Title: Follow on Protein Products: Opportunity or Overblown
1Follow on Protein Products Opportunity or
Overblown?
- Bobba Venkatadri
- 2nd November,2007
2Presentation Outline
- Introduction
- Business Opportunity
- Development Strategy
- Product Clinical Supply
- Competition
- Summary
3Introduction
- Biopharmaceuticals are proteins made by
recombinant DNA technology - Production processes and regulatory issues are
significant - Since 1980s over 100 new products created,
allowing treatments never before realized - Diabetes, cancer, genetic disorders, autoimmune
diseases, hepatitis, etc. - Many exciting products worth about 25 B coming
off of patent in near term creating opportunity
for Follow on Protein Products business - Also referred to as bio-similars and follow on
biologics
4Introduction (contd)
- Biopharmaceuticals are
- Highest value pharma products today on per
therapy basis - Therapies in US range from 10K to 100s of K
per annum - Highest value added products with large biotech
companies enjoying significantly higher
valuations than large pharma - Fastest growing segment of pharmaceutical
industry - Over 100 product approvals for bio-pharma
products were made at US FDA from 1996 to 2003
5Business Opportunity Follow on Protein Products
- Over 15 products coming off patents in next 10
years - A number of these are in excess of 1 B in sales
in US and Europe alone - Over 25 B opportunity
- Requires unique knowledge and skills to take
advantage of this opportunity
6The Business Opportunity Examples
7The Business Opportunity Background
- Factors in favor of the development of
Biosimilars - Demand for bio-pharmaceuticals is rapidly rising
throughout the world thereby increasing
pharmaceutical expenditure which is a huge
budgetary issue - Development of new, expensive treatment continues
- New emerging markets (BRICKS) in Asia, Latin
America, Africa - Bio-pharma prices growing at a much more rapid
rate than traditional small molecule
pharmaceuticals - Political climate of goodwill
8Strategies for Success
Technical Barriers Manufacturing Approach Cost
of production
Can you make the product? Can you get the
product to market? Can you make
money? Successful product
Efficient process Low cost manufacture Access to
GMP facilities
Regulatory barriers Patent litigation
Pick the right partner Pick the right
product Pick the right indications
Sound commercialization strategy
9The Business Opportunity Success Factors
- The opportunity is large success will require
- In depth technical knowledge of the products
- Developmental and regulatory experience
- Commercial relationships expertise
- Clinical programs will cost 10 50 MM, much of
which will need to be done in EU US to access
those markets - Relationships with thought leaders and their
endorsement is essential for each indication - Significant investment in process development and
manufacturing, 30 to 90MM - World class quality and low cost supply is
critical
10The Business Opportunity
- Follow on protein product business model will
resemble specialty pharma or biotech business - This will not be a generics business in the US
and EU - Prescriptions will not be substitutable or
interchangeable - Must establish product and market franchises
using MD thought leaders patients
11The Business Opportunity
- Each product must be marketed will be costly
- Budgets for promotion, phase 4 studies, etc.
- Commercial investment in the US will be large
requires - Marketing materials
- Drug reps
- Physician education programs
- Niche products could cost as much as 30 MM to
launch block busters much more
12The Business Opportunity Product Selection
Criteria
- Patent expiry in US and EU
- Many blockbusters are coming off patent
- Potentially a lot of value, but competition will
be intense - Difficulty of manufacturing must be taken into
account - Difficulty of clinical trials and regulatory path
- Large and long clinical trials will significantly
increase development costs and lower overall
returns.
13Business Opportunity Example Niche products
- Commercialization resource requirements are
relatively small and expected competition will be
minimal or limited to innovators - Pulmozyme sales in 2006 were 250 MM
- 200 MM in US
- 50 MM in EU
- US patent expiry 2012
- About 115 Cystic Fibrosis Centers in the US
14Business Opportunity Blockbuster examples
- Commercialization resources will be large, and
competition will come from both first and second
generation follow on proteins. - Second generation (long acting) versions of EPO
GCSF, thus avoiding heavy competition on first
generation, shorter acting Follow on Protein
Products - Aranesp product sales in 2006 were 2,880 MM and
growing rapidly, 30, displacing Epogen (1st
generation) - US patent expiry approximately 2016
- Neulasta product sales in 2006 were 2,300 MM and
growing at 12 - US patent expiry approximately 2017
15Regulatory Challenges and Strategy
- EU has taken the lead on defining a regulatory
path - Guidelines for development of Similar Biological
Medicinal Products (Follow on Protein Products in
US) - Reduced non clinical testing
- Requires phase 1 and phase 3 studies
- Safety registry (ph 4) will be required
16Regulatory Challenges Strategy
- Current PHS Act (US Law) does not allow for
Follow on Protein Products - Congress is addressing need to change PHS Act to
allow for Follow on Protein Products - We expect US to have similar guidelines as EU,
perhaps more preclinical safety - Most likely phase 1, 3 and 4 (registry for
safety) will be required - US environment Follow on Protein Products
legislation pending
17US not that different from EU
- Growth hormone Sandoz
- Phase 1 and Phase 3 study
- Cerebrosidase Protalix (partnered with Teva)
- Phase 1, then directly into phase 3
- FDA and EU authorities are highly focused on
quality safety - In depth technical and regulatory expertise
critical to success
18Clinical Development strategy
- Regulatory requirements contd
- All products clinical development strategy will
be case-by-case discussion with EU and US
authorities - Average cost per program will be approximately
30 MM for clinical alone higher in many cases - Additional costs will exist for process
development, manufacturing investment, regulatory
quality support, GA, sales force development,
promotional materials, etc. - Phase 4 safety registry will be required
19Clinical Development Strategy
- Positioning the products with the market will be
very important - In the US, each label claim may require
additional studies No substitutions for Follow
on Protein Products for innovator products! - EU has stated no studies for additional label
claims (if justified) - Thought leader involvement will be critical!
20Safety Quality Opportunities for Success
- Phase 4 program can be viewed as a chance to
ensure patient safety physician endorsement - Growth hormone registry (Ph 4) drove sales in
80s 90s - Set the bar high for competition
- Prescribers, FDA and patients will be highly
focused on safety
21Development Strategy (contd)
- Strategic partnerships should be strongly
considered and explored to share the financial
burden - Establish the manufacturing process early
- Validate cell banks, test methods and
manufacturing process as soon as possible - EU requires full validation of assays, process,
manufacturing, prior to initiation of phase 1
studies - Characterize API to show comparability to
innovator product - Purity quality will be the focus
- Ensure compliance to regulatory and ICH standards
22Supply Chain Strategy Strategic approach
- For First time investors in bio-pharma
products, the cost of supply chain will be - At best, seem outrageous
- At worst, not worth it
- Plants in EU and US cost in excess of 18,000 per
sq. meter - To maintain a compliant facility, operating costs
are high
23Supply Chain Strategy Strategic approach
- Strategic relationships in process development
manufacturing should be chosen carefully - History of compliance and quality
- Strong interest in Biopharmaceuticals and well
developed capability - Any strategic relationship should maximize
efficiencies and capital of the companies in this
space - Technology, expertise experience in
development, regulatory, and commercialization
from US - Low cost process development, manufacture
capital in India
24Expected Competition
- Competitors will fall into three categories
- Originators, Giant Generics, Specialty Players
- Level of competition will be significant, but not
as intense as generic Pharmaceuticals - While as many as 20 to 50 companies are
reportedly interested in participating, perhaps
as few as 5 or 6 will be serious players due to
entry barriers - No current US generic regulatory pathway
- Technical and Manufacturing requirements
- Clinical and Marketing requirements
- Cost of development and commercialization will be
high - Likely consolidation and strategic alliances to
address above
25Expected Competition (contd)
- Select Originators
- Genentech, Amgen, Genzyme, JJ
- Giant Generics Committed publicly to Follow on
Protein Products - Sandoz/Novartis (Momenta), Teva (Sicor, Tianjin
Hualida Biotech), Ranbaxy (Zenotech), Barr
(Pliva) Dr. Reddys Laboratories Ltd. - Specialty Players
- Shire (TKT), BioPartners (LG Life Sciences,
Rentschler Biotech, Cambridge Labs, Nycomed,
Megapharm, Laboratorios Raffo, BioPro Pharma) - Others to follow
26Bio-generic Companies, Products and Timescales
Note Although Transkaryotic Therapies has
marketing authorization for Dynepo in Europe it
has not launched the product pending the outcome
of patent litigation with Amgen in the US. Data
validated as of January 2004
27Bio-generic Companies, Products, and Timescales
(cont.)
Note Although Transkaryotic Therapies has
marketing authorization for Dynepo in Europe it
has not launched the product pending the outcome
of patent litigation with Amgen in the US. Data
validated as of January 2004
28Summary
- Follow on Protein Products offer a large
opportunity - 10s of Billions USD in next 7-10 years
- Development commercialization experience
critical to success of penetrating US and EU
markets - Regulatory requirements of recombinant proteins
unique Experience in small molecules will not
guarantee success - Business model vastly different from generics
business - Costs of development of Follow on Proteins is
very high - Bearsteins article, Dec. 2006, 100MM per
molecule - Capital and commercial requirements will offer a
significant barrier to entry - Strategic partnering offers a sound route to
managing capital requirements for development and
commercialization.
29Offshore Industry Lifecycle Curve-Pharmaceuticals
Vs. Other Industries
Key Focus
Consumer Products Retail PG, Nestlé
Automotive Ford
Financial Institutions GE, Citi, Amex, HSBC
MNC Pharmaceuticals are Laggards
GSK
Wyeth
AZ Novartis
Adoption Stage / Examples
JnJ
Aventis Roche
Pfizer
Lilly
As Other Industries Have Faced Margin Pressure,
They Have Moved To A Global Operating Model
BMS AbbottMerck
Source A.T. Kearney analysis
30Chronic Therapy market to form close to 50 of
overall market by 2020 E compared with current 25
31India to be the fifth largest drug market in the
world by 2020 E