

Ref:: IMS Outlook 2005 & Beyond; Product & Company Research by Stratycon

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..also the number of NBEs approved by FDA till 2005

1213

20

15

21

42

0

5

10

15

20

25

2001 2002 2003 2004 2005 2006 2007 till Nov30

# of

NB

Es a

ppro

ved

by U

S FD

A

Ref:: Ronald A. Rader; Record Number of Biopharmaceuticals Approved: 2005 Was a Record-Setting Year; BioPlan Associates 2006, FDA Approval History (Accessed Dec 07)

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Projected biologics market by geography (2010)

66.45

24.92

11.08 9.55

0

10

20

30

40

50

60

70

US EU Japan ROW

Bio

logi

cs M

arke

t in

$bio

.Projected Biologics Sales

Ref:: Stratycon Estimates

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Erythropoietin, TNF, insulin analogs and cancer antibodies are leading biologic categories (excluding vaccines)

Neulasta/Neupogen G-CSF from Amgen is the leading biologic with 2005 global sales of $3.5 bio.

Top 10 biologics constitute 49.5% of total biologics market

Leading Classes & Products

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Erythropoietin is the leading class of biologic constituting ~22% of biologic market (excl. vaccines)

10.9

7.67.2

6.8

3.8 3.8

2.3 2.2 2.11.3 1.1 1.0

0.0

2.0

4.0

6.0

8.0

10.0

12.020

05 G

loba

l Sal

es $

bio

.Erythropoietins

TNF

Insulin & analogs

Cancer Antibodies

Interferon Beta

G-CSF

Human Growth Hormone

Rec. Coagulation Factors

Interferon Alpha

Enzyme Replacement

Antiviral Antibody

Follicle Stimulating Hormones

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7 of top 10 products have annual global sales of > $ 2 bio. (2005)

3.53.33 3.32 3.27

2.57 2.54 2.46

1.81 1.721.54

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.020

05 G

loba

l Sal

es $

bio

.Neulasta/NEUPOGEN

MabThera/Rituxan

Procrit/Eprex

Aranesp

Enbrel

Remicade

Epogen

NeoRecormon,Epogin

Herceptin

Avonex

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4 of $2 + bio. biologics are growing at more than 20% Y0Y

• The Strongest growth was observed for Avastin - bevacizumab (+141%), Humira (+64%) and Herceptin (+48%)

Aranesp

Enbrel

NeoRecormon,EpoginAvonex

Neulasta/NeupogenMabThera/Rituxan

Procrit/Eprex

RemicadeEpogen

Herceptin

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

-10% 0% 10% 20% 30% 40% 50% 60%

YoY Growth

2005

Glo

bal S

ales

in $

bio

.Top 10 biologics - 2005

Note: Avastin & Humira doesn’t feature in top 10 biologics

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~19% of all drugs under development are biologics, with mAbs accounting for ~34% of all biologics being developed.

~46% of biologics in clinical stages are being developed for cancer.In 2010, ~50% of all new approved pharmaceuticals will be biologics.

Pipeline of Biologics

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Monoclonal antibodies, gene therapy are constitute major proportion of biologic pipeline apart from vaccines

Ref:: PhRMA Report 2006;

• ~19% of all pipelines are biotech products

160

62

46

43

21

20

18

16

9

8

62

0 50 100 150 200

Others

Interleukins

Immune based therapy

Growth Factors

Interferons

Antisense

Cellular therapy

Recombinant Hormones/Proteins

Gene Therapy

Vaccines

mAbs

# of Biologic in Development by Category

Notes: Could include pre-clinical molecules hence total is more than

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Biologic pipeline has major focus on cancer, infectious diseases, HIV/AIDS

21050

442222

17151413

1076

44

18

0 50 100 150 200 250

OtherTransplantationGrowth DisordersEye ConditionsSkin DisordersBlood DisordersRespiratory DisordersDigestiveDiabetes/RelatedNeurologic DisordersCardiovascularAIDS/HIV RelatedAutoimmuneInfectious DiseasesCancer/Related

# of Biologic in Development by Disease Segment

Ref:: PhRMA Report 2006

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Current global market of biosimilars is estimated to be less than $100 mio. Regulated markets are taking the next step for

biosimilars. ROW countries could act as a launch pad taking products subsequently to regulated markets.

Biosimilars

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Biosimilars - Background

• The current global biosimilars market is estimated to be ~ $100 mio.

• With the advent of EMEA’s progress in drafting guidelines, the scenarios is expected to be bright

• By 2011, biologics worth $18 bio. annual sales are expected to lose patent protection in developed pharmaceutical markets

• The global biogenerics market opportunity is estimated to be worth >$2 bio by 2008, (but it could be to the tune of >$5 bio. considering possible market expansion)

– EPO, CSFs and hGHs are expected to account for the majority of the biosimilar sales

• US still lags behind entangled with a number of debates and influencing stake holders

Ref:: The Future of Biogenerics- PharmaVoice – May 2005; Chemical & Engineering News - June 6, 2005; F&S Articles, Stratycon Analysis

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Selected biologics with expired patent

Product Compound Company Expired

Neupogen G-CSF Amgen 2006

Novolin Human Insulin NovoNordisk 2005

Protropin Growth hormone Genetech 2005

Activase t-PA Genentech/BI 2005

Epogen, Procrit EPO-α Amgen/J&J/Sankyo 2004

Nutropin Growth Hormone Genentech 2003

Humatrope Growth Hormone Eli Lilly 2003

Avonex Interferon b1a Biogen 2003

Intron A Interferon a2b Schering Plough 2002

Humulin Human Insulin Eli Lilly 2001

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EU has guidelines in place for approval of biosimilars, US and Japan lag behind in the process.

Biosimilars - Regulatory

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EU has defined regulatory requirements for biosimilars

• EMEA has developed guidelines for approval of biosimilars– Draft guidelines, including specific clinical and non-clinical data requirements for four

product types: • Recombinant insulin, human growth factor, erythropoietin and CSFs

• The Committee for Medicinal Products for Human Use (CHMP) issues specific guidelines on case by case

– Comparability studies are required to substantiate evidence for safety, efficacy and quality

– Advised to approach EMEA for detailed case by case basis guidance on studies required to be conducted

– Product-class specific guidance documents on pre-clinical and clinical studies to be conducted for the development of biosimilars will be progressively available

– The authority for marketing approval of a biosimilar lies with EC

• Omnitrope is the first biosimilar to be approved in EU, which was earlier approved in Australia by TGA. Biopartner’s Valtropin is approved and α interferon is under review

• Note: EU has constituted 10 year data exclusivity period for all pharmaceutical innovators. (this prevents a patent challenger to use innovators safety & efficacy data)

Ref: EMEA (Accessed Jan 07)

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US is still in the process of developing guidelines for biosimilars

• Currently there is no clear guidelines and authority for approval of biosimilars

• Drugs generally covered by Federal Drug & Cosmetic Act, and biologics approved under Public Health and Safety Act

– Most of the Biologics are approved through BLA – Some early biologics, such as human growth hormone (hGH), insulin, and

conjugated estrogens, were approved as drugs by FDA under the FD&C Act– ANDAs could be applicable for these products, subject to FDA resolution of the

scientific and other issues involved.

• Guidelines for approval of biosimilars currently not defined– No equivalent of ANDA under PH&S act for approval of follow on biologics

(biosimilars)– The congress and the FDA are considering various scientific and legal issues

surrounding follow-on biologics, to define a regulatory process for follow on biologics

• Biosimilar Omnitrope is approved in US

Ref: FDA

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US - Some products under NDA may be approved without new ‘follow on biologics’ legislation!

Growth Hormone, FSH, LH, hCG, TSH

Insulin

Calcitonin

Approved Through NDA

PTH

Imigucerase

Aprotinin

Hyaluronidase

tPA

Interferons

EPO

Approved Through BLA

mAb

Enzymes

Ref: FDA

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Japan – PDMA – Office of biologics evaluates generic biologics

• Currently there is no guidelines for approval of biosimilars

• CPAC & MHFW are authorities for pharmaceuticals– Central Pharmaceutical Affairs Council evaluates and makes the

recommendation & the Ministry of Health and Family Welfare makes the decision on approval of drugs, biologics

• PMDA (Pharmaceutical & Medical Devices Agency) – Office of Biologics– Provides consultations concerning the clinical trials of new drugs and medical

devices

– Has ‘Office of biologics’ for handling biotech medicines including generic biologicals

• Use of foreign clinical data is very limited while approval of new medicines, and less likely that glycosolated proteins will be recognised as generics

Ref: MHW, JPMA Report 2006

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Biosimilars – Competitive Intensity

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Foreseeing Competitive Intensity

• How big is the market?

• How complex is the manufacturing process?

• Will the regulatory approval be through a relatively abbreviated process?

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Biosimilars – Evaluating Probable Competitive Intensity

1

2

3

4

5

6

7

1 2 3 4 5 6 7

Reg. Simplicity

Ease

of M

nf. S

core

Neupogen

Retuxan

Procrit/Eprex

Enbrel

Humulin

Avastin

Genotropin

Ref: Stratycon Analysis – Draft

Size of bubble: Innovator Brand Sales -2005 ($ bio.)

Portfolio Development Path (considering market size)

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Leading Generic Companies & their biosimilar portfolio

Company EPO CSF Insulin HGH Interferon tPA mAb Total

Teva/Sicor/BTG D M M M 4

Sandoz M 1

Pliva (+Mayne) M D M 3

Stada D D D 3BioPartners/LG LS M M M M M 5

BioGeneriX D D 2

GeneMedix D M D D 4

Dragon M 1

Biocon D M M D D D D 7

Scino Pharma D D D D D 5

SciGen M M M D D 5

Wockhardt M D M D 4

DRL D M D 3

Shanta Biotech M D M M D 5

Total 11 9 6 7 9 3 6 52Total (M) 5 5 5 4 4 1 0 24

Note: List is not complete, M: Marketed, D: Developing

Ref: News releases, company research

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Biogenerics – Probable Competitive Outcomes under regulatory uncertainty

Biosimilars Regulatory Process in Question

Requires large Clinical Trials

Doesn’t Require large Clinical Tests

Higher Price Differential

Lower Price Differential

Expanded Demand

Higher Competitive

Intensity

Limited Change in Demand Next Gen

Biologics

Price & Competitive Equilibrium

Focus on Next Potential Biologic going off patent –

get it first to the market!

Next Gen Biologics

Authorized Bio-similar well in

advance

Lower Competitive Intensity

Less Time to Market

More Time to Market

Focus on Next Potential Biologic going off patent?

Likely Strategies by Innovator

Incremental product Innovations

Process Innovations for cost cutting

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Constraints & Drivers

• Regulatory– No clear cut regulatory mechanism in

US, Japan

• Technological– Manufacturing complexity– High setup & manufacturing costs– Higher cost to prove comparability

• Market Factors– Next generation biologics– Limited discounting ability

(discounting in the range 25% to 30%)

– Authorised generics/price cuts– Gaining acceptance by clinicians

(brand based competition)

• Biologics segment size & growth– Biologics performance exceeds that

of overall market– Biologics worth $18 bio. Will go off

patent by 2011

• Increasing pressure to reduce healthcare expenditure

– Evolving regulatory mechanisms to recognise biosimilars (EU, Australia)

• Semi/unregulated markets as launch pad

• Generic majors like Teva, Maine, Pliva developing biosimilar capabilities through partnerships as well

CONSTRAINTS DRIVERS

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Business Options – Step by step approach?

Unregulated Markets

EU

US

Japan!

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Analyzing business options

Market in Question

Have/ Can build

Market yourself?

Complete partnering?

Doesn’t have/can’t build Out-license?

Selective partnering?

Marketing & Regulatory competency?

Authorized Generics?

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Comments

• Biologics approved through NDA and easy to manufacture could be the first targets for generic manufacturers

• Semi/unregulated markets could act as launch pad for biosimilars and could be beneficial in accelerated approvals in regulated markets (once the guidelines are in place)

• Big generic companies like Teva, Sandoz, Pliva have significant focus on biosimilars and have access to market and marketing resources

• Medium size/ biotechs from developing world are increasingly following collaborative models to accelerate commercialization of their biologics

• Biologic innovators will move forward with the next-generation biologics trying to make up for revenue loss due to biosimilars

– This is facilitated by biotech innovators bridging the innovation gap of big pharmaceuticals

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Documents

Biosimilars Overview 18012007 v2