The generics and biosimilars sector is critical to delivering healthcare worldwide, but how is economic downturn aggravating existing challenges facing the sector?
Words by Isabel O’Brien
Economic instability wasn’t on anyone’s wish list this Christmas. However, after the financial haemorrhaging caused by the pandemic and the ongoing Russian invasion of Ukraine, many companies are finding an unwelcome lump of coal in their stockings this year.
Effects of global instability
While traditional pharma companies are the undisputed experts in innovation, generic and biosimilar companies are healthcare systems’ bread and butter. “Without our industry, there would be no healthcare systems,” says Richard Saynor, CEO, Sandoz, at FT Live’s Global Pharma and Biotech Summit. “Quite frankly, they’d be bankrupt.”
Staggeringly, off-patent medicines currently represent 70% of dispensed medicines in the EU, treating patients at “20-30% of the cost,” according to Saynor. This underlines the need for governments and policymakers to support the sector to ensure it can continue to deliver vital therapies to patients during this turbulent time.
“Our sector has a moral and a legal obligation to maintain the supply of medicines to Europe and we are fully committed to do so,” says Elisabeth Stampa, President, Medicines for Europe, and CEO, Medichem, in an open letter to European Energy Ministers and responsible European Commissioners. “However, we cannot operate in an environment combining rampant cost inflation with policies that continuously lower prices,” she adds.
Rising energy bills are placing the most significant strain on operations. “It is imperative that the EU introduces measures to lower energy costs for the generic medicines sector,” Stampa continues. Unlike originator companies, it is challenging for these companies to pass inflated costs onto customers. In the case of over-the-counter generics, customers could simply switch to a competitor.
Bad deal for biosimilars
Even before the most recent economic instability, biosimilar firms faced challenges that hindered their productivity and profit levels. “One clear challenge in biosimilars is the development costs,” explains Saynor. “It costs about $200m to bring a biosimilar to market.” He attributes this to a number of factors, but largely the regulatory hurdles biosimilars companies must clear to get their therapies approved.
While generics companies must prove their product is identical to the original drug, regulatory bodies require biosimilar firms to conduct Phase 3 trials to demonstrate their therapy’s safety. The UK is an exception, but it also taxes each biosimilar brand as both an innovator and a generics company.
Without our industry, there would be no healthcare systems
The environment is complex, and at times hostile, and that has led to disillusionment from the sector in developed markets like the UK and US. “If you regulate an additional tax on a competitive market, all you’re doing is either reducing supply or increasing price,” affirms Richard Torbett, Chief Executive, Association of the British Pharmaceutical Industry, also at the FT Live event. “Neither of which are good for patients.”
Future outlook
By 2025, 19 global blockbuster brands are set to lose their patent exclusivity, according to McKinsey, and between 2026 and 2032, a further 39 blockbusters will lose theirs, too. Global health is clearly reliant on the world maintaining a thriving generics and biosimilars sector, so action must be taken now to ensure smooth passage for these companies to take advantage of patent expirations and deliver patients access to medicines.
