Novartis’ Biogeneric Pipeline Has Six Projects; Pricing Issues Are A Focus

Novartis expects to file its second biosimilar application in the coming year, Sandoz CEO Andreas Rummelt stated during the Swiss drug maker's first quarter sales and earnings call April 24.

"We expect to have another filing within the next 12 months, but...for competitive reasons, we are not giving details," the head of Novartis' generic division said.

Novartis has six biosimilar projects in its pipeline, ranging from early- to late-stage development. If filed in the EU or U.S., the application for the biosimilar would be Novartis' second such filing.

The company's recombinant human growth hormone Omnitrope (somatropin) was the first follow-on biologic to be approved under a new biosimilar pathway in the EU. The product cleared the European Commission in April.

"In Europe, our understanding is that the pathway is pretty clear," he said. "We now are getting guidelines per product, and as long as these guidelines are being followed I don't expect to have major regulatory hurdles for our future biosimilar products to come."

While Sandoz will have the first biosimilar on the market in Europe, it might not have the second. Amgen and Roche are projecting potential generic competition for Aranesp and Epogen in 2007. Even if Sandoz were to file an erythropoietin generic in the next 12 months, approval in the '07 timeframe seems unlikely (see ¹ (Also see "Roche Pulls The Plug On PPAR Candidate After Carcinogenicity Tests" - Pink Sheet, 1 May, 2006.)).

Amgen has said it is pleased with the criteria that EU regulators have established for approval of follow-on biologics, suggesting that innovators have shifted their focus in Europe to regulatory rather than political maneuvering.

In the U.S., biosimilar drugs face a tougher road to approval. FDA consideration of a pathway for follow-on biologics had stalled recently, but the topic is likely to be addressed following a recent court decision.

In an April 10 opinion, a Washington, D.C. federal judge declared that FDA must act on Sandoz' application for Omnitrope , a follow-on version of Pfizer's Genotropin (² (Also see "User Fee Program Renewal Gets Trickier After Ruling In Omnitrope Court Case" - Pink Sheet, 17 Apr, 2006.), p. 3).

Sandoz filed the application seeking approval through the 505(b)(2) pathway in June 2003, but FDA had failed to act on it. Sandoz then filed a lawsuit in September (³ (Also see "Omnitrope Lawsuit Could Further Delay FDA “Follow-On” Biologics Guidance" - Pink Sheet, 19 Sep, 2005.), p. 21).

"The more general pathway to get follow-on products to be approved in the U.S. has yet still to be defined and has to be written in law, so this will certainly take some longer time," Rummelt said.

"Here, I expect [a] slow, basically product by product approval process until we get these guidelines defined," he added.

Regardless of the market, however, Novartis said uptake of follow-on biologics will not occur overnight. The current environment around the category is comparable to the situation seen with traditional generic drugs 25 years ago, Rummelt said.

"This takes awhile until these new products are fully accepted by the prescribers and also by the patients," he said, predicting that uptake of follow-on biologics would be slower than the usage pattern seen with traditional generic drugs.

"In the long run, I see that the penetration of these compounds will increase significantly, as we'll be showing that we have the same product with the same efficacy and safety profile," Rummelt said. "Then, the acceptance will increase. It is just a matter of time."

In addition, the pricing benefit of follow-on biologics will be less than the benefit typically seen today with small molecule generics.

"The price versus the originator will certainly be significantly lower, but not as low as we see for standard generics," Rummelt said. "This is just impossible because of the higher cost in development due to clinical efficacy and safety studies and also higher manufacturing costs."

"But the prices will be significantly lower and therefore very attractive for the healthcare system," he said.

Another pricing challenge for generic biologics will be the use contracting strategies to preserve market share, a strategy adopted by Amgen (⁴ (Also see "Amgen Looks To U.S. Contracting Strategies To Head Off European Biosimilars" - Pink Sheet, 13 Feb, 2006.), p. 13).