Pfizer's biologics plant, and plans, in China garner steep interest on Q2 call

By EJ Lane Aug 3, 2016 9:30am

Pfizer ($PFE) CEO Ian Read wasted no time in describing the company's biosimilar efforts as a pillar in the company's growth strategy and along with executives discussed at some length how a Remicade (infliximab)‎ biosimilar made by South Korea's Celltrion and a new biologics plant fit into its China plan.

"Of note, we are now the worldwide leader in biosimilars according to our index revenue," Read said at the top of the Aug. 2 earnings call.

"We expect to compete in the first wave of biosimilars in the U.S. And recently we announced our investment to develop a state-of-the-art local biotechnology Center in Hangzhou Economic Development Area in China. This innovative facility will ensure the development and manufacture of high-quality affordable biosynthetic and have the potential to benefit patients both in China and throughout the world. And to potentially further enhance the revenue growth in this business we will continue to actively manage and reshape our portfolio."

The comments on China draw note because--even though the company in June announced the $350 million biologics plant in China as a first in Asia and a major new investment in the country--biosimilars and even many of the innovator products lack approvals in China. That makes the timeline for any impact for biosimilars in China hard to predict.

But as John Young, president of Global Established Pharma, said on the call, the company is playing a long game in the Middle Kingdom.

"First of all about the penetration of biologic medicines generally into China ... is low vis-a-vis most benchmarks internationally. And so we believe that in a post--the expiring of any relevant patents in China, biosimilars (are) a significant opportunity," Young said.

"Obviously, we are committed to bringing high-quality products to the market and so we are very excited with the investment that we announced in Hangzhou Economic Development Area to invest $350 million in what will be a state-of-the-art global biotech technology center. The center is expected to be completed in 2018 and will be working with the CFDA and relevant Chinese authorities to bring products biosimilar molecules coming out of that facility to the Chinese market as soon as possible and following the completion of the plant."

Young also noted that the overall China business for the company in the second quarter rose about 11%, without specifying whether that was in constant currency or adjusted.

Of more immediate concern was a state-of-play on sales of a Remicade biosimilar in the U.S. Incheon-based Celltrion--which manufactures U.S. FDA approved Inflectra (infliximab-dyyb)--will see sales handled by Pfizer via a marketing pact it now holds after the acquisition of Hospira.

Originator Johnson & Johnson ($JNJ) said during the first quarter there would be no biosimilar available in the U.S. this year. On the second quarter call, that changed to one possible by Oct. 6, pending legal challenges in progress.

Pfizer had its own timetable in the second quarter call--one that differed by a few days. Doug Lankler, executive vice president and general counsel, then gave a timeline brief.

"Just to review the dates, so Inflectra was approved on April 5 and we gave our notice to Janssen immediately," Lankler said.

"That notice period expires on Oct. 2, and we've agreed not to launch before Oct. 3. Earlier this year we filed a motion for summary judgment of Janssen's 471 antibody patent is invalid. Starting on Aug. 16 the Federal Court in Massachusetts will hear arguments on this motion and some other issues. If the court rules in our favor, there will be no legal restriction on our ability to launch. If the court doesn't rule in our favor we still have the trial and we'll review our options at that time."

Read then made sure everyone understood that in the event the company wins in court, it would respect the 180-day notice period.

"To confirm, if the court were to rule in our favor we expect that we would launch Inflectra sometime after Oct. 2 which is after the expiry of the 180-day notice period."

To which Lankler added another caveat.

"If they don't rule in our favor, we would need to look at it the different scenarios of when we launch, what's the valid launching on our own, what's the risk we are taking, taking that launch risk, what is the loss of value of other competitors come in, and we will make that decision once we know the results of the court case."

And then just to make the whole Remicade biosimilar story more complicated, Young also updated on the company's internal infliximab program.

"Just as a reminder, we out-licensed that as part of our agreement with the EMA when we acquired Hospira to Novartis," Young said.

"We retained the commercial rights for a number of territories, including the U.S. and certain other markets. That program is progressing on track. We expect to--the readout from our pivotal Phase III trials from that program towards the end of this year."

Of further interest on that score, Novartis ($NVS) CEO Joe Jimenez toured Asia in June and remarked that biosimilar firms in the region were of interest as possible M&A or collaborative projects to complement programs by the company's generics arm, Sandoz.

- here's the release

manufacturing Remicade Manufacturing Marketing Financials