September 23, 2015 / 2:15 PM / 2 years ago

Steep discounts help biotech drug copies gain ground in Europe

* Biosimilar antibody drug prices fall faster than expected

* Risk to AbbVie and others, though Humira holds up so far

By Ben Hirschler

LONDON, Sept 23 (Reuters) - Cut-price versions of expensive biotech drugs are gaining ground in Europe, following surprisingly steep price discounts offered on the first copy of a complex antibody medicine for rheumatoid arthritis and Crohn's disease.

The potential for so-called "biosimilars" to take business from pricey original brands is grabbing the attention of both healthcare providers, who see big budget savings, and investors, worried about the impact on drug company earnings.

While the United States saw the launch of the first approved biosimilar earlier this month, at a modest 15 percent discount to the original, the pace is being set by Europe, where biosimilars have been available since 2006.

In particular, all eyes are on biosimilar infliximab, a copy of Remicade, which has made strong inroads in parts of Europe this year on the back of price discounts as high as 69 percent in some hospital tenders.

Overall, discounts have been around 45 percent, according to Merck, which sells Remicade in Europe - still a much bigger price cut than many industry watchers had expected.

"The price has come down very, very quickly," Alan Sheppard, global head of generics at IMS Health, which tracks drug sales, told Reuters.

"I don't think anybody thought infliximab would be discounted to such an extent and that switching would come into some markets quite so aggressively."

Remicade, used to treat rheumatoid arthritis and Crohn's disease, had European sales last year of about 2 billion euros ($2.2 billion), making the success of the copycat version an important harbinger for a global biosimilars market that is predicted to have sales of $25 billion by 2020, according to a 2014 Thomson Reuters report.

Still, uptake varies widely from country to country.

IMS data shows that Poland, which does not use tenders to buy drugs, leads the field with biosimilars accounting for 80 percent of infliximab use. Norway follows with a two-thirds biosimilar share, while Finland and Hungary both have around one third.

In the big European markets the penetration rates are much less, at around 10 percent in Germany and Spain, with British use even lower. French demand, meanwhile, has picked up from a low base since a big tender in July.

LIVING CELLS

Because biotech drugs are made from living cells it is impossible to manufacture exact copies, as happens with simple chemical medicines, so regulators have come up with the notion of approving products that are similar enough to do the job.

That makes developing a biosimilar a relatively costly affair, leading to expectations of only modest price discounts.

But Roche Chief Executive Severin Schwan, who faces biosimilar competition to two of his top cancer drugs from late 2017, is not surprised competition is impacting discounts.

"Analyst expectations now vary widely, with some saying 30 percent and others 60 percent," he told Reuters in a recent interview. "Personally, I think we will see material price effects because I believe in the power of markets and competition."

So far, cheaper infliximab has not derailed European sales of other so-called anti-TNF injections, like AbbVie's Humira or UCB's Cimzia, according to Barclays analysts.

But that could change, depending on how much price pressure prevails once more biosimilars arrive.

Currently, South Korea's Celltrion has the only infliximab copy in Europe, which it distributes through partners such as Pfizer's Hospira, Orion, Mundipharma and Egis.

But it won't be alone for long. Samsung Bioepis, the biosimilar arm of conglomerate Samsung Group, hopes to launch biosimilars in 2016 of both Remicade and a competing drug Enbrel, which is sold in Europe by Pfizer.

"Samsung will definitely have to come in even lower," said Sheppard. "From the payer's perspective, the bar has now been set with expectations of sizeable discounts." ($1 = 0.8950 euros) (Editing by Adrian Croft)

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