Amgen (NASDAQ:AMGN) is pouring billions of dollars into biosimilar development in an attempt to capture lucrative markets enjoyed by several widely successful biologic drugs that are due to come off patent in the next several years. Ironically, the company knows how it feels to lose out to generic competition, with three successful biologics coming off patent in major markets. There are millions of dollars at stake, so investors need to watch both sides of the biosimilar equation. In the following video, Fool contributor Maxx Chatsko goes over the immediate generic threats facing Amgen's Aranesp, Epogen, and Neupogen.
Luckily for innovator biologics, generic development is a lengthy and costly process. It can take up to eight years and $250 million to develop a biosimilar, compared to just three years and $3 million for small molecule generics. This limits the number of companies that can get in on the action and also insulates revenue streams of innovator drugs. That hasn't kept an onslaught of competition from taking place, so biotech investors need to become familiar with market development.