Orphaning Biotech? The Impact of Biosimilars on Biotech Investment
An abbreviated follow-on biologics pathway is inevitable, despite the fact that Congress failed to pass legislation in 2007. Will a FOBs pathway adversely impact money flowing into the biotech industry? Unlikely. The impact of the 1983 Orphan Drug Act may be a good model to consider. (This article first appeared in the RPM Report, January 2008).
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You have to go back to 1983 to find a year as bad as 2007 for R&D output. It was a terrible year by any measure. The key question for industry: does it need to learn to subsist on a trickle of new drugs coming to market each year, or is the current drought in fact a sign of a transition to a new, more innovative R&D model? The sparse class of 2007 does offer some glimmers of hope.
At the beginning of October, Roche announced the discontinuation of the alpha interferon brand Roferon-A. That decision is unremarkable, except that it may have an interesting consequence: protecting Pegasys--Roche's second-generation pegylated recombinant interferon product--from competition once Congress completes work on follow-on biologics. Alpha interferon is sure to be an early target of generic drug manufacturers looking at biosimilar opportunities, along with EPO. A lower-cost interferon alternative certainly wouldn't help Roche's prized Pegasys franchise. In that context, the withdrawal of Roferon-A raises an interesting question: will generics companies be able to pursue follow-on versions of that product now that Roche has withdrawn the product?
As the blockbuster model comes under threat, Genzyme's highly diversified approach begins to look smart. Plenty of larger companies likely envy Genzyme's specialist expertise, tight customer relationships and long-standing embrace of external R&D. It's up to CEO Henri Termeer to prove that these strengths warrant an independent future for Genzyme.