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Can Biogenerics Deliver on the Multibillion-Dollar Market Promise?
Biogenerics have received a lot of publicity regarding the estimated multibillion-dollar market they represent and the discussion has the attention of several companies not involved in the health care industry. A recent Reuters article titled “Race to Copy Biotech Drugs Creates Odd Bedfellows” outlines the unlikely partnership between drug manufacturers and companies who have no history in this area. The potential of biogenerics has many Asian companies like Samsung and Hanwha Petrochemicals Group anxious to get involved. According to the article, many of these companies see biogenerics as a good opportunity to diversify and potentially offset any decline in their primary business ventures. For example, Hanwha recently closed a deal to partner with Merck on a copy of the drug Enbrel and earlier this year Samsung partnered with Quintiles to create contract manufacturing for biogenerics.
Because of the high cost to bring a biogeneric drug to market – an estimated 100 million dollars and five or more years – partnering makes sense. Analysts are predicting a record year for biogeneric deals with 9 deals already this year, which is up from 7 for 2010. Partnerships also offer access to the broad range of skills necessary for commercialization, including development, manufacturing, regulatory, and marketing. With these challenges there are only a few large drug companies that could reach a global market, and partnerships allow more companies access.
Looking beyond the publicity surrounding the large market potential and the excitement around partnerships to reach a global market, there are still many hurdles for biogenerics to pass before any of the promise can be achieved. The first challenge is duplicating the original product. Manufacturing biopharmaceuticals is complex and it is impossible to produce an exact copy. Biogeneric manufacturers will have to make a similar product and prove through clinical studies that the drug has the same function and efficacy in humans. These clinical studies will be necessary for regulatory approval, which has not yet been clearly defined in the United States. In Europe, two major biogenerics have been approved, but in the United States the Food and Drug Administration (FDA) has not approved any. In fact, the FDA is just beginning to work on guidance for biogeneric approval, which is due later this year.
Lastly, biogeneric manufacturers will need to keep cost in mind and provide a final product that is less expensive than the original biopharmaceutical. In Europe, Omnitrope, a biogeneric human growth hormone, is offered at a 25% price reduction compared to the original product. Biogeneric companies will have the advantage of improved technologies, including production systems that are more advanced, more cost-effective, and more defined. They can utilize manufacturing systems that are completely animal-free and defined, which would be an improvement over some original products that are still manufactured using animal or other undefined components.
Will the biogenerics live up to the promise? It will depend on regulatory requirements, cost savings, and public acceptance. The Affordable Care Act, signed into law by President Obama in March 2010, will certainly help as it clears the way for FDA approval of a biogeneric and strongly encourages reducing health care costs. There has been strong support for making less expensive biopharmaceuticals available to the public. Biogenerics could deliver on the promise of reducing the cost of medicine and if successful, then they have an excellent chance of delivering on the multibillion-dollar market promise.