of enabling patient self‐administration and often cutting down on the delivery time. This solves many of the challenges of IV delivery; however, there is still room for improvement and innovation. Much of the work for innovative biologic delivery has been in the diabetes space. This is because diabetes is a primary care area with an extremely large and growing patient population that could see significant benefit and increased compliance with insulin treatment should administration be made easier and less onerous. Once established, these technologies could spread to other disease areas. This will be particularly important in diseases with large patient populations like asthma, chronic obstructive pulmonary disease (COPD), and hypercholesterolemia.
Collectively these drug technologies make up 18% of the Phase II+ biologic drug pipeline. It is still not clear which of these platforms will enter the mainstream market. The performance of each particular technology class is somewhat dependent on the first few launches. If they fail to deliver clinically and commercially, these launches serve as warnings to investors for the platform as a whole. Existing marketed examples of cell and gene therapies have faced multiple challenges in commercialization, particularly in the funding of treatment. The western world's first gene therapy, Glybera®, was priced at €1.1 million in Germany. Glybera® is used to treat an ultra‐orphan indication, lipoprotein lipase deficiency, but much of the pipeline similarly aims to cure disease and will likely be priced highly. The challenges associated with the cost of groundbreaking curative treatments in the pipeline must be tackled proactively. Innovative approaches to funding will be a necessary prerequisite to success when commercializing such valuable treatments. Instilling payer confidence in a technology's curative promise is challenging given the inability for clinical trials to model a lifelong cure. Schemes such as the UK's Early Access to Medicines and the Accelerated Access Review can enable early collection of real‐world data before approval and enable longer periods of evaluation.19
2.6.3 Biologic Asset Deal Frenzy
As biologic pathway targets are validated, competition for the mode of action intensifies. In the 2012–2016 period, the upfront value of a biologic product deal rose from ~US$20 to 60 million (IMS MIDAS, 2016), tripling in four years. These valuations increased due to three factors:
Innovation output from biotechs has increased in scale and quality. This is possible due to greater scientific understanding of disease, advancement in scientific techniques, and their wider availability.
Investment strategies are increasingly incorporating biologics into the pipeline with large pharma driving the trend. This competition, particularly between companies with deep pockets, is driving up deal values.
There has been prolonged availability of capital at low interest rates, promoting deal making across all sectors.
The Valeant, Turing, and Mylan pricing scandals attracted heavy criticism in late 2015 and 2016. The resulting attention from policy makers in the United States has concerned investors, reducing expectations of future pharmaceutical market potential and growth. This has contributed toward the fall of the NASDAQ biotech index by 21% since September 2015. President Trump's pronouncements after his election have served to increase the uncertainty of an already nervous and volatile sector. The number of biologic product deals signed has also risen. Between 2008 and 2012, these numbers were relatively stable at ~250 deals per annum. However, in 2015, the number of deals announced reached 400. A relevant question to be posed is: Where are these biologic assets being sourced from?
Historically, most biologic product deals have been executed early in the drug development cycle. This trend is becoming more pronounced. Between the 2006–2010 and 2011–2015 periods, deals for biologic drugs in development to Phase II increased by over 60%. If we look at deal growth in absolute terms, the bulk of biologic deal increase is coming from very early stage, discovery/preclinical (392 more deals, 71% of deal growth) (DRG Deal Database, 2017).
There are not many high‐potential late‐stage biologics left to acquire. Demand for pipeline biologic therapies has increased but it will take several years before reactive supply will progress to the late stage.
High valuation of biologic products is pushing players who are unwilling to invest heavily to look earlier in the development of promising candidates.
Players in the industry now have many years of experience developing biologics. They have taken them from scientific concept through to market blockbusters. As a result of this experience, more players have comfort in conducting early stage deals.
The greater risk of early deal making has been balanced with the increased usage of contracted milestones within deals.20
2.7 The Arrival of Major Biosimilars
2.7.1 Biosimilar Immediacy
When small molecule drugs lose patent protection, generics enter the market, resulting in lower drug cost burden for payers. These savings are channeled into the funding of new innovative drugs and expanding access to older ones. The same innovation cycle for biologics is reaching maturity. Many biologic blockbuster products now have biosimilars lined up to take market share. Those biologic makers facing loss of exclusivity on a current marketed product can be partially comforted by the prospect of funding availability for future launches.
A jump in biosimilar availability and usage:The first biosimilar mAb, infliximab, has launched for all originator indications and has taken majority share in several European markets. There are now three competing infliximab biosimilar brands in Europe: Remsima® marketed by MundiPharma, Inflectra® by Pfizer/Hospira, and Flixabi® by Biogen.The list of biosimilar molecules that have gained FDA approval now includes filgrastim, infliximab, adalimumab, and etanercept, with many more entrants expected before the end of the decade.A rich pipeline with over 240 biosimilars in development (including only those that are announced publically) will mean that launches will be coming with increasing frequency and there will greater competition within each molecule.
Stakeholders will have biosimilars high in their priorities. They will gain a lot of experience in the space of a few years:Regulators will be clarifying guidance for biosimilar manufacturers. Many regulatory bodies are aligning guidelines to those of the EMA.Country medicines agencies will be assessing the clinical evidence over time. Important decisions on stance for switching patients to biosimilars will be adopted as a result.Payers will be grappling with barriers to biosimilar uptake in order to find savings and increase leverage.Physician and patient groups will express their views. These will form the backbone of public opinion on biosimilars and have the potential to influence regulatory agency guidance.The biopharma industry, innovative and biosimilar players, will develop new strategies for competition. The level of discounting that a biosimilar business model can sustainably provide and absorb will be more fully understood.
The decisions and opinions developed during this transition period will set precedence moving forward. As a result, keeping up to date with this rapidly changing space will be important for strategic decision‐making in the short and long term.
Many of the top 20 biologics are already exposed to biosimilar competition. An estimated 6/20 have lost exclusivity in the United States and 7/20 in Europe. By 2020, these figures will increase to 15/20 and 14/20, respectively (DRG Company & Drugs, 2016).21
2.7.2 Regulatory Hurdles for Biosimilar Launch
The regulatory evolution of biosimilars is still relatively immature. The EMA published the world's first biosimilar guidelines in 2005, with the FDA publishing its guidelines in 2012. The convergence between these and other regulatory guidelines has been slow, preventing single cost‐effective biosimilar development. Biosimilar legislation is only in its infancy. The Hatch‐Waxman Act in the United States in 1984 did not lead to an immediate mature small molecule drug generic market, and neither will this be the case for biosimilars. As regulatory agencies and biosimilar manufacturers gain experience in bringing biosimilars to market, regulatory difficulties and pathways will have a smaller impact