RE:RE:RE:RE:RE:PwC sees continuation of US$ 5 to 15 Billion Bio M&A DealsWhat seems to be increasingly driving Roche to the opportunities in the novel biologics space is that Roche’s oncology drugs Herceptin®, Avastin® and Rituxan®, which typically generated about $21 billion in combined sales, have been dramatically impacted by biosimilars to these products, when they hit the market.
Roche believed its brand name would represent significant value for oncology drugs and initially refused to compete on price. However, Roche appears to have underestimated payers’ and providers’ willingness to accept biosimilars - which was significantly greater than Roche expected. Within a year of the competitive firms biosimilars’ launch, Roche saw market share erode and cut prices on all three of its products, thus dramatically eroding Roche's magins and impacting Roche's bottom-line profitability even further.
USC Center for Health Policy and Economics research investigated the impact of biosimilars on Herceptin three years after biosimilar entry into the market. The study’s authors concluded that the market for Herceptin “displayed important hallmarks of competition: doctors could choose among six products; biosimilar new entrants rapidly captured market share from the originator [Herceptin]; and prices steadily declined on all six options. Prices of some versions declined by more than half, and the originator lost half of the market.”
This shift directly challenged the earnings of companies producing well-established brand-name drugs. Besides developing and introducing new medications, the success of pharmaceutical companies will hinge on effectively handling the shrinking profit margins of their flagship drugs. This will happen when Big Pharma turns to face the loss of their former brand-name "blockbusters" by aggressively acquiring novel late stage biologics companies with platform drugs like ONCY's pelareorep, which not only complement Big Pharma's product current and evolving pipeline, but also provide for approximately 13 years of market exclusivity in the global markets of the US, EU, and UK, from the date of receipt of regulatory approval.