Merck is stepping up its push into a new class of copycat medicines that offer hope of lower drugs bills for national healthcare systems while threatening rival pharmaceutical companies with a fresh wave of competition.
Karl-Ludwig Kley, chief executive of the German group, said he expected “biosimilars” – cheaper copies of expensive biological drugs – to become an important new market as governments seek to lower healthcare costs.
Biosimilars have been slow to take off because the complex nature of biological drugs – which are made from living cells and used to treat a growing range of diseases – means they are harder to replicate than traditional chemical-based pills.
But Mr Kley said Merck had “all the capabilities to compete in biosimilars” and expected significant growth in the market by “the second half of this decade”.
The German drugs and chemicals group has struck partnerships in India and Brazil to develop the products, highlighting appetite from emerging markets for access to affordable medicines and for expertise to help build drug industries.
Merck agreed last November to work with Bionovis of Brazil on six biosimilars for cancer and arthritis following a similar deal with Dr Reddy's Laboratories of India.
Some pharmaceutical companies have appeared torn between embracing biosimilars or resisting them as a new threat to profitability akin to the brutal competition from generic versions of older branded drugs.
But Mr Kley said he was confident biosimilars would command a higher margin than traditional generics, which typically cost 90 per cent less than the original.
“We do not think the market will be as crowded as in generics because it is harder and more costly to achieve the required quality,” he said.
Regulators and medics have so far been wary of biosimilars because it is impossible to make exact copies of biological drugs, raising doubts over safety and effectiveness. Several have been approved in the EU but the US is yet to give its first go-ahead.
Biological drugs have become the industry’s strongest source of growth and helped catapult biotech companies such as Amgen and Biogen Idec into the pharmaceuticals big league. But they are expected to face growing competition from biosimilars as patents begin to expire.
The biosimilars market is forecast to be worth up to $25 billion by 2020, up tenfold on 2012, according to IMS Health. The global biologics market had sales of almost $170 billion in 2012.
While committing to biosimilars, Mr Kley said Merck’s priority would remain developing its own innovative medicines. – Copyright The Financial Times Limited 2014
