Large investments into the South Korea’s biosimilar sector development by big players like Celltrion along with the Government’s capital and regulatory assistance, are forecast to facilitate the biosimilar market’s growth to $1.2 billion at a CAGR of 7.8 per cent by 2019, with a global market share of 22 per cent by 2020.
Biotech start-ups account for roughly 13 per cent of all the listed companies on the South Korean stock market and the biotech industry is predicted to outpace the growth of the current, highest-grossing industries.
The key factors behind the diversification of pharmaceutical opportunities in the country are the rapid expansion of the biosimilar sector and a continued modernisation across its industry.
Six biosimilars have been approved in South Korea since 2012, and dozens of other biosimilars are currently in the development pipeline. Contributors to the domestic market’s rapid growth are the South Korean government’s support of the biosimilars industry as well as major investments in biosimilar development by companies like Celltrion and Samsung Bioepis.
In order to support of the goal of controlling 22 per cent of the global market by 2020, the South Korean government has invested heavily in domestic biopharmaceutical companies by providing capital and regulatory assistance. For example, in 2011, the government reportedly began a consulting program to help South Korean biopharmaceutical companies understand the regulatory process for biosimilar approval at home and abroad. And in 2012, the government invested a reported 35 per cent of the national medical R&D budget in biosimilars development.
South Korea’s early investments in the biosimilars industry are already paying off for two companies in particular, Celltrion and Samsung Bioepis, both of which have received approval for biosimilars of blockbuster drugs. Celltrion, whose infliximab biosimilar is currently approved in dozens of countries, is aiming for $1 billion in global sales of the drug. The company recently disclosed that it intends to invest an additional $275 million at its Korean manufacturing site to more than double its production capacity by 2021. Samsung Bioepis, with EU-approved etanercept and infliximab biosimilars, also expects to reap a windfall from its drugs, with a revenue target of 1 trillion won by 2020. Samsung Bioepis intends to invest $740 million to double its own production capacity by September 2018.
Meanwhile domestic biosimilar products are rapidly expanding their market share in many European countries and industry watchers are wondering whether the Korean makers also will be able to duplicate their success in U.S. markets.
Biogen, a U.S. multinational biotechnology company, announced its second-quarter results recently including the sales records of Benepali, an arthritis drug developed by Samsung Bioepis and marketed by it in Europe. The second-quarter sales of Benepali totalled about 17 billion won ($15 million), an increase of 7.5 times from the first quarter, Biogen said.
Samsung Bioepis is expected to record sales of almost 100 billion won from Benepali alone. Samsung Bioepis has been making Benepali, its first biosimilar product, in Biogen's factory in Denmark. As its sales increase, however, the firm has signed a contract with its parent company, Samsung Biologics, for the production of the biosimilar medicine, company officials said.
Sales of Inflectra, a rheumatoid arthritis treatment developed by Celltrion and marketed by Pfizer in Europe since 2013, are also growing steeply.
Its share in the Norwegian market, for instance, was 9 percent in February but soared to 93 percent in April. The Oslo government reportedly is encouraging use of the biosimilar medicine to save money in its medical budget.
Particularly, Celltrion's biosimilars are expanding their markets from Northern Europe to Western Europe. "The market shares of Inflectra have reached 97 percent in Denmark, 88 percent in Finland, 33.5 percent in Sweden, 27 percent in the Netherlands, 14 percent in Germany and 11 percent in France," said Steinar Madsen, a medical director in the Norwegian government.
The Korean companies' robust performances in European markets are attributed to their swifter obtaining of permissions than their foreign competitors. They are contacting foreign governments and hospitals with global pharmaceutical companies as their marketing partners, offering bold price discounts. The brisk sales of Korean biosimilars in Europe are prompting other Korean firms to make additional applications for permission.
Unlike Europe, however, sales of Korean biosimilar medicines in the U.S. market will likely face an uphill battle, industry executives said.
Fortunately, patent disputes are almost over for Remicade's biosimilars, for which domestic companies have completed development and won marketing permission. Celltrion has obtained permission for its biosimilar medicine Remsima, and Samsung Bioepis applied to the U.S. Food and Drug Administration (FDA) for its medicine in June.
According to the Korea Pharmaceutical Manufacturers Association (KPMA), the industry, which was valued at 80 billion won in 2013, will grow to a 150 billion won market by 2019. The government’s active policy towards biosimilars, major companies’ establishment of large-scale production facilities, and new product launches are all contributing to growth.
Changes in price calculation methods for biosimilars may expand the market even further. The industry is currently demanding a price increase for biosimilars, which now sell for between 70 and 80 percent of the prices of the original medications.
Korean companies tend to focus less on developing new medicines, which require greater investment and have a higher risk of failure compared to biosimilars. In 2012, five biosimilars were approved by the Ministry of Food and Drug Safety, and twelve more biosimilars are undergoing clinical trials.