Johnson & Johnson's (JNJ -0.13%) Remicade is its best-selling drug, but a cheaper biosimilar to Remicade launched last year, and that's forcing J&J to cut prices to maintain its market share. Is Remicade on the ropes?

In this clip from The Motley Fool's Industry Focus: Healthcare podcast, Kristine Harjes is joined by Todd Campbell to discuss Remicade's first-quarter sales and how the company's responding to the biosimilar threat.

A full transcript follows the video.

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This video was recorded on April 19, 2017.

Kristine Harjes: One drug I know we've called out a bunch in the past is Remicade, which is one of their key drugs. It's an anti-inflammatory. This is a drug that everybody has been watching because of the threat of biosimilar competition. Quick reminder: Biosimilars are basically generic versions of very complicated drugs that you can't make what would technically be called a generic for. [Merck & Co.] is partnered on this drug. When you look abroad, you see this biosimilar called Inflectra being priced at about a 15% discount to Remicade. It's a little bit concerning as an investor to think, is this going to start affecting Remicade sales in the United States as well?

Todd Campbell: Yeah, Remicade is huge. We're talking about almost $1.7 billion just from this one drug alone last quarter.

Harjes: Yeah, this one is super important. But, it looks like maybe we don't quite have to worry about that as much -- at least not yet. Management has commented that they're not seeing much impact from a Remicade biosimilar just yet.

Campbell: I think we can probably kill a whole episode talking about Remicade and the whole movement toward biosimilars. In Europe and overseas, they have a much more established biosimilar market. As a result, Remicade export volume from Johnson & Johnson is falling much more quickly than the threat is here in the United States, where it's just basically an emerging market for these biosimilars. So, overall, Remicade sales fell 6%, as I mentioned, to $1.67 billion. U.S. sales were down 2.4% to $1.18 billion, and that was following the launch of Inflectra, this was the first full quarter of it, Q1. And I think what people have to say is, why were sales down if they say they don't see much of an impact? What they were saying was, we don't see much of an impact in prescription volume and market share. But they did say they are seeing an impact in pricing. My view is they said, you launch that biosimilar with only a 15% discount. Guess what? This is a margin-friendly drug for us, we can match that price. So, we're going to maintain our market share until you get to a point where we don't want to match it anymore. So, that might be a very big struggle for biosimilar manufacturers in the United States, where you have these very high-priced drugs, theoretically, a lot of room for the manufacturer to be able to compete more aggressively with the biosimilars when they first roll out.

Harjes: Right, especially when you consider that a doctor looking at your original drug versus the biosimilar version, I think there's a healthy amount of skepticism there among a lot of prescribers in that they'll be hesitant to switch patients, or even start new patients, on the biosimilar when they're used to the original brand-name drug.

Campbell: Yeah, it's going to come down to cost -- whether or not the payers make them.

Harjes: Yeah, if the pricing is minimal, I don't see payers pushing for that, I don't see doctors pushing for it. But, as you mentioned, it's a pretty nascent market.

Campbell: Yeah, and I feel like, when you look back at the regular generic market, as it started to grow in the 90s, there was a lot of hesitancy about that. Of course, now we all know that the majority of prescriptions written are for generics. So, I think there's a tremendous opportunity, here. Remicade is going to face headwinds for a long time, it's just that, maybe the headwinds aren't as strong initially as was feared. That's something to keep in mind.