Opportunity Analysis for Biosimilars – KoreaOpportunity Analysis for Biosimilars – Korea

Yamunah Kandasamy, Research AnalystHealthcare

18 May 2012

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Today’s Presenter

Apart from market opportunity analysis, Yamunah has knowledge and experience base covering following range of sectors, with exposure to end users’ perspective on medical investments such as stem cell harvesting.

Medical devicesBiotechnologyMedical imagingLife Sciences and IT

Yamunah Kandasamy, Research Analyst

Frost & Sullivan

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Focus Points

• South Korea Biosimilars Market Overview• Challenges, Drivers and Restraints of Biosimilars Market• Competitors’ Profile• Last Word - Conclusion

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South Korea Biosimilars Market Overview

• A new engine of Korea’s economic growth

• Biosimilars are generics for biologics or biotechnology drugs

• Requires upfront investment and infrastructure for the development, much lesser than

biologics but much more than the development of generic drugs

• Doctors may be reluctant to prescribe biosimilars, as the developers capabilities, expertise

and credentials may not be known to them as much as the innovator drug manufacturing

companies

• The U.S. market will be tough for Korean firms to penetrate

• South Korea has a long history in manufacturing biologicals and a regulatory pathway for

biosimilars was introduced in 2009

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Market Segmentation

• Biosimilars, the imitation of biological products follow the same segmentation. They can be broadly divided into therapeutic proteins whose basis are large blocks of amino acids while the other category includes antibody-based therapeutics.

• The geographical scope of this research is South Korea, an emerging market with immense potential to become a strong player in the biosimilars market.

• Vaccines are not covered in this research.

Market Segmentation

• Biosimilars, the imitation of biological products follow the same segmentation. They can be broadly divided into therapeutic proteins whose basis are large blocks of amino acids while the other category includes antibody-based therapeutics.

• The geographical scope of this research is South Korea, an emerging market with immense potential to become a strong player in the biosimilars market.

• Vaccines are not covered in this research.

Total Biosimilars MarketTotal Biosimilars Market

Biosimilars Market: Market Segmentation (Korea), 2011

Human growth hormones

Human growth hormones

ErythropoietinErythropoietin G-CSFG-CSF

Source: Frost & Sullivan

Market Overview—Segmentation

Monoclonal AntibodiesMonoclonal Antibodies

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Revenue Forecasts

Years

61.063.6

75.1

89.7

82.1

71.167.262.3

Biosimilars Market: Revenue forecasts (Korea), 2010

Source: Frost & Sullivan analysis

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Biosimilars Market Challenges in Emerging Markets

EMERGING MARKETS

Source : Frost and Sullivan

Quality consciousness among doctors/physicians

Doctors/physicians are loyal to innovator molecules and can be very fussy in switching prescriptions. However, when price is concerned, a lower prices presents an attractive proposal if the similarity is established.

Lack of or low reimbursement for high priced biologics

Emerging countries typically have poor insurance coverage.

Huge patient potential in ROW

Breast cancer, non-Hodgkin's lymphoma (NHL), autoimmune deficiencies are out of control and most of the time, do not afford biologics.

Lack of patent protection for high growth products (G-CSF and MAbs)

Lack of patent rights in majority of the emerging countries for biologics like enbrel, TNF- alpha inhibitors creates a huge market.

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Biosimilars Challenges in South Korea

• Acceptance by doctors/ physicians to switch prescriptions

• Immunogenicity and complexity in establishing similarity with the originator molecule

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Drivers 1–2 Years 3–4 Years 5–7 Years

Strategic partnerships between Korean biosimilar

companies and other company to drive growthL M H

Access to patients in comparison to cost containment will compensate for lower prices of biosimilars

H M M

Impact Ratings: H = High, M = Medium, L = Low

Drivers—Impact and Duration

Source: Frost & Sullivan analysis

Market Drivers – Biosimilars Market, South Korea, 2011

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Drivers—Explanation

• Strategic partnerships between Korean biosimilar companies and other company to drive

growth

Samsung Electronics Co., Ltd., the world’s largest electronics company, and its affiliated companies

have entered into a strategic partnership with Quintiles, the world’s leading pharmaceutical

services company, to support Samsung’s entry into the biopharmaceuticals market.

• Access to patients in comparison to cost containment will compensate for lower prices

of biosimilars

Only a proportion of patients currently have access to expensive life-saving drugs, the availability of

lower cost biosimilars will allow more patients to be treated. Also, as access to patients

increases, cost containment such as price cuts will compensate for lower prices of biosimilars.

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Restraints 1–2 Years 3–4 Years 5–7 Years

Biosimilar clinical trials require large capacity for approvals from FDA/EMEA/PMDA to cater to export markets

H H M

Cost of development and marketing necessitates deep pockets which in turn requires partnerships with big pharmas/regional partners

H H M

Impact Ratings: H = High, M = Medium, L = Low

Restraints—Impact and Duration

Source: Frost & Sullivan analysis

Market Restraints– Biosimilars Market, South Korea, 2011

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Restraints—Explanation

• Biosimilar clinical trials require large capacity for approvals from FDA/EMEA/PMDA to

cater to export markets

Before biosimilars drugs can be marketed globally, clinical trials need to be done and approved by

FDA/EMEA/PMDA. Biosimilar clinical trials are generally needed in large quantities because the

comparability test and samplings need to be done repetitively to ensure consistent results.

• Cost of development and marketing necessitates deep pockets which in turn requires

partnerships with big pharmas/regional partners

Development and marketing cost of biosimilars are high, this creates a necessity for companies

to make strategic partnerships with big pharmas/regional partners to have more cash flow.

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Competitive Landscape

Company Core Portfolio Corporate Strategies

Samsung Electronics Consumer Electronics/IT Industry Entering biosimilars business (2009)

ISU Abxis Antibody therapeutics Biologics/Biosimilars

AprogenMonoclonal Antibodies

(NCEs/Biosimilars)Biosimilars

Teva PharmaceuticalsNCES (CNS therapeutics)

Generics/Biosimilars

LG Life Sciences-LG Subsidiary NCEs/Biologics/Biosimilars NCEs/Biosimilars

Source: Frost & Sullivan analysis

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Company Core Portfolio Corporate Strategies

CelltrionTherapeutic monoclonal antibodies,

Recombinant proteinsGenerics/Biosimilars

Dong-A PharmaceuticalNCEs (antibiotics)/

Biologics/Biosimilars NCEs/Biologics/Biosimilars

Competitive Landscape (Cont’d)

Source: Frost & Sullivan analysis

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The Last Word — Conclusion: Key Take-Aways

22With companies like Samsung making a foray into biosimilars, the market will witness newer entrants and changing business models. However, the success will largely depend on their ability to overcome the threat from big pharma’s strong expertise in marketing

With companies like Samsung making a foray into biosimilars, the market will witness newer entrants and changing business models. However, the success will largely depend on their ability to overcome the threat from big pharma’s strong expertise in marketing

33 The Korean market is expected to be largely export driven . Exports are expected to contribute as much as 50% of the total revenues. The Korean market is expected to be largely export driven . Exports are expected to contribute as much as 50% of the total revenues.

11By 2020, the familiar crisis of dwindling pipeline will hit the biosimilars as newer and more complex originator molecules need to be identified as target markets

By 2020, the familiar crisis of dwindling pipeline will hit the biosimilars as newer and more complex originator molecules need to be identified as target markets

Source: Frost & Sullivan analysis

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For Additional Information

Donna JeremiahCorporate CommunicationsAsia Pacific+61 (0) 8247 8927 djeremiah@frost.com

Carrie LowCorporate CommunicationsAsia Pacific+603 6204 5910carrie.low@frost.com

Miok LeeCorporate CommunicationsKorea+ 82 2 6710 2033miok.lee@frost.com