Investment Research and Business Due Diligence
Monday, April 22, 2013
Can Cipla's Etacept (biosimilar Enbrel) translate into a meaningful commercial opportunity?
Cipla recently announced launch of biosimilar copies of Pfizer's Rheumatoid arthritis drug - Enbrel in India. Cipla would be selling the drug under the brand name Etacept. The biosimilar copy has been inlicensed by Cipla from a Chinese company -
CP Guojian, a popular biosimilar player in China.
CP Guojian Pharmaceutical Co., Ltd. (Shanghai), is already selling biosimilar etanercept in China as Yisaipu and in Colombia as Etanar. Also under license from CP Guojian, a biosimilar copy of etanercept was also launched in Brazil by EMS in 2009.
In India Etacept has been priced at a 30 percent discount to Pfizer's Enbrel. It seems the level of discount offered by Cipla is insignificant and is unlikely to have an impact on improving accessibility of the drug among RA patients. Cipla might be able to cut some share from Pfizer's Enbrel, but that as well would be immaterial. There are many constraining factors that would impact Cipla ability to grab a share
1) Anti-TNF agents like Enbrel are associated with some serious safety concerns and we believe patients are unlikely to take the risk of shifting to a biosimilar whose safety and efficacy in comparison to the brand name has not been evaluated.
2) Had Cipla offered a steeper discount, say 60 percent to the brand, we might have seen Cipla been able to grab a better share. The economics of biosimilar manufacturing are such that operating leverage is very high and this does not allow biosimilar players to discount at attractive levels compared to innovator brands.
3) Etacept is available in lyophilised powder and hence would have to be reconstituted before use, while Pfizer's Enbrel is available in ready to use liquid injection form. Also Enbrel is available as 50mg injection taken once weekly, while Etacept is only available in 25mg dose and would have to be taken twice weekly.
4) Pfizer has recently launched an oral small molecule drug (Xejiang or Tofacitinib) for the treatment of moderate to severe Rheumatoid arthritis patients. Since Tofacitinib is a small molecule, the cost of manufacturing is significantly lower. In case Cipla does decide to get more aggressive on Etacept price, Pfizer may counter it with a much better price discount on Tofacitinib. Tofacitinib efficacy and safety is comparable to existing biologics on the market.
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