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Can Celltrion, Samsung make stable earnings with biosimilar?
  • By Nam Doo-hyun
  • Published 2017.09.26 17:31
  • Updated 2017.09.26 17:31
  • comments 0

Amid the intensifying competition to lower drug prices, market watchers predicted biosimilar products would continue to rake in profits thanks to the growth of overall markets.

Remsima (infliximab), which has lowered its price below that of original products in the U.S, market, is showing slower tempo of market infiltration than expected, forcing some analysts to forecast that profits from biosimilars would remain at a less than sufficient level. Most others, however, expressed the views its earnings will continue to increase.

The U.S. market share of Remsima, which cut its price by 15 percent against Remicade, stood at 2.3 percent as of June 30.

Some experts raised concerns that if the price continues to fall because of the increase of competitors, Remsima may lose its price competitiveness.

Others, however, said competitive price cuts of biosimilar products would lead to greater demand for them to expand the market size, allowing Remsima to endure even the discount rate of 50 percent or more.

"The price of Remicade 100mg stands at $1,071 in the U.S., 78 percent higher than that in the five European countries of U.K., France Germany, Spain, and Italy,” said Kim Tae-hee김태희, an analyst at Mirae Asset Daewoo미래에셋대우 in a report Tuesday. “Remsima’s price is $428 if the discount rate is 60 percent in the U.S., higher than the $362 in Europe if the discount rate 40 percent,"

"Concerns are mounting that the competitive discount rate among biosimilars and the price cut of the original product would reduce market size. If the existing biosimilars are any guide, drug price cuts had led to increasing demand, enlarging overall markets from when there were no biosimilar products,” Kim added.

According to the report, after the release of the biosimilar, the markets of granulocyte colony-stimulating factor (G-CSF), growth hormone, and erythropoietin(EPO) have increased 122 percent, 41 percent, and 66 percent (the combined total of original drugs and biosimilars), respectively.

Accordingly, Celltrion셀트리온 and Samsung Bioepis삼성바이오에피스, which are selling anti-TNF-a drugs, the second-generation biosimilar, will be able to rake in sufficient profits thanks to the gradual increase of market size and rising market shares, he predicted.

"Competition in the biosimilar market is less severe than worried. Currently, only five or six companies, such as Celltrion, Samsung Bioepis, Pfizer화이자, Amgen암젠, and Sandoz산도즈, are conducting global clinical trials with other smaller bio companies targeting only their domestic markets,” Kim said. “It is because the development of biosimilar is difficult, needs lots of money to finance phase 3 trials involving 500-800 people, and production cost is also high.”

Given the market’s characteristics that put latecomers at a disadvantage, companies entering the market as the second or third players will be able to maintain significant market shares, he predicted, adding that price cuts would stop at a certain level.

"The discount rate of the second-generation biosimilar is 35-40 percent, and the rate is likely to hover between 40-45 percent even though rival companies release the similar drugs,” he said. “The first-generation biosimilar, which underwent relatively fierce competition and the development and production costs of which were rather small, saw their price discount rate stop at 40 percent. The drug price cut of the second-generation biosimilar is inevitable due to competition but will leave rooms large enough to make profits."

hwz@docdocdoc.co.kr

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