Erelzi is the biosimilar for Enbrel
As we discussed earlier, Enbrel is facing challenges in terms of cutthroat competition from AbbVie (ABBV) and Johnson & Johnson (JNJ). The rising competition has put pricing pressure on Amgen (AMGN). With higher rebates, Enbrel’s sales might fall in 2017 and beyond.
To fuel the problems further, Novartis’s (NVS) Erelzi, a biosimilar for Enbrel, was approved in the US in August 2016. However, it still hasn’t been launched in the US. Perhaps Amgen (AMGN) is trying to postpone the launch by claiming patent protection for Enbrel until 2029.
If Enbrel succeeds in maintaining its market share, Amgen’s share price might jump. The Health Care Select Sector SPDR ETF (XLV) offers exposure to Amgen. XLV holds 4.2% of its total assets in AMGN.
Why did big pharma and biotechnology companies enter the biosimilars business?
In the absence of biosimilars, the biotechnology industry enjoys benefits after patent expiry for a longer period. However, during September 2015, the first biosimilar, Zarxio, was launched in the US by Novartis’s subsidiary Sandoz. Interestingly, Zarxio proved to be the only biosimilar for Amgen’s key product Neupogen.
After Sandoz, it was Pfizer (PFE) that won FDA (US Food and Drug Administration) approval for its copy-cat version of the drug, Inflectra, a biosimilar for Remicade. Inflectra was launched in November 2016 at a 15% discount to Remicade.
It seems that the companies are launching biosimilars at a lesser discount to the patented drug. Generally, in the generics business, the first generic is launched at a 30% or greater discount.