Yesterday we presented part 1 of our analysis on the biosimilar pharmaceuticals market. Today we'll be presenting part 2 and picking up where we left off with a Brief History of Biosimilars.
Brief History of Biosimilars
Some of the early “blockbuster” biologics began to lose patent protection around 2012. This caused the pharmaceutical industry to become interested in the possibility of “generic” versions of these medicines. As noted above, these generic versions have been called “biosimilars.”
There are several strong drivers of the future market for biosimilars. These include (1) the rapid future rise in patent expirations for popular biologics; and (2) the reduced cost of the generic versions of these biologics.
There are also several difficulties that the biosimilar market faces. These difficulties include (1) a globally inconsistent regulatory environment; and (2) the rapid evolution of the manufacturing technologies for both biologics and their generic equivalents.
These issues are discussed in great detail in many of the available studies of the biosimilar market. These studies are easily researched on the internet, but will not be repeated here.
Major Biosimilar Companies
Sandoz, a division of Novartis, is a global leader in generic biopharmaceuticals and biosimilars. Novartis got the first FDA approval for a biosimilar in 2015 for Zarxio, a generic for Neupogen, made by Amgen. As of 2017, Novartis has five biosimilars in their pipeline.
Amgen got its first biosimilar approval from the FDA last year (in September of 2016) and has another four in the approval pipeline.
Biogen does not have, nor does it develop, biosimilars that are solely theirs. Instead, they partner with other companies to market biosimilars in the European market, and ultimately to profit from these partnerships in US markets in the future.
Several of the large global pharmaceutical companies are partnering with others to either develop or market biosimilars.
Merck (MRK), Hospira (bought by Pfizer), Gilead Sciences (GILD), Teva (TEVA) and AbbVie (ABBV) are all expected to launch biosimlars in the near future.
All of the major pharmaceutical enterprises and many foreign companies expect to compete in the market for generic biologic drugs. It is probably correct that the future market for these generics will grow by at least 30% per year for the next 20 years. However, commentators and analysts guessing about the future of biosimilars give a wide range of growth projections.
Biosimilars are the generics of the future, but which companies will benefit the most from this future growth?
Company Comparisons
In reviewing the major biosimilar companies, other than the major global pharmaceuticals, very few of them pay a dividend, and of those who do, there is typically a very short history.
Novartis, the parent of Sandoz, has only paid a dividend since 2013. The growth of this dividend has been held back by the rise in the dollar since that time.
Amgen, on the other hand, was initially formed in 1980, and has paid a dividend since 2011. Since 2011, Amgen’s dividend has risen at a CAGR of 28%, and its current yield is 2.63%.
Conclusion
The creation of biological pharmaceuticals and the “discovery” of biosimilars is a growing and common activity of most large firms in the drug industry. Everyone is doing it. However, there is room for healthy growth in this area and the more experienced firms should have an advantage.
Thank you for reading!