In order to be successful in the global biosimilars market, Indian companies should identify opportunities in the US and European markets. There is also need to examine the opportunities for partnering with large pharma and multinational generic companies in Europe and the US for licensing deals and strategic alliances. Moreover the Indian companies should also understand legal and regulatory requirements for trade with European and US healthcare systems, according to a scientist from the Indian Institute of Science.

Companies which are likely to succeed in the biosimilar market should also have an appropriate marketing structure as well as the financial resources to develop the products and to accept higher upfront risks in development, commercialization and capital investment. Biosimilar players will therefore should adopt different business models and skill sets from those of conventional generics companies. This is the new territory for most generic players and players are likely to be fewer in biosimilars than in traditional generics. In the short-term at least, the commercial benefits from the biosimilars markets are likely to be small, say some experts.

Biosimilars, viewed as a high-growth sector in India include drugs like monoclonal antibody (MAb), granulocyte colony stimulating factor (G-CSF), interferon alpha, recombinant insulin, erythropoietin apart from a range of recombinant vaccines that are manufactured by companies including Biocon, Panacea Biotec, Shanta Biotech, Bharat Biotech International and Serum.

According to a Frost & Sullivan analysis, the biosimilar market in the regulated regions of the US and Europe is estimated to be over $16 billion by 2011. But the sector has seen a comparatively slow growth because of the lack of defined regulatory framework and uncertainty on the part of manufacturers and regulators.

"We have to urgently address the issues affecting the sector especially regulations governing biosimilars" says Dr. M. Vidyasagar, president Association of Biotechnology Led Entrepreneurs and executive vice president, Tata Consultancy Services.

The Department of Biotechnology (DBT) is working to develop a set of guidelines for the biologicals upto the clinical stage so that the approvals could be simplified and made more transparent.

Right now there is no regulatory mechanism existing for biosimilars. But a committee within the department has met several times and has taken the views of the industry, according to sources from the industry.

Since the biosimilars differ from the innovator drugs because of its complexity in the manufacturing process, there is a need to classify the biosimilars as new products. These will require a set of procedures for approval. The Drugs Control General of India (DCGI) should have a list provided by the industry classifying all the biosimilar products.

According to Ms. Kiran Mazumdar Shaw, chairman and managing director, Biocon Ltd, future is bright for biosimilars. In early 2008, we made a strategic investment in AxiCorp, German pharmaceutical company, which heralded our European foray for biosimilars like Recombinant Human Insulin. The main reason for acquiring AxiCorp was really to front end our biosimilar insulin business, and that will become a much better margin business, she added.

Globally the biosimilar market will be characterized by price competition, even if there are limited number of players for a given product. This will constrain the size of the commercial opportunity. A small price differential reduces the incentive to switch. The consensus seems to be that a 20-25 per cent discount is optimum to increase the switch back to first generation products, according to Jo Pisani and Yann Bonduelle, Pharmaceutical strategy consultants at PricewaterhouseCoopers LLP.

To make the most of the opportunity, generic companies will have to change their business model. The current model consists of launching new generic products regularly to maintain growth. Entry barriers are relatively low and there tends to be severe price competition from several generic competitors reducing sales significantly after the first year on the market. It is not clear if there will be enough biologic candidates for a company that is focused on launching biosimilars to sustain growth. There are not enough possible biosimilars for a company to rely on these alone to launch a new product every year, according to the PricewaterhouseCoopers study.

Biopharmaceutical drugs or biologics have outperformed the pharmaceutical market as a whole, largely due to two factors: they address areas of clinical need that are unmanageable with conventional therapeutics (including many cancers and genetic diseases) and they are able to command a premium price. At some point the patents protecting the successful biologic will expire and the potential of a sizeable market will attract generic companies. However the process to develop a biosimilar which essentially is the generic version of biopharmaceuticals is more complex than that of developing a generic copy of a chemical-based compound, adds the PwC study.