Novartis AG (ADR) (NYSE:NVS) is in the process of tripling its portfolio of biosimilar drugs by 2020. The company is particularly working to develop alternatives to blockbuster drugs such as Johnson & Johnson (NYSE:JNJ) Remicade and Amgen, Inc. (NASDAQ:AMGN) Enbrel. The five original drugs whose copies Novartis hopes to launch in the coming four years generated total sales of about $44 billion in 2015.
Novartis is hoping to seize the opportunity in the biosimilars market at a time when payers, governments and patients are increasingly rebelling against expensive drugs. According to officials of Novartis, their biosimilar alternatives can be 75% cheaper compared to the original drugs they copy.
Over the coming four years, Novartis wants to launch biosimilars of Roche Holding Ltd. (ADR) (OTCMKTS:RHHBY) Rituxan, Amgen’s Neulasta and Enbrel, Johnson & Johnson’s Remicade and AbbVie Inc (NYSE:ABBV) Humira. If Novartis launches alternatives to these drugs without hitches, it would have nearly tripled the number of biosimilar drugs in its portfolio. With that, the company is hoping to unlock billions of dollars in fresh revenue considering that the five biologics being targeted generated sales of more than $44 billion last year.
It is estimated that biosimilars could save drug buyers in the U.S. and Europe between €50 and €100 billion by 2020.
But there are risks for Novartis and others hoping to grow their revenues by launching copycats of biosimilars. Besides the regulatory hurdles, there is also the challenge of overcoming doctor reservation. It is said that some doctors don’t readily prescribe biosimilars because they believe they are different from the original drug despite being marked as highly similar to the original.
The other risk is a legal hurdle created by a lower U.S. court. One court ruled that makers of biosimilars must wait six months after they receive marketing clearance from the FDA before they can start selling those drugs. Novartis AG and others marketing biosimilars are challenging that ruling.