Roche Stays a Step Ahead of Copycat Drugmakers

25.03.2013 -

Delays in developing copies of Roche's top-selling biotech drug are justifying the Swiss company's decision to stay out of biotech generics to focus on improved, patented versions of its medicines.

Roche faces its first big test at the end of this year when it loses exclusivity in Europe on MabThera, also known as Rituxan, a treatment for blood cancers and rheumatoid arthritis that had sales of 6.7 billion Swiss francs ($7 billion) in 2012.

The patent loss is the first of several looming expiries on expensive biotech medicines to treat cancer and autoimmune diseases, opening up a big commercial opportunity for those who manage to develop lower-cost copies known as "biosimilars".

Unlike traditional chemical drugs, biotech medicines consist of proteins derived from living organisms which cannot be replicated exactly. Generic copies, therefore, are more difficult to develop and market.

While rival drugmakers such as Novartis and Amgen have opted to develop biosimilars, eyeing a market that could be worth more than $15 billion by 2020, Roche has ruled out generics, preferring to defend its original products.

The strategy is working so far. Uncertainties over the regulatory framework for biosimilars in the United States, plus high manufacturing costs and the need to run clinical trials to win approval, have caused delays.

Israel's Teva, which joined forces with Swiss partner Lonza to develop biosimilars in 2009, suspended its late-stage trial for a MabThera biosimilar last October to seek input from regulators on how to proceed.

Samsung Electronics, which set up a biosimilars joint venture with pharmaceutical services provider Quintiles in 2011, also halted work on its version for "internal reasons", a Korean newspaper reported.

"This is not for the faint of heart," said Jeff George, head of Novartis's generics unit Sandoz, which started developing biosimilars in 1996 and had sales of $335 million in 2012.

"You need experience across the entire bio-pharma value chain, coupled with pretty substantial financial resources to succeed in this space."

Biosimilars cost between $100 million and $250 million to develop on average, compared with $1 million to $4 million for traditional "white pill" generics, says IMS Health, a leading supplier of information to the pharmaceuticals industry.

Building defences

The delays have enabled Roche to push back to early 2016 the date it expects the first MabThera biosimilar, meaning that sales of its drug are likely to hold up despite the patent loss.

Six of Roche's 10 top-selling drugs in 2012 were biotech medicines, accounting for 60% of its pharmaceutical sales. The drugs start to go off patent between 2013 and 2019.

The Basel-based company is building its defences rapidly, bringing out better versions of its original drugs.

This approach contrasts with that of the world's biggest biotech company, Amgen, which is hoping to become a leading player in biosimilars at the same time as defending its own biotech drugs.

Amgen plans to launch six biosimilars beginning in 2017, including versions of Roche's multibillion-dollar cancer drugs Herceptin, Rituxan and Avastin, the last of which loses patent protection in the United States and Europe in 2019.

Roche has made a running start in protecting its breast cancer drug Herceptin - off patent next year - by winning approval for two new drugs, Perjeta and Kadcyla. It plans to use Perjeta in combination with its older medicine.

Kepler Capital Markets analyst Fabian Wenner thinks that companies may struggle to recruit patients for trials of biosimilar drugs for serious diseases such as breast cancer.

"If you're a patient and have a choice between using Herceptin, a new active agent or doing a trial with a biosimilar, then I guess it's obvious what you choose - It's your life," Wenner said.

However, questions remain over cost: a typical course of Perjeta costs about $188,000. Cash-strapped healthcare authorities, particularly in Europe, would welcome cheaper alternatives.

But unlike traditional generics, which have pushed down prices by about 70 to 80%, price cuts for biosimilars have been more modest - around 30% - because manufacturers have to recoup the higher development costs.

Europe has already approved biosimilars including copycat versions of human growth hormone (HGH), the anaemia treatment EPO and G-CSFs to boost white blood cell counts in patients on chemotherapy. However, uptake has been limited.

G-CSFs have achieved the highest penetration, at 56% of unit market share in regulated markets, IMS Health says, with HGH the lowest, at less than 10%.

Sandoz's biosimilar Zarzio - a copy of Amgen's Neupogen - was approved in 2009 and has a 23% market share in Europe. But this is still a lower penetration than Neupogen.

Follow-on hopes

Roche also aims to extend MabThera's shelf life by bringing out a new subcutaneous formulation, which cuts treatment time to about five minutes from the 2.5 hours for intravenous infusion. It has already filed for approval in Europe.

Deutsche Bank analysts expect sales of MabThera to peak at 7.2 billion francs in 2014 before declining to 6.2 billion francs by 2017.

But while the subcutaneous formulations may help short-term sales, the drug's long-term success hinges on whether it can bring out an improved follow-on, as it did for breast cancer drug Herceptin.

For Rituxan, the company is pinning its hopes on a compound known as GA101. It is running trials in the smaller indication of chronic lymphoid leukaemia (CLL) and expects to present late-stage data in late May or early June.

Roche plans to file GA101 for approval in the United States and Europe this year and is also running trials in the larger area of non-Hodgkin's lymphoma.

"If it doesn't work for CLL, then of course this would put a big question mark on GA101," Chief Executive Severin Schwan told analysts after the drugmaker's full-year results.

"On the other hand, if the data are good, that gives us more hope that it will help for substituting MabThera in the long term."