biopharmaceutical product

As patent protection expires for the first wave of biopharmaceutical products, the potential marketplace for generic substitutes looms large. Biogenerics offer a multi-billion dollar marketplace, one which has yet to be exploited. I would like to discuss future developments that may lie ahead for biogenerics, as well as a tentative perspective and a (necessarily incomplete) overview of the issues and hurdles to be overcome if the golden opportunities predicted by some observers associated with the future of biogenerics are ever to materialize. I must stress that my perspective is based on a personal interpretation of a very complex situation and that my views do not aim by any means to be comprehensive.

We should start by defining what a biogeneric is. Generics (or, more appropriately, multisource pharmaceuticals) are typically defined as pharmaceutical preparations that:

• are essentially similar to an original product;
• involve an active substance with expired patent protection;
• are approved through a simplified registration process; and
• sell under a common name typically with very little (if any) promotional activities.

Essentially, generic pharmaceutical companies offer consumers a cheaper version of a product for which patent protection has expired. Within this framework, a critical success factor is represented by the ability to develop the generic copy with relatively modest investments, in order to make the economics work.

By extension, the term biogenerics is used to designate pharmaceutical preparations involving a biologically active substance stemming from modern biotech tools. As with pharmaceutical generics, these biogenerics are essentially similar to an original biopharmaceutical whose substance patent has expired, are approved through a simplified abbreviated registration process, and are sold under the generic substance name as opposed to a brand name (e.g., EPO as opposed to Epogen).

Table 1: Top biopharmaceuticals and their biogeneric status

Brand	Active Substances	Marketer	Year of Approval	1999 Sales in $Millions	Generics Under Development
Epogen	Epoetin alfa	Amgen Inc.	1989	1760.0	Yes
Procrit	Epoetin alfa	Ortho Biotech Inc.	1990	1505.0	Yes
Neupogen	Filgrastim	Amgen Inc.	1991	1260.0	Yes
Humulin	50% human insulin isophane suspension, 50% human insulin (recombinant DNA origin)	Eli Lilly & Co.	1992	1088.0	Yes
Intron A	Interferon alfa-2b, recombinant	Schering Oncology	1986	650.0	Yes
Avonex	Interferon beta-1a	Biotech	1996	621.0	Yes
Engerix-B	Hepatitis B vaccine, recombinant	Biogen Inc.	1989	540.0	Yes
Rebetron	Ribavarin and interferon alfa-2b, recombinant	SmithKline Beecham	1998	530.0	No
Ceredase	Alglucerase	Schering Corp.	1991	500.0	No
Cerezyme	Imiglucerase	Genzyme Corp.	1991	479.0	No
Genotropin	Somatropin	Genzyme Corp.	1995	460.8	Yes
ReoPro	Abcicimab	Pharmacia Corp.	1994	447.3	No
Betaseron	Interferon beta-1b	Eli Lilly & Co. and	1993	413.0	Yes
Kogenate	Antihemophilic factor, recombinant	Centocor	1993	403.4	No
Enbrel	Etanercapt	Berlex Corp.	1998	366.9	No

Market Drivers
Having defined biogenerics, we should review the reasons behind the interest they have sparked. The biggest driver of this market is money, as should be expected. Presently, the world market for biopharmaceuticals is approximately $20 billion (source: IMS Healthcare). If biogenerics achieve the same 10-15% medium- to long-term penetration rate of the rest of the generic market, that means there’s a potential U.S. biogeneric market of $2 billion.

In addition, during the next five years, several of the top 15 biopharmaceuticals will come off patent, creating opportunities for generic formulators. Most of these biopharmaceuticals are currently under development by generic producers, including EPO, hepatitis B vaccine and colony stimulating factors. Also, some biopharmaceuticals, including insulin and human growth hormones (HGH), have already lost their patent protection—at least for the drug substance—and are therefore open to generic competition.

Not surprisingly, a number of companies are jockeying for position in what is perceived as a multibillion dollar opportunity. Several players are emerging either located outside the Triad (namely western Europe, Japan and North America) or working in partnership with non-Triad companies. These companies include:

LG Chemicals – a Korean biotechnology company producing EPO, insulin and interferons for the domestic market and reported to be cooperating with several Western companies.

GeneMedix – a UK company with strong ties to several institutes in China and expecting to launch its first product this year. Interestingly, GeneMedix has elected to focus on Asia, since the regulatory and patent situations have not been clarified in western countries.

Cangene – a Toronto-based biotech company with a "generic-like" approach. Cangene concentrates on the development of existing molecules but performs limited clinical trials to demonstrate equivalence./

Rhein Biotech – producing biogenerics through partnerships in India and Argentina.

In addition to these a few large generic players have expressed interest in biogenerics, including:

E. Merck – In the late 1980s, this company acquired rights for HGH and interferon from Tecnofarma (Argentina) and has subsequently worked with LG Chemicals for the production of six other proteins. E.Merck Group’s current commitment to biogenerics is unclear.

Teva – Through its alliance with Bio-Technology General in the U.S., this Israeli company plans to market generic HGH, which was a $350 million market in the U.S. in 1999

Stada – This large German generic producer has begun development through its minority-owned subsidiary Stada Biogenerics and is working in collaboration with DSM Biologics in Canada to produce bulk active substance. Main targeted molecules include erythropoietin, filgrastim, interferon alpha and interferon beta.

Yet, despite all this interest, the substantial potential market and the fact that some biopharmaceuticals have seen their substance patent already expire—if one excepts gray market like Latin America or the Far East—a market for biogenerics has yet to emerge. The originators of biopharmaceuticals appear to have been remarkably successful in preserving their franchises. We must ask why this is and whether the situation will change. Will the promises of substantial growth and financially rewarding opportunities associated with biogenerics ever emerge? To answer this question, we must examine the conditions typically required for generics to succeed, and see how they apply to this unique market.


Obstacles
At least on paper, several biopharmaceuticals coming off patent represent ideal candidates meeting most of the criteria for the successful development of generics.

These drugs satisfy the large market size qualification. The first biotech products expected to come off patent comprise several blockbusters still showing double digit growth. The top example of this is EPO, a molecule with sales in excess of $3 billion, and interferon alpha, which posts more than $600 million in sales.

In addition, they offer large profit margins, with relatively low impact of the cost of the bulk biopharmaceutical on the overall price. This would allow biogeneric producers to offer discounts compared to the nongeneric versions that are currently available.

These potential biogenerics also tend to have simple non-proprietary formulation systems. Most of the molecules are straight injectable forms such as solutions or lyophilizates.

However there are key issues are associated with biogenerics that differ from regular generics. The most intricate obstacle is the availability of bulk active biopharmaceuticals through non-patent-infringing routes. Patent coverage for biopharmaceuticals represents a thorny path for biogenerics. Also, affordable demonstration of bioequivalence has held back development of this market.

The most critical divergence from the pharmaceutical generic market is the lack of a clear regulatory framework. Without this element, it is impossible to envision an economically viable development of a generic product. Biogeneric developers need regulatory standards so that they may avoid undertaking massive investments to develop the generic file.

As of today no specific regulations exist for biogenerics. Traditionally, biologicals have been considered by regulatory authorities as a distinct category from synthesized drugs. This has resulted in a situation of regulatory near-vacuum (or at least vagueness).

For example, in Europe it is not clear whether a biogeneric should be registered through the abbreviated procedure applicable for well-defined traditional generics requiring "that the generic is essentially similar to a reference product; if not, the generic should undergo a full registration process logged with the European Medicines Agency" (EMEA Committee for proprietary medicinal products- Note for guidance on development pharmaceuticals January 1998, EU Directive 65/65/EEC Article 4.8, medicinal product marketing license directives). This is not an unlikely or impossible proposition, as this procedure is theoretically mandatory for all "high-tech products," including biopharmaceuticals.

The regulatory situation for biogenerics is even more complex in the U.S., where the regulatory paths for biologicals and chemicals differ. Biologicals are approved by the CBER (Center for Biologics Evaluation and Research) under the Public Health Act, while conventional drugs are regulated by the U.S. Food, Drug and Cosmetic Acts and are evaluated by the CDER (Center for Drug Evaluation and Research).

The schism is not absolute, we must note. Complicating the classical distinction between biologicals and small molecule pharmaceuticals is the fact that some well-characterized recombinant proteins (such as growth hormone and insulin) have been registered as pharmaceutical drugs through the CDER.

This has far-reaching implications, for biologicals approved under the CBER are specifically excluded from the generic abbreviated approval process that is applied for synthetics. The rationale for this is the viewpoint that current bioanalytical methods are not adequate to assess biopharmaceutical equivalence. However "biologics" approved under the CDER are theoretically subject to generic competition, an element of critical importance.

Even if biogenerics were made eligible for the abbreviated procedure, another hurdle immediately emerges: the need to demonstrate "essential similarity" to a reference product. Indeed, unlike low molecular weight synthetic chemicals, where equivalence can be easily demonstrated through full analytical characterization, biopharmaceuticals most often consist of complex substances that are difficult, if not impossible, to fully characterize from a physico-chemical perspective, given limitations in current analytical techniques.

Furthermore there is the widespread view that, for biopharmaceuticals, "the process makes the product." Even minor modifications in a bioprocess such as changes in agitation or aeration systems, reactor size, operating conditions or culture media, not to mention changes in the cell line or microbial system applied are viewed as potentially leading to possible variations in the quality or properties of the biopharmaceutical associated as an example with different postranslational modification patterns (such as glycosylation), variation in tridimensional structures or altered impurity profiles.

Such changes (at least as seen by regulators who are vested with the task of overseeing the safety of pharmaceuticals) could potentially result in an altered safety and efficacy profile. This would require extensive (and expensive) clinical trials to gain regulatory approval. The authorities’ perspective has been—up until now—that simple bio-equivalence studies are not enough for biogenerics.

In fact, this issue is not specific to biogenerics. Marketers en-gaged in the development of innovative biopharmaceuticals currently face the same hurdles when changes are brought to the production process during development or after market authorization.


Getting Over the Process
However, this situation is evolving. The dogma that the "process makes the product" has been increasingly challenged. It appears that—if not strictly identical—at least comparable biologics can be obtained through different processes. This is the case for most well-characterized proteins. In Table 2, we see how HGH is being produced in Europe in a variety of expression systems (standard E. coli, special strains of E. coli and transformed mouse cell lines), with identical results, a 191-amino acid sequence copying the human pituitary growth hormone. Thus, there are at least five HGH products currently on the European market, each obtained by different companies based on distinct processes and even involving different expression systems. All of these products appear to show the same profiles in terms of amino acid sequence, potency and safety and efficacy, undermining the belief that "the process makes the product."

Producer	Expression System	End Products
Pharmacia	Standard	191 amino acid
Ferring	E. coli	sequence
		“identical” to the
Lilly	Special strains	human
Novo	of E. coli	pituitary growth
		hormone
Serono	Transformed mouse
	cell line

This is leading to a consensus that the concept of "product comparability" is more appropriate for bioproducts than "essential similarity." The regulatory authorities in both Europe and the U.S. have become increasingly aware of the almost Kafkaesque situation associated with this regulatory vacuum surrounding the comparability of complex molecules (including biopharmaceuticals). In Europe, the CPMP (Committee for Proprietary Medicinal Products) has started to develop specific guidelines within the frame of an initiative launched in 1998 by the Biotechnology Working Party.

These guidelines are designed to address the issue of comparability for what is referred to as "well characterized biotech-derived products, namely recombinant proteins and peptides" (Note for guidance on comparability of medicinal products containing biotechnology derived proteins as active substance EMEA May 25th, 2000). The guidelines include the physico-chemical and biological tests required to demonstrate structural equivalence of the two products, the assessment of the potential impact of process changes on the quality of the products, and the comparability in terms of toxicology and clinical efficacy. Interestingly, these guidelines were developed to facilitate changes in the processes applied by originators, but they have been extended to compare recombinant proteins developed by different manufactures such as biogenerics and multisource biopharmaceuticals.

Does this means that the regulatory hurdles facing biogenerics are all cleared and solved? Not really.

Although this step potentially opens the door for biogenerics, we must recognize that, as presently written, the proposed draft leaves substantial room for interpretation. No universally applicable rules are being proposed, so each product must be reviewed on a case by case basis. Also in the proposed regulation, relatively vague words and statements are used, with rather strict conditions proposed to demonstrate ‘comparability.’ This continues to favor the originators rather than potential biogeneric producers. Still, it’s a start.


Patent Wars
The complex patent environment surrounding biologicals represents another barrier to the development of biogenerics. The unique aspects of biotechnology patent law and its complexities certainly represent a fertile ground for biopharmaceutical innovators to hinder the development of biogenerics, providing a nightmare for potential generic producers. Issues include the overlap of process and product patents, in addition to such matters as exclusivity period and orphan drug status. A salient example of this complexity is the fierce battle raging between Amgen and Transkaryotic Therapeutics surrounding EPO.

As if this would not be enough, in the U.S.there is no Bolar-Roche (or Waxman-Hatch) provision that applies to biopharmaceuticals that seems to apply to biopharmaceuticals (at least to those registered under the frame of the CBER procedure). This represents an additional hurdle for the development of biogenerics whilst providing an additional period of exclusivity for the originators, as it means that the generic company would not be able to start any substantial development work on the biopharmaceutical before the effective patent expiry date, a situation in sharp contrast to what is prevailing for traditional pharmaceuticals based on small molecules.


The Future of Biogenerics
Is the situation completely doomed for biogenerics? Should generic marketers shelve and forget forever hopes of ever capitalizing on this potential multi-billion dollar opportunity? The answer to this question must be nuanced and hinges on a variety of factors.

First, the biogeneric market requires the development of a favorable regulatory and patent framework. This situation, although evolving, has not yet materialized.

The availability of bulk material and bulk biogenerics suppliers is also a must for the development of a biogeneric market. In this respect several reliable contract biopharmaceutical producers are starting to emerge (Boehringer-Ingelheim, Cambrex-BSCP, Diosynth-Covance, DSM-Biologics, Lonza). We should note, however, that their focus has been mainly on exclusive custom manufacturing of new biologicals under development by biotech companies or pharmaceutical industry majors active in the development of new biopharmaceuticals. At this stage it is far from clear what strategies contract biopharmaceutical producers will follow in respect to biogenerics. Will they eventually move into this market , risking possibly alienating their present customer base or will they instead stick to the innovator biopharmaceutical market? Given the current capacity shortage having emerged particularly for mammalian cell culture it is quite likely that most contract biopharmaceutical producers will elect the latter strategy, creating thereby an additional hurdle for biogenerics as it will be difficult to have access to the bulk substance.

The receptivity of the customer base, including patients and health care providers, to generic formulations also represents a potential barrier. Most of the biopharmaceuticals on the market target serious diseases in which the risk of switching patients to new formulations could be viewed by health providers as unwarranted and dangerous, given fears about biogeneric quality.

Another factor is the policies and approaches of present-day pharmaceutical generics suppliers. Many are still waiting on the sidelines, hoping the biogenerics situation will become clear. Undoubtedly, once the first biogeneric hits the market, many companies will step up their efforts in this field.

In addition, advances or breakthroughs in analytical technologies potentially have far-reaching implications. New technologies in this field may allow a more accurate characterization of macromolecules, opening new frontiers in terms of demonstration of equivalence or even essential similarity.


The Empire Strikes Back
We must also take into account the strategies followed by biopharmaceutical innovators, the originators of these products. They are expected to fiercely defend their franchise, engaging in a wide array of tactics, including proactive efforts to influence and shape the regulatory framework and stress to the medical community the value and safety of the original product, compared to biogenerics. Innovators stand the most to gain from the belief that "the process makes the product," and that even small process changes can impact the product equivalence and hence its safety and efficacy profile

Innovators are accustomed to the methods of blocking biogenerics, having already used these techniques to hinder traditional generics. These potential obstacles include:

• Adopting an aggressive legal stance and suing any patent infringement: examples include Amgen defending EPO’s position against Genetic Institutes and now against Transkaryotic Therapies;

• Repositioning the molecule through new enhanced formulations offering tangible benefits in terms of patient compliance, sustained release forms, lower adverse effects. Novartis did this with Neoral, its blockbuster transplantation drug;

• Accelerating the introduction of a second generation product, and possibly phasing out the original molecule: see Amgen’s strategy with NESP, the novel erythropoiesis stimulating protein currently under registration.


So, will the promise of major opportunities associated with biogenerics ever materialize? Undoubtedly, major hurdles are still hindering the development of biogenerics, but the overall field is rapidly evolving. Developments are not always predictable. Breakthroughs in the regulatory environment must not be ruled out. This may well have a catalytical effect on the onset of biogenerics. Perspective participants, eager to capitalize on this potential opportunity, must carefully monitor the field, keeping in mind that timing is of the essence.

Within this frame it is important to note that whilst it is beyond doubts that one day biogenerics will become a reality not only in gray markets but also in the U.S., Europe and Japan, a major uncertainty is represented by the precise timing of such developments. Given the critical impact of time on the ultimate financial return of investments, it is probably wise for perspective players on the biogeneric scene to carefully hedge their bets.