3 Big Battles in Biosimilars to Watch

The global biosimilars market is forecast to grow to $24 billion by 2019. A few major contenders -- Hospira, Novartis, and Mylan -- could profit from that growth.

Mar 5, 2014 at 2:30PM

The global market for biosimilars, or generic versions of biologic medical products, is expected to soar to $24 billion by 2019, according to a recent report from Frost & Sullivan -- not bad for a fledgling industry that currently only consists of a handful of drugs.

Biosimilars have appeared in response to the patent cliff now facing some of the top-selling biologic drugs of the past decade. In this article, we'll examine biosimilar versions of Johnson & Johnson (NYSE:JNJ) and Merck's (NYSE:MRK) Remicade, Amgen's (NASDAQ:AMGN) Enbrel, and Roche's (NASDAQOTH:RHHBY) Herceptin, and look at just how much these new contenders matter to patients and investors.

Generic Remicade
The blockbuster rheumatoid arthritis treatment Remicade is a core source of revenue for J&J (NYSE:JNJ) and Merck (NYSE:MRK), which co-market the drug globally:


2013 Remicade sales

YOY growth

Percentage of total revenue


$6.67 billion




$2.27 billion



Source: Company annual reports.

Remicade's European patent will expire in February 2015, although its U.S. patent will last until September 2018.

That's where Hospira (NYSE:HSP), a maker of injectable drugs and medical devices, comes in. Hospira is no stranger to biosimilars -- two of its newer drugs, Retacrit and Nivestim, are respective generic versions of J&J's (NYSE:JNJ) anemia drug Procrit/Eprex and Amgen's (NASDAQ:AMGN) neutropenia treatment Neupogen.

Hospira's (NYSE:HSP) biosimilar version of Remicade, known as Inflectra, last September became the first biosimilar monoclonal antibody ever approved in the European Union. Hospira (NYSE:HSP) co-developed the drug with South Korean company Celltrion, which will market the product as Remsima.

Hospira (NYSE:HSP) plans to launch Inflectra across Eastern Europe this year, and subsequently into larger Western European markets in 2015 as more of Remicade's patents expire. If patent litigation doesn't halt the early launch of Inflectra and Remsima, the drug could generate annual sales of $560 million in Europe, according to Barclays analyst Mark Purcell.

This could provide Hospira (NYSE:HSP), which generated $4 billion in 2013 sales, with a considerable boost in 2015 and beyond. More importantly, it could offset the double-digit decline of its medication management business, which was hurt by an FDA ban that prevented the company from importing several of its top-selling medical devices from Costa Rica.

Generic Enbrel: Amgen vs. Novartis
Amgen's (NASDAQ:AMGN) Enbrel, another blockbuster arthritis drug, could also soon be threatened by a biosimilar version developed by Novartis' generics unit Sandoz. Amgen and Pfizer ended their co-marketing agreement for the drug last October.


2013 Enbrel sales

YOY growth

Percentage of total revenue


$4.55 billion




(outside U.S. & Canada)

$3.78 billion



Source: Company annual reports.

Amgen's (NASDAQ:AMGN) patent on Enbrel will not expire in the U.S. until 2028, thanks to new patents issued in 2011 and 2012, but it already faces generic competition overseas.

However, Novartis is intent on challenging Amgen (NASDAQ:AMGN) in the U.S., and initiated a late-stage trial of its biosimilar version of Enbrel last June. Novartis then sued Amgen (NASDAQ:AMGN), claiming that the new patents were invalid and unenforceable. However, a court ruled that a biosimilar manufacturer couldn't sue a branded company unless a new drug application for the biosimilar had already been filed with the FDA. Novartis appealed the decision in December.

Regardless of the outcome of the appeal, Novartis has a steep uphill climb ahead. When Amgen (NASDAQ:AMGN) received those new patents, Merck (NYSE:MRK) completely abandoned its efforts to create a biosimilar version of Enbrel.

Despite these stateside challenges, Novartis could manufacture the biosimilar overseas, where generic versions of Enbrel are already available from Pfizer's Wyeth division and Indian company Taj Pharmaceuticals.

Either way, a market approval of Novartis' generic Enbrel could further boost sales at its Sandoz division, which posted a 5% year-over-year jump in sales in 2013. Sandoz accounts for 16% of Novartis' top line.

Generic Herceptin: Roche vs. Mylan and Biocon
Last but not least, we'll look at Mylan and Biocon's biosimilar version of Roche's (NASDAQOTH:RHHBY) blockbuster breast cancer drug Herceptin, which was approved last November. Herceptin, a targeted treatment for HER2+ breast cancer (25% of breast cancer cases), is one of the lead contributors to Roche's top line.

Roche Herceptin sales, 2013

YOY growth

Percentage of total revenue

6.08 billion CHF (about $6.84 billion)



Source: Roche 2013 annual report.

Roche's (NASDAQOTH:RHHBY) patents for Herceptin will expire in 2014 in Europe and 2019 in the U.S. However, it faces a unique situation in India, due to the Indian government's practice of pushing pharmaceutical companies to either lower their prices or allow local pharmaceutical companies to produce generic versions of their patented drugs. Those practices caused Roche (NASDAQOTH:RHHBY) to lower the price for Herceptin from $4,500 per month in the U.S. to $1,366 in India, and to abandon its patent altogether last August in India.

Mylan, the third largest generics maker by revenue in the world, and Indian biopharmaceutical company Biocon then pursued the market approval of Hertraz, their biosimilar version of Herceptin.

On Feb. 10, however, Roche (NASDAQOTH:RHHBY) secured an injunction in India against Mylan and Biocon to ban any direct comparisons between Hertraz and Herceptin. Roche's (NASDAQOTH:RHHBY) reasoning was that there were no public records for the phase 1 and 2 trials demonstrating that Hertraz was a valid biosimilar version of Herceptin. As long as the injunction is active, Hertraz can only be promoted as an alternative treatment for HER2+ breast cancer instead of a biosimilar version of Herceptin.

Biocon called Roche's (NASDAQOTH:RHHBY) strategy "shocking but not unexpected," and highlighted the challenges that generic-drug makers can face while developing biosimilars in developing countries.

The Foolish takeaway
The biosimilars market is a key one to watch in the health care industry as blockbuster biologic drugs start going off patent. Companies such as Hospira, Novartis, and Mylan are all poised to profit from these losses at Johnson & Johnson (NYSE:JNJ), Merck (NYSE:MRK), Amgen (NASDAQ:AMGN), and Roche (NASDAQOTH:RHHBY) over the next few years.

More growth opportunities with these 6 stocks
They said it couldn't be done. But David Gardner has proved them wrong time, and time, and time again with stock returns like 926%, 2,239%, and 4,371%. In fact, just recently one of his favorite stocks became a 100-bagger. And he's ready to do it again. You can uncover his scientific approach to crushing the market and his carefully chosen six picks for ultimate growth instantly, because he's making this premium report free for you today. Click here now for access.


Leo Sun has no position in any stocks mentioned. The Motley Fool recommends Johnson & Johnson. The Motley Fool owns shares of Johnson & Johnson. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

©1995-2014 The Motley Fool. All rights reserved. | Privacy/Legal Information