During Pfizer’s second-quarter earnings conference call last week, many analysts were so focused on the company’s potential future payoff from its COVID-19 vaccine effort that they may have overlooked one area of the business that’s paying off now: biosimilars.
Pfizer’s global biosim sales grew 36% during the quarter to $289 million, driven largely by cancer drugs. The significance of that growth wasn’t lost on Bernstein analyst Ronny Gal. In a note to investors earlier this week, he singled out Pfizer, along with Amgen, as proof that the U.S. biosimilars industry has entered a “golden age.”
In February, Pfizer became the first company to have three monoclonal antibody biosimilars on the market in the U.S., all of which are discounted versions of Roche cancer drugs: Zirabev (Avastin), Ruxience (Rituxan) and Trazimera (Herceptin). During the conference call, Pfizer CEO Albert Bourla cited strong “early results” from all three launches, particularly Trazimera, which saw high demand overseas, he said.
But investors shouldn’t discount the potential of the U.S. biosimilars market, Gal said. To prove the point, Gal crunched the numbers on Pfizer’s biosimilar version of Remicade, Inflectra, which only has a 10% share of the U.S. market. Pfizer claims 30% of the European market for biosimilar Remicade—but it’s able to charge much more in the U.S. So sales of the product in the U.S. were $158 million, versus just $116 million in Europe in the second quarter.
“Thus, the US ‘failed market’ is much better commercially than price-sensitive EU,” Gal wrote.
All in all, Pfizer’s biosimilar sales are running at an annualized rate of $2.1 billion, and the company is set to eventually bring in close to $3 billion a year in biosimilar revenues, Gal predicted.
Amgen’s biosimilar business pulled in $357 million in the second quarter and is annualizing at $1.4 billion, Gal estimated. The company dominates some markets in the U.S., including those for biosimilar Herceptin, where its Kanjinti holds 32% share, and Avastin, for which it claims 39% share with Mvasi.
“Here the addition of [biosimilar] Remicade and later this year the launch of Rituxan should push the business toward $2 billion,” Gal wrote.
During Amgen’s second-quarter conference call, executives were asked to predict whether future competition in the markets for biosimilar Herceptin and Avastin might threaten the company’s market share.
Murdo Gordon, the company's head of global commercial operations, said he’s not worried, at least not in the short term, even though COVID-19 shutdowns did delay some dosing of injectable cancer drugs.
“I think providers are looking for a lot of places where they can extract more value in the healthcare system. So we've been pleased with the uptake,” Gordon said. “I would say we're less challenged on share but you may see some net price effects of multiple competitors entering.”
Bernstein’s Gal also acknowledged that pricing pressure could end the golden age for biosimilars—but not anytime soon. “There will be a transition [to a] commodity model, but perhaps not before mid-decade as the system does see gradual discounts,” Gal wrote.