At the first day of BIO 2008 conference I met with Murry Aitken, Senior VP of Healthcare Insight at IMS Health. IMS just released a report on the growth of biologic drugs in 2007. Global biologic sales increased 12.5 percent in 2007 to more than $75 billion; that's twice as fast as the pharmaceutical market, which increased 6.4 percent in 2007.
That's all good, from biotech's perspective, but Aitken says the industry is facing some big challenges in the years ahead. The most obvious eventual challenge for biologics are biosimilars--generic versions of biotech drugs. Europe has seven biosimilars on the market and while there is no clear pathway for approval in the U.S., that won't be the case forever. The good news for biotech is that the current impact of these drugs on their market share is minimal. The bad news is that the wild days of unlimited exclusivity for blockbuster drugs is coming to a close. The end is in sight. Within the next five to ten years, biotechs may be facing the problem that their cousins in pharma are struggling with now: generic competition.
More immediately, though, biotechs must address issues of safety versus costs. According to the IMS report, sales of erythropoietins (anemia drugs such as Epogen, Aranesp and Procrit) dropped nine percent last year due to safety concerns. At the same time, sales for all of the other top 10 biologic drug classes grew, many of them significantly. Medicare--which accounts for a huge chunk of erythropoietin sales--restricted payments for the Amgen and J&J drugs. It goes to show just how big an impact safety issues can have on even the best-selling
The FDA will be looking more closely for safety problems like those associated with erythropoietins. This year the FDA partnered with Medicare, Medicaid and private insurers to roll out the Sentinel project. Rather than waiting for doctors and patients to voluntarily report possible safety problems, the agency could actively monitor prescription drug use and its effects on people.
Biotechs in particular have to tread lightly in this new system. Biologics carry some safety risks, and almost as importantly, they can be very, very expensive. Insurers aren't too thrilled about picking up the tab, and would be even less likely to do so if more risks are found to be associated with pricey biologics. The sales hit erythropoietins took should serve as a warning. Aitken stressed that companies must be proactive, not reactive when dealing with safety information.
IMS's message is clear: Now is the time for biotech to prepare for the future. Over the last several years we've all watched as some of the industry biggest names have faltered under the crush of generic competition and weak pipelines. By keeping an eye on the future, biotech companies have the opportunity to prepare for challenges ahead and avoid many of the painful lessons pharma is learning now.