Jumping into the multibillion-dollar market for biosimilar insulin products seemed like a no-brainer for Merck & Co., which is one of the world’s leaders in diabetes.
But the company’s Lantus biosim partnership with Korea’s Samsung Bioepis has faced its share of challenges, not the least of which is a patent fight that has stymied its launch despite a tentative FDA approval last summer.
Now Merck is ditching the biosimilar Lantus market altogether and shelling out cash to Samsung Bioepis for its costs, too. That leaves Mylan and its partner Biocon as the only major biosimilar players in a strong position to challenge Eli Lilly and Boehringer Ingelheim's biosim Basaglar—and Sanofi's Lantus brand itself, when its last patents expire in 2020.
In a filing in Korea, Samsung Bioepis disclosed that Merck had canceled the development and commercialization partnership for the Lantus biosimilar, dubbed Lusduna Nexvue in the U.S. Merck paid Samsung Bioepis $155 million to cover the investment made so far in the product, plus interest, a spokeswoman for the company confirmed.
Merck said in a statement emailed to FiercePharma that the company assessed the current and future market for biosimilar Lantus, including “anticipated pricing and cost of production” before deciding to terminate the agreement. Merck is reallocating all commercial and manufacturing resources devoted to the biosimilar to other products.
Merck continues to work with Samsung Bioepis on other biosimilars in oncology and immunology, according to the statement. “We believe that biosimilars can present significant opportunities for cost savings through competition and improved patient access to therapies,” the company said.
Analysts who cover the diabetes market weren’t entirely surprised by Merck’s decision. Pricing pressure is likely to be a huge barrier for newcomers in a market that’s ruled by Sanofi and Eli Lilly, wrote Wells Fargo analyst David Maris in a note to investors Friday. Lilly and partner Boehringer launched their biosimilar, Basaglar, under an agreement with Sanofi in 2016.
“Lilly's and Sanofi's manufacturing capacity, along with aggressive discounting has created a severe pricing environment,” Maris said. Price erosion, coupled with biosimilar competition, has already hit Sanofi hard: Lantus sales in the U.S. slid nearly 30% in the first quarter of this year and worldwide sales were down more than 13%.
Question is, with Merck out of the market, will Mylan and Biocon have an easier time with their Lantus biosimilar? That product, approved in Europe with the trade name Semglee, is facing significant challenges in the U.S., including its own patent lawsuit from Sanofi. What’s worse, in June, the FDA issued a complete response letter on the biosimilar, citing production problems at the Malaysia plant that’s producing the insulin product. It was the FDA’s second complaint related to the Mylan/Biocon version of Lantus.
Even if Mylan and Biocon can work out the production glitches, Wells Fargo’s Maris doubts the partners will ultimately find the market for biosimilar Lantus to be all that lucrative. “In our opinion, if Samsung Bioepis and Merck can't make the economics work … one should be skeptical of Mylan and Biocon having substantial success.”
Umer Raffat, an analyst for Evercore ISI, has a sunnier view of Mylan and Biocon’s prospects. He pointed out in a note to investors that Biocon “has a very large insulin business in emerging markets already.” What’s more, Merck getting out of the biosimilar Lantus market could actually be a positive development, because Mylan and its partner “will no longer have to compete with a diabetes giant,” he wrote.