Potomac Research Grou

Follow-On Biologic Marke

Initial Lessons and Challeng

Ahead

Paul Heldman 

Friday, November 21, 2008

© 2008 Potomac Research Group. This information is solely for recipient’s interna

or forwarded to anyone outside the recipient's organization without the prior w
• The emerging follow-on biologic ma

suggest lower discounts and less mpenetration than for small moleculemedicines.

• Key differences between the small-

the biologics market.

• 3 backstops against rapid reference 

market share erosion: insurance reincentives, evergreening, and safetabout substitution.
Omnitrope US Monthly Prescriptio

0

100200300400500600

Mar-07

Apr-07

May-07

Jun-07

Jul-07

Aug-07

Sep-07

Oct-07

Nov-07

Dec-07

Jan-08

Feb-08

Mar-08

Apr-08

M

Total Monthly RX

THERE IS A MARKET FOR BIOSIMILARS....

Source: IMS Health
hGH Product US Market Share

 Humatrope, 

24%

 Norditropin, 

15%

 Nutropin, 18%

 Saizen, 9%

 Serostim, 3%

 Tev-Tropin, 2%

 Omnitrope, 1%

Genotropin, 

28%

...BUT LIMITED IF BIOSIMILAR USES A DIFFICULT ROADMINISTRATION

Source: IMS Health
0

102030405060

1987 1996 1997 2000 2001 2002 2003 2004 2005 2006 20

Year

Price/mg

Somatropin WAC prices in the US: Prices of all the soma

increased even after the addition of new products
Pricing of Somatrop

• Initial discount of about 30% for Om

comparison to Pfizer’s Genotropin ibased on wholesale acquisition cos

• Discount widens to about 40% in 20

Omnitrope competitors raise prices80% discounts in the market for tramedicines.

– Aggressive discounting not calculated 

help innovators maintain market share
ESA BIOSIMILAR MARKET STARTS SLOWLY AS WEL

Source: IMS Health and companies *Biosimilar market share jus

**Dynepo being phased out 

EU G7 ESA market

0.00%5.00%

10.00%15.00%20.00%25.00%30.00%35.00%40.00%

Eprex (epoetin

alfa)

Neorecormon(epo

etin beta)

Aranesp

(darbepoetin alfa)

biosimilars*

market share
0

123456789

10111213

Erythropoetin Stimulating Agent Sales Trends 

D J F M A M J 

J F M A M J J A S O N

2007 2008

Sales in M’s USD$

Aranesp

Price reduction

13‐16%

Mircera

Price reduction

15%

* Represents Binocrit
Biosimilar Discounts Signi

• ESA brand-name competitors reduc

before and after introduction of biosGermany and UK. 

• Amgen reduces price 13% to 16% i

Germany. However, Amgen says it 15% to 30% price premium to first gESAs in Europe. Other data suggespremium is narrower in Germany. 

• ESA biosimilars priced at about 25% 

innovator product.

Sources: IMS and companies
Causes of More Limited Biosimila

• Clinical development and mark• Biosimilar NOT substitutable fo

product at retail pharmacy leve

– State generic substitution laws m

provide for biosimilar or biogenersubstitutability.
One Man’sTech Gain is Another’s Evergree

• Introduction of 2nd generation product thre

potential of biosimilars to save money by reference product market share and price 

Aranesp: 

• Still commands a premium price to first-genera

to Amgen, although that premium is narrower in 

• Remains market leader in sales, with less mark

Germany than first-generation ESAs.

• Caveat: Biosimilar may improve on the re

product.
Biosimilar Impediment: Reimburseme

• 64% of biotech drugs are used in a 

office which limits effectiveness of rpharmacy substitution (if its even po

• Medicare Part B payment system p

incentive for doctors to use the mordrug.

• Limits on Medicare’s authority to gr

drugs in same payment category.

• Can Medicare use coverage decisio

patients toward biosimilars?
Some Insurance Incentives in Pla

• Dialysis bundling (although pay

yet set)

• Insurance plan formularies• Medicaid preferred drug lists
Conclusions

• First biosimilars in Europe and 

potential for price discounts, bumodest than with small-molecu

• Federal and state legislative iss

substitutability, public and privareimbursement incentives and and coding authority are key to biosimilars.
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