Winning with biosimilars
Opportunities in global markets

While most players will want a presence
in developed markets, a considerable
opportunity exists in emerging markets
for biosimilars. To win in these markets,biosimilars players will need to adopt a
long-term strategy to provide affordable
products and improved access to thelarge pockets of non-consumption. This
will entail growing sales – though at asmaller margin than in developed markets– among an increasingly affluent andhealth-conscious population. It will also
require selecting therapeutic areas (TAs)that have the largest potential impact

for the local population. Participatingcompanies will need to provide access,partner for local capabilities, andunderstand the importance of branding
and building customer engagement inmeaningful ways. Although selling lowercost biosimilars in emerging markets may
appear to be a less attractive strategy
than selling in established, developed
markets, particularly for high-margin
branded players, winning in these markets
can help position biosimilars companies
for long-term success.

Introduction
Over the past several years, biologics have gained
significant traction in the pharmaceutical industry,
representing more than $150 billion in global sales in
2013. By 2020 they are predicted to generate $290
billion in revenue and comprise 27 percent of thepharmaceutical market.i Forty-eight percent of sales
come from 11 biologics that face loss of exclusivity
over the next seven years (Figure 1).ii This, along with
the increasing worldwide focus on improving healthcare access and the cost of care, presents an attractive
opportunity for biosimilars manufacturers.
Analysts expect the worldwide biosimilars market to reach$25-$35 billion by 2020.iii Since the first biosimilar approvalin the European Union (EU) in 2006, there are now morethan 700 biosimilars approved (~450) or in the pipeline(~250) globally.iv In major markets like the EU, regulatorsand payers have recognized the potential financial benefitof biosimilars and are driving their uptake. For example,
France has initiated automatic substitution of selectbiosimilars over the reference products.
In the United States alone, the cost savings from switching
to biosimilars are projected to be between $40v and $250
billion over the next 10 years, with the first biosimilar to
hit the US market expected to contribute about $5-7 billion
in savings.vi

Figure 1: Patent expirations of major biologics
2014

2015

2016

2017

2018

2019

2020

2021

2022

US LOEEU LOE

Humira®
(adalimumab)

2028

Enbrel®
(etanercept)

Lantus®
(insulin glargine)

Expired (2013)

Rituxan(rituximab)®

Remicade®
(infliximab)

Avastin®
(bevacizumab)

Herceptin®
(trastuzumab)

Gleevec®
(imatinib)

Neulasta®
(pegfilgrastim)

Copaxone®
(glatiramer acetate)

Revlimid®
(lenalidomide)

Note: The size of the circle represents the drug’s global sales in 2013
Sources: Company websites and SEC filings, USPTO, EvaluatePharma

Winning with biosimilars: Opportunities in global markets

1

What are biosimilars?
Biosimilars are biologic products that are similar but not identical to reference/originator biologic products.
Although described differently by various global health agencies (Figure 2), biosimilars generally are largemolecular-weight, complex molecules that are produced in living cells through genetic engineering. The
recent recommendation by the United States Food and Drug Administration (FDA) to approve an oncology
supportive care drug developed by Sandoz represents a landmark for the United States launch andcommercialization of biosimilars.
Early biologics, such as insulin, erythropoietin (EPO), and growth hormones, have been invaluable in thetreatment of serious illnesses such as diabetes, anemia, and renal diseases. More complex biologics, such as
monoclonal antibodies (mAbs), cytokines, and therapeutic vaccines, are helping to revolutionize treatmentof cancer, autoimmune disorders, and other difficult-to-treat diseases. For such higher-cost disease areas,biosimilars should be instrumental in expanding access to populations who need these therapies but are
unable to access them today.

Figure 2: “Biosimilar” definitions by global health agencies

FDA
A biological product that is highly
similar to a United States licensed
reference biological product not withstanding minor differences inclinically inactive components, andfor which there are no clinicallymeaningful differences between the
biological product and the reference
product in terms of the safety, purity
and potency of the product.1

Source:1 United States Food and Drug Administration. Guidance forIndustry: Quality considerations in demonstration
biosimilarity to a reference protein product. Washington DC:
United States Food and Drug Administration, 2012.
2 World Health Organization. Expert Committee on BiologicalStandardization. Guidelines on Evaluation of Similar
Biotherapeutic Products (SBPs). World Health Organization.
October 23, 2009.
3 European Medicines Agency. Questions and Answers on
biosimilar medicines (similar medicinal products). European
Medicines Agency. September 27, 2012.

Winning with biosimilars: Opportunities in global markets

WHO
A biotherapeutic productwhich is similar in terms of
quality, safety and efficacy toan already licensed reference
biotherapeutic product.2
EMA
A biosimilar is a biological medicinal productthat contains a version of the active
substance of an already authorized original
biological medicinal product (reference
medicinal product). A biosimilar
demonstrates similarity to the reference
product in terms of quality characteristics,
biological activity, safety and efficacy basedon a comprehensive comparability exercise.3

2

Challenges facing biosimilars
Despite their promise, biosimilars face competition from non-original biologics and bio-betters:
Non-original biologics: Non-original biologics are copies ofof Rituxan®, both from Roche. Manufacturers of originator
biologics often use bio-better strategies to strengthen market
positioning with an improved product, while continuing tocommand premium prices. Depending on the therapeutic area,a clinically differentiated bio-better with the market accessproficiency of an established biologics player may be more
successful than biosimilars in capturing market share.

innovator drugs, frequently found in markets with less stringent
intellectual property (IP) protection, and/or markets that do nothave a dedicated regulatory pathway for approval.

Bio-betters: While biosimilars are approved via a dedicatedregulatory pathway, bio-betters follow the same regulatory
pathway as the innovator drug and are step-wise improvements
on innovator molecules. For example, Gazyva® is a bio-better

Although it is generally expected that biosimilars will emerge as a rapidly growing segment of the biopharmaceutical industry,
their uptake faces several challenges (Figure 3 illustrates the key differences between biosimilars and generic medications).
Regulatory uncertainty

Production complexity

T he regulatory policies governing biosimilars are still in flux,
with major markets like China lacking consistent and clear
pathways. The United States issued draft biosimilars guidancein 2013, and although the FDA recently approved thefilgrastim biosimilar, the agency has yet to finalize a formal
approval pathway.

Unlike generics, the cost, time, and risk of biologics production
are higher, and these are typically passed on to the consumer interms of higher prices. While generics cost between $1 million
and $5 million to develop, biosimilars cost between $100 million
and $200 million.vii Biosimilars are more complex to develop
and manufacture due to the inherent variability between one
living cell and another, and the inability to exactly replicate the
manufacturing or structure of the originator biologic.

Interchangeability

CompetitionT he lack of clear guidelines on substitutability andinterchangeability with reference biologics will likely cause
physicians to exercise more caution in prescribing biosimilars
until they gain comfort with the quality and efficacy ofbiosimilars. When the FDA reviewed Sandoz’s filgrastim,
there was much speculation on whether interchangeability
would be recommended. However, the FDA only focusedon biosimilarity. This means that Sandoz may need to show
comparative data and engage in market education to drive
prescriptions and increase market share.

Biosimilars face competition from at least two sources: biobetters from branded companies and brand consciousness fromconsumers. Biosimilars are anticipated to engage primarily in“brand-on-brand” competition with their reference therapies,
unlike Hatch-Waxman generics. Also unlike generics, which areheavily discounted, biosimilar discounts can be offset by rebatesand service agreements for branded biologics, thereby making
biosimilars less attractive. With more sophisticated and long-term
biologic treatments (e.g., monoclonal antibodies and growth
hormones) and the associated treatment chronicity, it could takelonger to demonstrate and convince stakeholders of the benefitsof switching.

Figure 3: Key differences between biosimilars and generics

Biosimilars

Generics

Similar to, and not identical to reference productBioequivalent and identical to reference product20-30% discount over reference product80-90% discount over reference product$100 - $200M in development costs$1 - $5M in development costs

8 - 10 year development timeline

3 - 5 year development timeline

No interchangeability or automatic substitution*

Interchangeable with reference product*France allows automatic substitution for biosimilars under certain conditions
Winning with biosimilars: Opportunities in global markets

3

Developing a global
biosimilars strategy
To develop a global biosimilars strategy, manufacturers willneed to address a set of strategic choices – including “whereto play” and “how to win.” These choices are part of theStrategic Choice Cascade (Figure 4), a framework developed
by Deloitte to help companies address strategy through a setof five integrated questions. Once a manufacturer answers
the first question about organizational goals and aspirations,the next two choices on the Cascade will guide how to fulfill
these goals and aspirations. The choices of “where to play”
and “how to win” are the focus of this paper.

Figure 4: Strategic Choice Cascade

Goals and
Objectives
What are ourgoals andaspirations?
• How will the biosimilars
business create value?
• What is the overall vision
for biosimilars?
• What financial objectives
should be achieved (e.g.,
growth, revenue, COGS
targets)?
• Which non-financial
objectives?

Business Strategy:
Positioning Choices

Where will
we play?

• Which regions andcountries present thegreatest potential forthe biosimilars business?
• In these markets, which
therapeutic area(s) aremost attractive?
• Which payer, provider or
patient unmet needs will
be addressed?

How will
we win?

• What is the value
proposition to payers
and providers in chosenmarkets?
• What can be the sourcesof defensible advantage
against existing
competitors and newentrants?

Implementation: Strategy
Activation Choices

Whatcapabilities do
we require?
• What will the impactof biosimilars be to theorganizations?
• Which distinctive
capabilities should bebuilt to address this?

• What is the right businessand profit model to win?

What tactics
will we use?
• What tactics will be mostcritical to success:–– Internal investment?
–– Strategic alliances?
–– M&A?
• What is the rightcadence?

• What is the right pricing
strategy for the portfolio?

As used in this document, “Deloitte” means Deloitte Consulting LLP, a subsidiary of Deloitte LLP. Please see www.deloitte.com/us/about
for a detailed description of the legal structure of Deloitte LLP and its subsidiaries. Certain services may not be available to attest clients
under the rules and regulations of public accounting.

Winning with biosimilars: Opportunities in global markets

4

Where to play
To help biosimilars manufacturers understand which
regions present the greatest potential for growth in thenear and longer term, Deloitte evaluated the developed
markets of the United States, EU5 and Japan, andemerging markets including the BRICS (Brazil, Russia, India,
China and South Africa) and MIST (Mexico, Indonesia,
South Korea and Turkey) countries. The analysis focused on

six dimensions: access to affordable biologics, regulatoryenvironment, payer assessment and access, prescriber
acceptance, patient acceptance, and biosimilars presence.
A summary of findings for each market is presented
in Figure 5, and more complete information on selectcountries is found on Page 6.

Figure 5: Summary of cross-country analysis

Variables(Ranked by importance)

Developed

BRICS

Access toaffordable
biologics
Physical andfinancial ability toreceive biologics

Regulatoryenvironment

Payer assessment
and access

Prescriber
acceptancePatient
acceptance

Biosimilars
presence

Presence of anabbreviated or
dedicated pathway

Engagement andadvocacy from payer infavor of biosimilars

Willingness to prescribe
biosimilar vs. reference
molecule

Patient attitude
towards biosimilars

Number of
approved biosimilars
in the market

US

Large accessIn development

Low

Low

Low

0–5

EU5

Large access

EstablishedHigh

MediumMedium>10

Japan

Large access

Established

Medium

Low

Low

>10

BrazilPoor access

EstablishedHigh

MediumMedium0–5

RussiaFragmented

In development

Low

Low

Medium

0–5

India

Poor access

Established

Low

MediumMedium>10

China

Poor accessIn development

MediumMediumLow

0–5South Africa

Poor access

Established

High

High

Medium

0–5

MexicoFragmented

Established

High

Low

Medium

0–5

Indonesia

Poor accessNo

MediumMediumLow

0–5South Korea

Fragmented

EstablishedHigh

MediumMedium>10

TurkeyFragmented

Established

Low

MediumMedium

6–10

MIST

Favorable for biosimilars

Moderate/neutral for biosimilars

Unfavorable for biosimilars

Sources: Secondary research, Deloitte Subject Matter Advisors, and Deloitte analysis

Winning with biosimilars: Opportunities in global markets

5

Although each country’s environment is unique, there aresimilarities in trends across developed and emerging markets.
Developed markets• Developed markets, with the exception of the UnitedStates, represent the greatest biosimilars presence today(Figure 5, column 6). Most biosimilars manufacturers havebeen and remain focused on the developed markets –whether it is for their historic and current opportunities(EU) or for their future market potential (United States,
Japan). Dedicated regulatory pathways (Figure 5, column
2) set the foundation for stringent, abbreviated approval
processes which, in turn, have fed investor enthusiasm.
However, thus far, commercial returns on the significant
investments made by manufacturers have been a sourceof disappointment, which emphasizes the importance ofbuilding the right conditions for success.
• Biosimilars adoption in developed markets has been
primarily payer-driven (Figure 5, column 3), especially inEuropean markets, given payers’ urgent, unmet need tocontain public health care expenditures. Further market
uptake has been slowed by prescribers’ skepticism andlow patient awareness (Figure 5, columns 4 and 5). Still,developed markets continue to have the highest numberof biosimilars molecules in development – estimated at 29in Europe, 19 in the United States and seven in Japan.viii• Sales of biologics could be significant, but are frequently
blocked by high out-of-pocket costs and consumers’
low ability to pay. Therefore, sales growth often ends up
being a pricing game: originators move into a biosimilars
play by heavily discounting their branded product(s), andcompetitors move into exclusivity deals with customers. In
India, a Deloitte survey found that physicians were willingto prescribe a first-line critical therapy if it was offered
at a 60 to 70 percent discount. In China, getting on theessential drugs list means mandatory usage by many
hospitals; however, it also comes with price cuts of
25-50 percent.xii• From a regulatory standpoint (Figure 5, column 2),
biosimilars pathways have been defined for mostemerging markets, although they are still in flux in China
and Russia. Where present, approval processes haveappeared speedier than in developed markets, with lessstringent comparability criteria.

Emerging markets• In today’s emerging markets, biosimilars are still nascent,with little to no presence (Figure 5, column 6). However,in contrasting emerging markets with developed markets,the limited patient access to affordable biologics (Figure
5, column 1) and the openness of physicians to lowcost therapies (Figure 5, column 4) may offer potentiallysignificant opportunities. Today, emerging markets
represent a snippet of total world biologic sales in value,less than seven to eight percent (versus 48.6 percent in
the United States).ix Treatment rates for flagship biologics
are still low compared to developed markets, despite
existing demand. For example, the treatment rate of
MabThera® in Brazil is three times lower than in the UK
and six times lower than in the US.x Additionally, a recent
Kantor Health Survey found that 20 percent of emerging
market autoimmune patients use a biologic, with the
distribution of biologics varying from 29 percent in China
to 12 percent in Russia and a mere 6 percent in Brazil.xi
This may indicate the presence of large pockets of nonconsumption, especially within the growing middle class.

Winning with biosimilars: Opportunities in global markets

6

Analysis of selected countries
United States• FDA approval of the first biosimilar in March 2015 with
Sandoz’s Zarxio (filgrastim)• About 19 pipeline biosimilar molecules in developmentviii• Represents about 50% of the global biologics market
value and generates about 50% of the sales value
growthi• Pending legislative decisions on data exclusivity period,
naming conventions and interchangeability likely tohave important implications

Japan• Limited maturity of the biosimilar market• Dedicated regulatory pathway• About seven pipeline biosimilar molecules indevelopmentviii• Growth potential considered limited today based on the
reluctance from both prescribers and patients as well as
the general mistrust toward “generic makers”• A push from payers, which has yet to be seen, may help
open up the market

Winning with biosimilars: Opportunities in global markets

EU5• Most mature biosimilar market representing 80% of
global biosimilar spending• Performance to date viewed as “disappointing” byselect manufacturers• Nineteen biosimilar products authorized in fourmolecule classes: human growth hormone,erythropoietin, G-CSF and tumour necrosis factor(TNF)-inhibitorxiii• About 29 pipeline biosimilars molecules indevelopmentviii• World-class dedicated pathway leaving questions of
substitutability at the pharmacy level to member states• Payer-driven uptake• Challenged by continued pressure from strict
regulatory decisions, lingering fear from prescribers
around biosimilars’ “similarity”, safety and efficacy,
debates on automatic substitution and INN prescription
Brazil• Led the way with the development of biosimilars
regulations in Latin America and released biosimilars
guidance in 2010
• Reducing the reliance on imported (and high-cost)
medicines through policies that favor the expansionof the domestic pharmaceutical industry and publicprivate partnerships to expand access to drugsxii• International companies have entered the market
through partnerships and acquisitions (e.g., Pfizer’s
40% stake in Teuto, Sanofi’s acquisition of Medley
and Merck’s joint venture with Supera, co-owned byCristalia and Eurofarma)• The regulatory environment and interest of domestic
and international manufacturers are major drivers in
expanding the biosimilars market• Approximately five biosimilar molecules in thedevelopment pipelineviii• Seventy-five percent of physicians surveyed in Brazil
considered rituximab difficult to access due to highcosts and 77% said they would increase prescription ofrituximab if a cheaper alternative were availablexiv

7Analysis of selected countries
Russia• Aims to boost its domestic pharmaceutical market andincrease the market share of domestic players from 20%
in 2012 to 50% by 2020
• The strong preference for local manufacturers
will require international companies to engage incooperative partnerships with Russian companies• Indicative of the burgeoning domestic industry, arituximab biosimilar, developed by Russian company
Biocad, was the first mAb biosimilar approved in Russia
in April 2014
• About eight biosimilar molecules in the development
pipelineviii

China• Issued draft biosimilars guidelines in 2014; once a
clear regulatory pathway for biosimilar approval isestablished, the market will be very attractive – not only
due to the volume potential but also the growing ability
to pay• Similar to the tight controls requiring international
companies to create partnerships or use domestic
pharmaceutical distributors, the successful
manufacturing and marketing of biosimilars will also
require partnerships with domestic companies• Lack of physician trust and enthusiasm for non-branded
drugs exacerbated by unsafe and counterfeit drugs

Mexico• Established, government-incentivized market forbiosimilars• Demand spurred by high out-of-pocket health carespending (estimated at +90%)xv• Significant presence of non-original biologicals known
as “biolimbos” who have not undergone marketing
authorization review consistent with globally accepted
standards• Biosimilars development led locally by Probiomed which
won six biosimilars approvals, including a version of
Rituxan®

Winning with biosimilars: Opportunities in global markets

India• Biosimilar guidelines established in 2012
• 80% of pharmaceutical spend is out of pocket• Indian companies have extensive experience withgenerics and have made in-roads in other countries aswell through exports• Indian companies grapple with the image ofmanufacturing as unsafe with poor quality drugs• Partnerships between global pharmaceuticalcompanies and domestic companies are helping to
improve the quality of biosimilars marketed in India• Approximately 19 biosimilars in the development
pipelineviii; large proliferation of non-original biologics• Large middle class with growing disposable income
who prefer brand name products, so there is a good
opportunity for branded biosimilars• Approximately 70% of the country’s population isconsidered rural and will focus on the cost of therapy– a 20-30% discount on originator biologics may not
be sufficientSouth Africa• Sophisticated market; generics make up more than
50% of the market• Biosimilars guidelines were established in 2010
• There is a financial pressure on the system overall, andgreat pressure to utilize generics including biosimilars• Several Indian companies have entered the South
African market and are key to keeping drug costs low• There is a cost containment focus from thegovernment and payer side and a quality focus fromthe physician and patient side
• Companies will have to bring in a cost structure that islower than what currently exists along with the highest
quality and safety profiles of their biosimilars
South Korea• Most mature biosimilar “development” market• Enabled by unprecedented support from the South
Korean government: 35% of the national medical R&D
budget was invested into biosimilars developmentin 2012xvi• Government-set goal for domestic biopharmaceuticalcompanies to win 22% of the global biosimilars market
by 2020• Twelve biosimilars have been approved and another 36
biosimilars are in the pipelinexvii• Leading the race in the high-risk and complex
development of monoclonal antibody (mAb)biosimilars with 17 mAbs in the pipeline8Different markets,
different opportunities
While developed markets will remain an important focus
area for biologics manufacturers, our analysis indicatesthat long-term growth likely will be fueled by emerging
markets. These markets have not yet attracted as muchattention in the biosimilars environment and are poised todrive growth but, will require specific strategies and tactics.
• Developed markets, such as the United States, EU5
and Japan, provide near-term growth opportunities forbiosimilars, aided by governments which are issuing
clear regulatory pathways and payers which are pushinguptake to contain costs. Yet, the growth potential thus
far has been a mix of reality and hype, as illustrated by
the perceived underperformance of biosimilars in Europe
in the last seven to eight years. Continued regulatory
uncertainty, lingering fears from patients and physicians
about biosimilars’ “similarity,” safety and efficacy, andthe ongoing (frequently heated) debates on automatic
substitution and International Nonproprietary Naming(INN), will likely build long-term barriers for widespread
uptake. In these markets, innovation (in the form of
bio-betters) is likely to beat imitation (in the form ofbiosimilars), especially in the United States.
• In emerging markets, the large pockets of nonconsumption and untapped demand – characterized bypoor physical and financial access to currently highpriced biologics – provide favorable long-term growth
opportunities (Figure 6). In addition to macroeconomic

factors such as high Gross Domestic Product (GDP)growth rates, and increasing purchasing power parityand health care spending, there is a strong regulatory
focus on containing costs and increasing treatment
access (especially where there is a growing middle class).
Although the emerging market countries each havedifferent health care and payer systems, studies haveshown that cost is a big barrier to the use of biologics
in all of these markets, and physicians would increaseprescription rates if less expensive biosimilar alternatives
were available.xiv, xviii In most of these countries, patients
have high out-of-pocket costs for medicines and are
unable to afford branded biologics – a powerful driver ofbiosimilar uptake. In addition, many of these countries
already have biosimilar approval pathways in place orare finalizing guidelines. Finally, emerging markets have
driven the growth of the generics industry, with almost
90 percent generics penetration in some marketsxix, xx
while developed countries have served as the innovation
hubs for new therapies. Similar strong growth may beattainable for biosimilars.
While developed markets will remain important to thebiosimilars market, based on this assessment, answers to
the “how to win” question will focus primarily on emerging
markets.

Figure 6: Key themes in emerging markets

Patients
cannotafford anddo not haveaccess tohigh-priced
biologics

There is a
shifting diseaseprofile from
infectious
diseases to morechronic conditions
better treated bylarge molecule
therapies

Winning with biosimilars: Opportunities in global markets

Governments arepushing for thedevelopment of
their domestic
pharmaceuticalindustries
Physicians are thekey influencers anddeciders of patienttherapy and often
make prescription
decisions on brandvs. generic /biosimilars basedon perceived ability
to pay9How to win
Winning in emerging markets poses considerable
challenges but the opportunity to create a market inmany cases, along with the growth potential, shouldmake it worthwhile for biosimilars companies to establish
and/or expand in these markets. In considering “howto win,” companies should assess each market’s uniquecharacteristics and opportunities, in order to develop
strategies (Figure 7) that can enable them to leverage theunique value proposition they offer stakeholders (including,physicians, patients, payers and policy makers), and gain adefensible competitive advantage.
Choose wisely
When considering which products to offer in specificmarkets, biosimilars companies should choose therapeuticareas wisely. In evaluating their emerging markets portfolio,
companies should consider the diseases that are mostprevalent and costly for payers to treat in that market, inorder to strengthen the case for reimbursement and market
access. As part of this process, biosimilars companies may
have to adjust their R&D and commercial focus, as someemerging markets are eradicating infectious diseases andshifting health care treatment and spending to lifestylediseases and other complex conditions that require largemolecule therapies.

To help drive physician and patient uptake, manufacturers
should also examine patient unmet needs or the diseases
that provide the most burden to the community. These may
be very different from those that burden payers as they
could include diseases that limit patients’ abilities to work,
care for families, etc., and diseases that impact patients’sense of wellbeing. Doing so may enable biosimilars
companies to use grassroots marketing campaigns topromote adoption.
To minimize risks, companies may want to enter newmarkets by focusing on TAs in which they have establishedexpertise and strength, and use that to expand into areasthat address broader local needs. For example, Merckestablished a partnership with Samsung Bioepis in 2013 andis pursuing biosimilars opportunities based on its strengths indiabetes, anti-TNF, and oncology.

Figure 7: Strategies for success in emerging markets

CHOOSEWISELYUNLOCKACCESSPARTNERLOCALLY

Winning with biosimilars: Opportunities in global markets

Choosing the right market and right TA is the firststep; potential entrants should consider the mostprevalent and costly diseases for payers to treat
and those that have the biggest impact on patients

Tapping into pockets of non-consumption will beessential, and companies will need to focus on
innovative market access and financing approaches

Partnering with local players can help bridge the local resource
and knowledge gap; it can provide strategic access to local
commercial capabilities and distribution networks while bringing
distinctive understanding of local stakeholders

10

It is also important to consider the likely comorbidities
of prioritized disease areas. If a condition has several
comorbidities, treatment of just one disease might not beenough to make the case for reimbursement. Similarly, if
other medications (biologic or not) are required to treat a
disease, manufacturers should look to provide bundles ofdrugs through the same representative (either in a single
formulation or separate). This will help drive uptake ofthe biosimilar (e.g., metformin and DPP-4 inhibitors or
methotrexate and etanercept). Even if patients can accessthe biosimilar, if comorbidities or concurrent therapies are
required, access to the biosimilar may be dampened if
access to other treatments are not available or affordable.
Partnering with local companies, particularly generics
manufacturers, to bundle products for comorbid conditions
or to gain greater efficacy at an affordable price may be amore patient-centric approach and help to drive uptake ofthe biosimilar. In addition to strengthening the company’s
experience in the TA, this approach may help create
marketing and operational efficiencies and, ultimately,
provide the physician and patient with a single valueoriented bundle.
Once a company selects a TA or specific treatment, it should
prioritize and sequence its target markets. Each market will
require a tailored approach due to regional, country andlocal complexities.
Unlock access
After TA selection, the next step for biosimilars
manufacturers is to consider how to drive adoption.
Growth in emerging markets may be hampered by alack of regulatory oversight and / or compliance, nascentdistribution networks, underdeveloped health careinfrastructure, fragmented demand, and pressure on
manufacturers’ margins. In response, companies may
have to adapt traditional sales, marketing, and distribution
models. Two major issues to address are market access andinfrastructure.
Market access
Biosimilars manufacturers will need to secure broad accessto succeed in emerging markets. Manufacturers willneed to work closely with policy makers and payers to
implement reimbursement policies built on solid evidence.
With increased purchasing power and demand forbiopharmaceuticals, governments and payers in emerging
markets are facing the challenge of containing healthcare spending. Therefore, the strategies most likely to be
successful in driving access and reimbursement will begrounded in value and health economics. An important

Winning with biosimilars: Opportunities in global markets

nuance is that companies need to understand what “value”
means in each market. To identify the sources of value,companies will need to develop an integrated stakeholder
approach that supports the dynamic policy and stakeholder
landscape in emerging markets. In many markets, policy
makers change with every election cycle, and many policies
are implemented to manage short-term budgets constraints
rather than longer-term health expenditures. This presentsa challenge to manufacturers with evidence packages
solely built on five plus year economic analyses. Instead,manufacturers should balance short- and long-term benefitsof the product. The benefits can be modeled relative to thecurrent standard of care, the cost in local currency, near-term
safety and efficacy endpoints, and longer-term outcomes.
Emerging markets typically lack an integrated approachto care that includes services and collaboration with other
health care players, such as providers and retail outlets.
In addition to providing the drug, biosimilars companies
can provide added services, partner with other healthcare players to build patient engagement and awareness(currently low in emerging markets), and gather real world
evidence (currently lacking). Biosimilars companies who
can bring this approach to emerging markets stand to gainsignificant market access advantages, including a potential
seat at the policy table. Biosimilars companies also canenhance market access by providing supporting services andtechnologies such as smart-phone apps, support groups,
and educational forums that are targeted to the uniquechallenges and circumstances of patients in emerging
markets. For example, Genentech recently created an
app to educate breast cancer patients on the disease andtreatment options. In addition to providing a support systemfor patients, such services can foster patient engagement
while providing companies with valuable data, including the
much-needed real-world evidence for therapies.
Similarly, the pricing strategy for biosimilars in emerging
markets should keep patient out-of-pocket costs low. In
markets where patients subsist on $4-6 USDxxi per day,paying as little as $5 USD for a biologic on a daily or weekly
basis – even if it saves a life – is untenable. Companies
may still achieve a pricing advantage by lowering costs(cost of goods sold, selling and administrative costs) andshifting toward lower cost manufacturing techniques.
Partnering with low-cost and lean manufacturers, as well as
investing in research and technology for innovative low-cost
manufacturing approaches, may ultimately help biosimilars
companies own the low-cost position and keep patient /payer prices lower.

11In addition to pricing considerations, biosimilars companies
should evaluate innovative financing approaches andpatient-access programs. For example, biosimilars companies
could consider providing monthly installment plans for acute/ non-chronic medications. These plans are proving popularwith the rapidly growing middle class in emerging markets
and may enable purchases that would otherwise be beyond
reach. Additionally, biosimilars companies could consider
cost-sharing models with governments and payers, especiallyfor chronic medications, as a way to drive adoption andfurther reduce the cost for consumers.
Finally, communicating a product’s value to all stakeholders
is particularly important for biosimilars. Due to nonconsumption and access issues, stakeholders have generally
low awareness of and familiarity with the safety andefficacy of these drugs. Later sections of this paper discuss
engagement and communication with two important
stakeholders – physicians and patients.
Infrastructure
Biosimilars companies must address infrastructure (e.g.,transportation, availability of clinicians) limitations in many
emerging markets. Access can also be limited if patients do
not have the flexibility to visit a physician or drive a family
member because they must work to support their family.
Further, in many emerging markets such as India, doctors
still make house calls. In such instances, companies canengage physicians serving remote geographies to build agrassroots network of key opinion leaders (KOLs) who canhelp penetrate the most under-served areas.

Partner locallyThrough partnerships, local companies can help
multinational biosimilars companies improve sales by
providing an understanding of the local operating
environment and patient needs, making stakeholder
introductions, and providing some local credibility(coupled with the power of the biosimilars company’s
global brand). Many emerging markets are implementing
local manufacturing regulations that require a product to
be manufactured (at least in part) in-country. Partneringwith resident players may be a cost-effective and flexible
way to meet this requirement, and to help multinational
companies navigate local regulations, customs and otherchallenges. In addition to leaning on local players’ market
understanding and low-cost manufacturing excellence,
multinational biosimilars companies can benefit from andleverage resident players’ R&D capabilities, as evidenced byseveral recent partnerships (e.g., Lilly’s strategic alliance with
Chinese drug-maker Innovent and South Korean company
Hanmi Pharmaceuticals). In addition to commercial, R&D
and / or manufacturing partnerships with other companies,
biosimilars companies may also engage in public-private
partnerships (PPP). Several countries including Brazil andChina are increasingly encouraging PPPs between local
and global pharmaceutical companies. Through PPPs,
private companies gain low-cost financing and government
benefits, while public companies improve access ofbiosimilars based on the country’s specific public healthneeds.xxii

From a manufacturer’s perspective, many biologics require
cold chain logistics and storage, so intermittent power
and refrigeration in rural areas can present challenges.
Tapping into the expertise of local manufacturers to develop
formulations suited for emerging markets is already a tactic
employed in the small-molecule world. While the complexityof the manufacturing process makes this more challenging
for biologics, these local partnerships could have an evenbigger impact, given the more prevalent issues of stability
and immunogenicity with large molecules.

Winning with biosimilars: Opportunities in global markets

12Business model differences
Lower margins, higher volumes
Biosimilars companies may need to adapt traditional
business models in several ways when entering / expandingin emerging markets (Figure 8). First, emerging markets
will not provide the margins typically earned in developed
markets. Margins will be lower due to lower prices
and upfront investments required to build the markets.
Manufacturers will need to shift approaches to seek higher
volumes at a lower margin. This represents a fundamental
shift for many potential players — one that will likely
require extensive change management with company
shareholders, leadership and the Board of Directors.
While companies playing in the generics space alreadymay be better equipped to manage this change, eventhose organizations should be prepared for the upfront
investment and lower margins associated with providing
biosimilars in emerging markets.
Brand matters
A second fundamental shift may be required in the way
biosimilars are developed and marketed in emerging
markets. While biosimilars are, by definition, similar to theassociated branded drug, biosimilars companies should
not look to promote any differentiation (other than price).
Differentiation from the branded drug could create fears
in customers, especially in markets where counterfeiting
can be rampant in both the life sciences industry andin consumer goods in general. A recent study revealed
that a third of anti-malaria drugs sold were found to be
counterfeit,xxiii and 100,000 deaths per year in Africa werelinked to counterfeit drugs.xxiv Physicians and patients inemerging markets are particularly wary of non-brand namedrugs. In our experience, brand matters more in emerging
markets than developed markets, and there tends to bea willingness to pay for the brand (assuming there is theability to pay). Seventy-five percent of emerging markets
pharmaceutical growth is expected to come from branded

generics.xxv According to a 2013 Roper Report, 79 percentof consumers in developing Asian markets and 61 percentof consumers in Latin American markets only buy products
and services from a trusted brand.
Patient- and physician-driven uptake
While regulatory agencies and payers in the EU havelargely driven the uptake of biosimilars in those markets, inemerging markets, physicians and patients are expected toplay a bigger role in biosimilars uptake. In many emerging
markets, physicians are the sole decision makers of patienttherapy based on their perception of a patient’s ability to
pay for high-priced therapies.
Physician awarenessOne challenge facing biosimilars in emerging markets is
low physician awareness of biosimilars exacerbated by
low prescription rates for and familiarity with existing
biologic therapies (branded or non-branded). In response,
biosimilars manufacturers should develop education
programs to educate physicians (and nurses) on theneed to treat patients, how to administer the product,
and the side-effects and benefits. While these trainings
may require an upfront investment, they will likely be
crucial to driving adoption. Companies should likely startthese efforts with local KOLs and large medical centers
but quickly look for opportunities to expand into smaller
practices (depending on the market) while leveraging othereducational and training materials through web portals,
smartphones, sponsored mobile clinics and health camps.
Additionally, even if there are no stringent regulatory
approval requirements for clinical research in the local
population, companies should be strategic about theirclinical development plans to potentially include patientsfrom emerging markets in clinical studies. This could
help to drive initial adoption and physician awareness,and convince physicians of the safety and efficacy of the
medication within the local populations.

Figure 8: Key business model differences

Manufacturers should consider key business model differences from developed markets

Lower margins,higher volumes
Margins will be lower due to lower
prices and the upfront investments
required to build a presence inemerging markets
This is a fundamental shift and will
require specific change management
for shareholders

Brandmatters
Non-brand-name drugs arouse
stakeholders’ skepticism in emerging
markets due to fear of counterfeiting. In
fact, 75% of pharma growth is expected
to come from branded generics
Large manufacturers should play up
their brand, portfolio and reputation,
but not chase differentiation fromthe originalWinning with biosimilars: Opportunities in global markets

Patient- and physiciandriven uptake
Patients in emerging markets are
expected to play a strategic role indriving biosimilars uptake given theaccess and affordability challenges they
are facing today; physicians are the key
deciders of patient treatment
This contrasts with developed markets(esp. Europe) where payers drive
adoption, with a similar intent ofcontaining costs
13

Patient awareness
Patient awareness may be another way to drive biosimilars
adoption. Patients in emerging markets are typicallydeferential to their physicians and rarely question physician
decisions. While direct-to-patient marketing is not
permitted in most markets, many emerging markets havegrowing patient advocacy groups that can drive market
access, and physician and patient awareness. This presents
an opportunity for biosimilars companies to work withthese groups to educate patients on the therapy options
available, including the price advantage of biosimilars andthe long-term benefits of the medication (and adherence
to the regimen). Biosimilars’ ability to more cost-effectively
deliver the same efficacy as branded products is likely

Winning with biosimilars: Opportunities in global markets

to resonate with many emerging markets patients who
typically pay out-of-pocket. Advocacy groups, socialorganizations, worker groups and physicians can also help
distribute patient education material (which should bemade easy to read and understandable for patients withlimited education or literacy). While more “grassroots” thantypical pharmaceutical / biologic marketing, this method
can be especially effective if there is a higher incidenceof the disease among specific cohorts. All of this must be
done within the requirements of local regulations.

14

Conclusion
A 2013 report published by the European Commission
supports the idea that biosimilars will improve access tobiological medicines and new treatments from medical
and scientific advancement.xxvi Although biosimilars growthhas been slow to date, more governments and payers arerecognizing the savings potential of increased biosimilars
penetration. We believe that long-term growth of thisburgeoning class of drugs will come from emerging
markets — and will accelerate as regulatory pathways
around the globe are developed. We anticipate the market
can be expanded by addressing non-consumption resulting
from patients in emerging markets being unable to accesshigh-priced biologics.
Developed markets, such as the United States, EU5 andJapan, are expected to provide near-term biosimilars
growth, aided by governments who are issuing clear
regulatory approval guidelines and payers promoting
uptake in order to contain health care costs. In thesemarkets, bio-betters, which offer a clinical advantage overexisting therapies, may grow more quickly than biosimilars.
However, in emerging markets, such as the BRICS andMIST, the overall growth of these markets — coupledwith a lack of physical and financial access to high-priced
biologics — will likely provide the best future opportunity
for manufacturers of biosimilars.

While biosimilars’ growth potential appears bright,
winning with biosimilars in emerging markets is nota simple undertaking. Companies seeking entry or
expansion should craft a strategy to address the specificchallenges in the emerging markets and incorporate thelessons learned from developed markets. A unique value
proposition will likely be required to tap into the large
populations in emerging markets who cannot accesshigh-priced biologics. These companies should develop
robust market-access strategies that address key “Where
to play” and “How to win” choices, be prepared to makeupfront investments to drive adoption, and shift businessmodels from profit to volume. Upfront investments will
likely require a strong emphasis on physician and patient
education to address non-consumption, as well as
supply chain investments to better enable access to the
medication. Part of this education may come through thesales force, who should be fully equipped to meet theneeds of the patient (including strategies and products
for helping treat comorbidities and side effects). Finally,
manufacturers should not overlook the opportunity towork with local players to help navigate the environment.
Knowledge of local market nuances and lean, low-cost
manufacturing, coupled with the strong international
brand and reputation of the manufacturer, will help topropel the growth of biosimilars in emerging markets.

While biosimilars’ growth potential appears bright,
winning with biosimilars in emerging markets is nota simple undertaking. Companies seeking entry or
expansion should craft a strategy to address the specificchallenges in the emerging markets and incorporate thelessons learned from developed markets.

Winning with biosimilars: Opportunities in global markets

15Endnotes
i IMS Health, Searching for Terra Firma in the Biosimilars
and Non-Original Biologics Market: Insights for the
Coming Decade of Change, 2013
ii Nature Biotechnology 32, 626–632 (2014)iii Allied Market Research, Global Biosimilars / Follow-onBiologics Market, July 2014
iv BioTrends Research Group, Global Biosimilars Pathway
and Clinical Development Activity: Where are the
Biosimilar Hotspots?, 2014v The Cost Savings Potential of Biosimilar Drugs in the
United States http://www.rand.org/content/dam/rand/
pubs/perspectives/PE100/PE127/RAND_PE127.pdf
vi The $250 Billion Potential of Biosimilars http://lab.
express-scripts.com/insights/industry-updates/the-$250billion-potential-of-biosimilars
vii United States. Federal Trade Commission. “Emerging
Health Care Issues: Follow-on Biologic Drug
Competition,” June 2009viii Decision resources Group, Biosimilars Advisory Service:
Global Biosimilars Markets, Pipelines, Regulations andMajor Players, 2014ix IMS Health, Shaping the biosimilar opportunity: a global
perspective on the evolving biosimilars landscape, 2011x McKinsey, Biosimilars seven years on: where are we andwhat’s next?, February 2013xi Hillary J. Gross & Feffrey Vietri, Barriers to Biologic
Therapy Use for Autoimmune Disorders in Emerging
Markets, International Society for Pharmacoeconomics
and Outcomes Research: 16th Annual European
Conference (Nov. 2-6, 2013)
xii The Economist Intelligence Unit Industry Report, 2014
xiii GABI Online, Generics and Biosimilars Initiative, Last
Updated: February 2015, Based on EMA Data (http://
www.gabionline.net/Biosimilars/General/Biosimilarsapproved-in-Europe)xiv Lammers et al. Barriers to the Use of Trastuzumab
for HER2+ Breast Cancer and the Potential Impact ofBiosimilars: A Physician Survey in the United States andEmerging Markets. Pharmaceuticals (Basel). Sep 2014;
7(9): 943–953.
xv World Bank, Out-of-pocket health expenditure (% ofprivate expenditure on health), 2013xvi South Korea Ministry of Knowledge and Economy,
November 18, 2011xvii PM Live, http://www.pmlive.com/pharma_intelligence/
an_eye_towards_the_biobetter_in_south_
korea_466459
xviii Barriers to the Access and Use of Rituximab inPatients with Non-Hodgkin’s Lymphoma and Chronic
Lymphocytic Leukemia: A Physician Survey; Baer et al.,Pharmaceuticals (Basel). May 2014; 7(5): 530–544
xix http://www.gabionline.net/Reports/The-genericsmarket-in-China
xx Frost and Sulllivan, Global Generic PharmaceuticalMarket - Qualitative and Quantitative Analysis, 2013xxi http://www.data.gov.in/catalog/average-daily-wagerate-rural-india#web_catalog_tabs_block_10xxii Bryan A. Liang and Timothy Mackey, Public-Private
Partnerships to Promote Biosimilar Access, Affordability,
and Patient Safety in Emerging Markets, Stanford
Journal of Law, Science and Policy, April 2014xxiii Tabernero et al., Mind the gaps - the epidemiology
of poor-quality anti-malarials in the malarious world- analysis of the World Wide Antimalarial Resistance
Network database, Malaria Journal, 2014, 13:139
xxiv http://www.un.org/africarenewal/magazine/may2013/counterfeit-drugs-raise-africa%E2%80%99stemperature
xxv http://www.merck.com/licensing/our-partnership/sunpartnership.html
xxvi European Commission Consensus Information
Document, 2013

Winning with biosimilars: Opportunities in global markets

16Authors
Rob Jacoby
Principal
Deloitte Consulting LLP
rbjacoby@deloitte.com

Divya Iyer
Manager
Deloitte Consulting LLP
diiyer@deloitte.com

Erik Smith, PhD
Principal
Deloitte Consulting LLPeriksmith@deloitte.com

Sophie Peltre
Manager
Deloitte Consulting LLP
sopeltre@deloitte.com

Drew Wilkins
Senior Manager
Deloitte Consulting LLP
drwilkins@deloitte.com

Acknowledgements
The authors wish to thank their colleagues within Deloitte who have supported the development of this paper: Amit
Agarwal (US), Ko Asami (Japan), Thomas Croisier (France), Oscar Diez (Mexico), Thibault Ducarme (US), Faith
Glazier (US), R. Terry Hisey (US), Sheryl Jacobson (China), Ralph Judah (South Africa), Sudeep Krishna (India),
Alexander Mirow (France), Goro Nishimoto (Japan), John Phillips (US), Ricardo Ruiz-Huidobro (Mexico, US),
Matthew Szuhaj (US)Follow @DeloitteHealth on Twitter
To download a copy of this report, please visit
www.deloitte.com/us/globalbiosimilars

This publication contains general information only and Deloitte is not, by means of this publication, rendering accounting, business, financial,investment, legal, tax, or other professional advice or services. This publication is not a substitute for such professional advice or services, nor should
it be used as a basis for any decision or action that may affect your business. Before making any decision or taking any action that may affect yourbusiness, you should consult a qualified professional advisor.
Deloitte shall not be responsible for any loss sustained by any person who relies on this publication.
Copyright © 2015 Deloitte Development LLC. All rights reserved.
Member of Deloitte Touche Tohmatsu Limited