Gedeon Richter Chief Makes Biosimilars Prophecy
As Company Discusses Sales Prospects For Coming Quarters
Executive Summary
Gedeon Richter has high ambitions for biosimilars, recently penning a deal to bring in a tocilizumab biosimilar that is currently under development. During its first-quarter earnings call, the Hungarian company’s CEO gave his current thinking on how payers may treat biosimilars amidst the COVID-19 pandemic.
Biosimilars may emerge as “winners of the pandemic” at the expense of novel biologics, according to Hungarian player Gedeon Richter PLC, as payers and fiscal budgets “become stressed” and governments look to save costs in the wake of COVID-19.
Addressing investors during Richter’s first-quarter earnings call, CEO Gábor Orbán pondered “changes to the attitude or ability of payers to accommodate new drugs” in an “otherwise stressed health budget.”
“To me it looks quite likely that the accommodation of new innovative therapies will be lessened as a consequence of the fiscal stress, and the pricing on generics may see more pressure,” he predicted.
“Stress in the budgets will push governments and authorities, in my view, even further in the direction of allowing biosimilar penetration to go up, because this is the single most important way they can save costs given how biologicals occupy a huge share of reimbursement budgets.
“And while I see, therefore, a negative tendency for innovative molecules, I see this mixed effect for generics and maybe a positive impact ultimately on biosimilars. This is my current thinking.”
Reiterating that generic pricing was likely to come under further pressure and that both pharma reps and clinical trials would see activities interrupted by the pandemic, Orbán forecasted: “There are reasons to believe that biosimilars may come out as the winners of this pandemic.”
The Hungarian firm has a small but burgeoning presence in biosimilars, with non-US rights to the women’s follicle-stimulating Bemfola (follitropin alfa), a biosimilar to Gonal-f, as well as Terrosa (teriparatide), a biosimilar to Eli Lilly’s Forsteo rolled out in European markets from August last year; and licensed out to Mochida Pharmaceuticals in Japan in November.
A Prolia/Xgeva (denosumab) biosimilar is currently in the works, with Richter seeing “a lot of potential in that molecule,” per the company’s fourth-quarter call, across both rheumatology and oncology; as well as a rival to Neulasta (pegfilgrastim).
Meanwhile, Richter recently struck a deal worth $16.5m with Taiwanese biotech firm Mycenax to gain global development, manufacturing and commercialization rights to the company’s proposed tocilizumab biosimilar version of Roche’s Actemra/RoActemra. (Also see "Gedeon Richter Strikes $16.5m Global Tocilizumab Deal" - Generics Bulletin, 29 Apr, 2020.)
The Hungarian company said it expected to launch the tocilizumab biosimilar in the EU, Japan, Canada and Australia “during 2025.”
A biosimilar to Herceptin (trastuzumab) was previously in the works although Richter opted to discontinue development last year.
Richter Says No ‘Big Downside Risk’ In Q2
In the first quarter of this year, biosimilars had a modest impact on Richter’s business, with Terrosa bringing in HUF1.84bn ($5.66m) and Bemfola HUF4.76bn, representing growth of more than 15% over last year for the latter product.
“That said, Bemfola is the product that is hardest hit by the COVID-19 pandemic given that fertility centers have closed down and doctor-patient contacts have declined,” Orbán commented.
Group pharma sales jumped by a fifth in the first quarter to HUF116.6bn, driven by significant gains in the EU excluding its native Hungary, as well as in the Commonwealth of Independent States.
“In Central Eastern Europe, we saw good demand for our antiviral products, especially in Poland, and we saw early signs of stockpiling, a buying frenzy in the second half of March in these countries especially for products that are used for the treatment of flu-like symptoms and such. Some evidence of similar stockpiling in Western Europe in oral contraceptives,” Orbán said in summary.
On the other hand, in Russia, “the virus came later. And even if there is a stockpiling there, it will flatten out in the rest of the second quarter,” he added.
“So, we don't expect a similar pattern to develop in the Russian market or anywhere else. Rather it’s more likely for purchasing power to affect sales negatively going forward, especially in Russia with the virus hitting the economy, causing unemployment and weaker income growth.”
“The buying frenzy that occurred in parts of our markets, in parts of our product range, in parts of March, were not so significant as to cause a big downside risk to the second quarter figures. I'm not saying they’re irrelevant or insignificant, but let’s wait and see.”
Overall growth in Richter’s pharma sales saw the business unit post a HUF25.6bn operating profit in the first quarter, up around 50% year over year, as sales and marketing expenses showed little movement. This was also despite research and development costs being almost 30% higher at HUF15.1bn for the three-month period, Richter revealed.
“We’re spending on female healthcare products, as well as Groprinosin (inosinum pranobexum) lifecycle management and the biosimilar projects. We spend roughly equal – an equal share of the R&D budget on those three,” the company noted.
Richter also acknowledged that it may not see any more sales this year for the company’s Esmya (ulipristal acetate) uterine fibroid treatment, after the drug was temporarily suspended in the EU in March as the European Medicines Agency carries out a further review of its potential to cause serious liver injury. (Also see "Ulipristal Suspended In EU Pending Further Review" - Pink Sheet, 16 Mar, 2020.))