Home / Companies / Aurobindo eyes Europe deal for biosimilar push

Aurobindo Pharma Ltd is in advanced talks with a European company to obtain permits for at least four biosimilar drugs to treat cancers and autoimmune disorders in a deal valued at about $200 million, according to two people familiar with the matter.

The deal will pit the Hyderabad-based drug maker against the likes of industry behemoth Biocon Ltd and others such as Dr. Reddy’s Laboratories Ltd and Intas Pharmaceuticals Ltd, which are looking to launch biosimilars for Europe and other highly regulated markets.

Biosimilars are copies of complex biological drugs. Unlike generic drugs that are cheaper copies of branded chemical drugs, biosimilars are harder and more expensive to develop as they are made from living cells and cannot be identically replicated.

The global biosimilar market is predicted to have sales of $25 billion by 2020, according to a 2014 Thomson Reuters report. Developed markets account for a lion’s share.

The deal, which is expected to close in the fiscal’s fourth quarter, will give Aurobindo rights to develop, manufacture and market the biosimilars in Europe, one of the people said on condition of anonymity.

The four biosimilars under Aurobindo’s radar include trastuzumab, bevacizumab, infliximab and etanercept, according to the two people cited above. Both declined to be named.

Trastuzumab, the biosimilar version of Switzerland-based Roche Holding AG’s Herceptin, is used in the treatment of breast cancer, while bevacizumab, the biosimilar of Roche’s Avastin, is used to treat certain metastatic cancers. Infliximab, the biosimilar version of US-based Johnson & Johnson’s Remicade, is an anti-inflammatory drug to treat autoimmune disorders such as rheumatoid arthritis and psoriasis. Etanercept is the biosimilar version of US-based Amgen Inc’s anti-rheumatoid arthritis drug Enbrel.

The deal will give Aurobindo a head start over rivals in Europe as some of the biosimilars it is evaluating have entered the clinical trial phase, the first person said.

Biosimilars have been on the company’s agenda for a while, the second person said.

A spokeswoman for Aurobindo declined comment.

The US Food and Drug Administration (FDA) approved the first biosimilar of filgrastim in March under the biosimilars pathway, established by the 2009 Biologics Price Competition and Innovation Act (BPCIA), paving the way for more replicas of complex biological drugs to hit the world’s largest pharmaceutical market.

The European Medicine Agency has implemented a specific regulatory pathway for biosimilars, and approved a few of them.

“It’s a good step by the company," said Sarabjit Kour Nangra, vice-president of research, pharma, at Angel Broking Ltd. “Biosimilars is next big opportunity, but it’s a long haul."

Other analysts painted a cautious picture for Indian companies trying to crack the biosimilar market, citing high entry barriers.

“There are two aspects to it. One is the difficulty of regulatory pathway and second is to launch a biosimilar you have to do R&D, you have to do clinical trial and then you have to market it as though you are launching a new product. So that is the reason why today (launching) biosimilars in developed markets is very hard," said Sujay Shetty, leader of the life sciences practice at PwC India, a consultancy firm.

The estimated cost of developing biosimilars for global markets is $75-250 million, while developing traditional non-biologic generics costs about $2-3 million, experts say.

“Biosimilars are a lucrative category of medicines, but given the high cost of development, and rigorous regulatory compliance requirements, Indian companies with exception of Biocon and Dr. Reddy’s have largely stayed away from regulated markets," said a pharma analyst at a Mumbai-based brokerage who did not want to be named.

Partnering with companies with deep pockets and reliable regulatory, clinical and marketing practices is going to be critical for Indian companies to succeed in these markets, Shetty of PWC said.

A few Indian companies have formed partnerships to crack the lucrative market. Biocon has tied up with Mylan NV to develop certain biosimilars, while Dr. Reddy’s has tied up with Merck Serono, a division of Germany-based Merck KGaA. Intas has partnered with Canada’s Apotex Inc to do the same.

Biocon spent about 180 crore on research and development for 2014-15 that mainly goes into development of biosimilars, while Dr. Reddy’s invested around $40 million ( 250 crore) in the same period on biosimilars, or 14% of its R&D budget of about $280 million ( 1,744 crore).

Both companies will have to spend more on R&D as their biosimilars enter late stage clinical trials.

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