Asian companies really score?
-Mark Ravera is principal at
US-based Strategic Pharma Consulting Group, which provides advisory
services to both emerging market and western biopharmaceutical
companies. This work makes him a frequent visitor to Asia.
The big global pharmaceutical companies have spent large amounts of
time and money fighting challenges from generic competitors. They have
met challenges, both legal and regulatory, with very vigorous defenses.
So, it is very surprising to note that several of the leading global
players, including AstraZeneca, Merck and Eli Lilly, are looking to
move into the biosimilars space. Novartis, already a strong generics
player through its Sandoz division, is also expected to join the game.
It appears that these companies view the biosimilars market as being
very different from the small molecule generics market. And they may be
The big pharma companies are saying that they can leverage both their
clinical development and manufacturing expertise to make their
biosimilar efforts successful. But there is another expertise that they
can use in this area, and this expertise may be the largest threat to
Asian companies that have been investing in the biosimilars
Asian pharmaceutical companies can claim that their biological
manufacturing expertise is equivalent to that of the large US and
European pharmaceutical companies, and this claim is, in many cases,
valid. Asian companies can also claim clinical development
expertise, although to a much lesser extent in the more regulated
markets. But it is very difficult for any Asian pharmaceutical company
to claim an ability to brand and promote drugs in the US and Europe
that is in any way equivalent to the branding and promotional abilities
of the largest pharmaceutical companies.
And this is a key component of the biosimilars market that has been
overlooked—the importance of marketing. This will not be a
“classic generic drug” market. There will be many
questions and concerns regarding the safety and efficacy of biosimilars
as compared to the original drugs, questions and concerns that will be
emphasized by originator companies such as Amgen and Genentech. These
issues will be raised with patients, prescribers, regulators and
Given recent concerns surrounding drug safety and quality, and given
that many of these biologicals are used by patients with very serious
and/or complex diseases, it is reasonable to expect that those
biosimilars with the Novartis or AstraZeneca names on the label will
engender much more confidence as compared to biosimilars with the names
of Asian companies that most people in the US and Europe have never
heard of. This is not to question the quality of biosimilars coming
from Asian companies—let us assume that, by all standards and
metrics, the Asian biosimilars will be equivalent to those from the US
and European companies. But the marketing power and brand equity of
companies such as Merck and Eli Lilly will give them a clear advantage
over Asian brands.
It is important to remember that the biosimilar market is expected to
be relatively high-priced. As a result, the western pharmaceutical
companies will have gross margins on their products that could allow
reasonable marketing and promotional efforts to address any concerns
about their products.
Of course, these are still early days, and we really don’t
know how the biosimilar market will evolve. As of now, it looks like it
may be a hybrid between the branded and generics markets. If this is
the case, then both the large western companies and the Asian companies
that want to compete in this space will have a lot to learn, and
perhaps a lot to teach.