Teva, Lonza end biosimilars joint venture as the copycat crowd thins

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After a financial wake-up call, Lonza Group has bailed out on development of biosimilars and come to a mutual decision with Teva Pharmaceutical ($TEVA) to end the two companies' joint venture to advance knockoff biologics. Unlike its cost-wary partner, Teva aims to pursue biosimilars development with a "highly selective approach" to picking programs.

The companies' joint venture, formed in 2009, encountered difficulties as the groups learned over the past year or so that biosimilars would require greater investments in clinical development and marketing than originally thought. An Israeli newspaper reported last October that the two companies slammed the brakes on a copycat program for Roche's ($RHHBY) blockbuster Rituxan, and then Lonza revealed plans to review the joint venture in March.

Lonza, a Basel, Switzerland-based contract biotech manufacturer, aims to reduce its costs after an 11% dip in profits for the first half of the year, Reuters reported. It aims to avoid spending in areas outside of its areas of expertise, including pricy clinical trials and commercial campaigns expected for biosimilar drugs.

"In our assessment those investments in biosimilar[s] will require more capital than initially planned and will also take more time until they reach the market," Dr. Stephan Kutzer, COO of Lonza Pharma & Biotech Market Segment, said in a statement. "This is why we intend in the future to limit our role by focusing on our core expertise in the areas of contract manufacturing and cell line development."

Teva and Lonza were forced to scrap their initial financial projections for biosimilars in recent years, with the FDA making more clear that developers of the therapies would likely face some additional hurdles to show that their products could be used in place of the originals. Biosimilars have always been considered more challenging than generic versions of small-molecule drugs because biologics are more complex molecules.

The bottom line: The technical and cost barriers of the biosimilars business in the U.S. are higher than some expected, meaning fewer players will likely have the expertise and financial strength to compete. 

- here's Teva's release
- see Reuters' article

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