Biosimilars: The Next Big Thing Zacks Investmentupdated Jan 13, 2012TweetAt GET.com we maintain complete editorial integrity on our content & provide transparent & unbiased information. Companies don't pay us to include their products although we receive a compensation when you successfully apply to products from our partners. See how we make money here.At GET.com we maintain complete editorial integrity.As a large number of branded biopharmaceuticals/biologics are slated to lose patent protection in the US and other markets, generic companies like Hospira, Inc. (HSP), Teva Pharmaceuticals (TEVA) and Sandoz, the generic arm of Novartis (NVS), are stepping up their R&D expenses to manufacture biosimilars/biogenerics which are cheaper generic alternatives to expensive biopharmaceuticals. Biopharmaceuticals/biologic drugs, which are large-protein molecules derived from genetically modified cell lines, are structurally much more complex as compared to the traditional small molecule medicines. Thus, the manufacturing of the generic versions of these drugs requires much more rigor and involves higher costs. It is estimated that developing a biosimilar can cost anywhere between $150 million and $200 million whereas a small-molecule generic can be made with just $500,000–3 million. With more than $60 billion of biologic sales slated to lose patent protection through 2017, the biosimilars market -- which is currently in a nascent stage -- represents a huge, untapped commercial opportunity. According to the IMS Institute for Healthcare Informatics, global spending on biosimilars is expected to exceed $2 billion annually by 2015, up from more than $300 million in 2010.Biosimilars Yet to Break Ground in U.S. Biosimilars are currently available only in Europe and certain other countries outside the U.S. However, governments worldwide are under pressure to allow a path of approval for making affordable, effective and safe biogenerics/biosimilars. In this context, President Obama signed into law the Patient Protection and Affordable Care Act in March 2010. The Act includes a provision authorizing the US Food & Drug Administration (FDA) to develop an abbreviated approval pathway for biosimilars. The FDA has yet to issue its regulation in this matter. The entry of biosimilars in the US, widely anticipated in 2014, would open a new and significant avenue of growth for pharmaceutical companies.Generic Firms See New Opportunity Among the generic companies, Hospira is fast working on expanding its biosimilar portfolio. It already markets two biosimilars in Europe and Australia – Nivestim, a biosimilar of Amgen’s (AMGN) Neupogen and Retacrit, a biosimilar of Johnson & Johnson’s (JNJ) Eprex. While Retacrit is marketed for the treatment of anemia associated with chronic renal failure, Nivestim is marketed for treating neutropenia. Moreover, Hospira boasts a strong biosimilars pipeline with 11 compounds in development. It recently began a phase III trial in the US for Retacrit, results from which are expected in 2013. Teva’s biopharmaceutical product portfolio consists of Tev-Tropin, Ratiograstim, Eporatio, and TevaGrastim. In order to build its biogeneric pipeline, Teva has been pretty active on the deal-making and acquisition front. It has acquired CoGenesys, Inc. and set up joint ventures with Lonza Group Ltd. and TL Biopharmaceuticals AG. These alliances should help the company establish a leading position in the biosimilars market. Teva intends to focus on the largest and most important biologics, mainly products which represent most of the current biopharmaceutical market. Sandoz also shows an increasing interest to build a strong foothold in the potentially multi-billion dollar biosimilars market. Already marketing biosimilars outside the US, Sandoz has begun phase III trials for its biosimilar version of Biogen (BIIB)/Roche’s (RHHBY) cancer drug Rituxan in first line follicular lymphoma. A phase II study is also ongoing in rheumatoid arthritis patients.Big Pharma Not Far Behind Big pharma giants like Merck, Inc. (MRK) and Pfizer, Inc. (PFE) are also not willing to miss the bandwagon of biosimilars opportunity that holds tremendous promise over the long haul. Merck has established a whole new segment called BioVentures which will focus on the development of biosimilars. Merck remains on track to have five biosimilar candidates in late-stage development by the end of 2012. The company entered into an exclusive global agreement with Hanwha Chemical Corporation for the development and commercialization of HD203, a biosimilar version of Amgen’s Enbrel. Merck has biosimilar versions of Amgen’s drugs Neupogen and Neulasta in development. Pfizer has a partnership with Biocon (an Indian bio-pharmaceutical company) for the global commercialization of Biocon's portfolio of bio-similar insulin, which should help the company strengthen its biosimilars portfolio and establish a presence in the diabetes market.To Conclude Generic companies are all set to make hay in 2012 and beyond selling generic versions of high-value branded pharmaceuticals (small molecule medicines) which have gone off-patent with many more due to lose patent exclusivity in the next few years. The much-sought-after FDA nod for the regulatory pathway of approval of biogenerics would be the icing on the cake for generic players. AMGEN INC (AMGN): Free Stock Analysis Report To read this article on Zacks.com click here. Editorial Disclosure: Any personal views and opinions expressed by the author in this article are the author's own and do not necessarily reflect the viewpoint of GET.com. 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