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Amgen Facing Down New ‘Biosimilar’ Upstarts

At first glance, it seems that Amgen Inc. might be the poster child for established biotechs about to get their business models upended by the new world of “biosimilars.” That’s because the Thousand Oaks company is likely to be the first biotech to experience competition from such drugs – so-named because they are similar but not exact copies of proprietary biotech drugs whose patents are expiring. The Food and Drug Administration has approved Novartis International AG’s Zarxio, a copycat version of Amgen’s Neupogen, a product with sales of $1.16 billion that lost patent protection last year. And Amgen was unsuccessful last month in a court maneuver to halt sales of the drug. However, Amgen has its own ambitious plans to copy other companies’ products. It has nine molecules in development, including versions of Humira, Remicade, Herceptin, Avastin, Rituxan and Erbitux. Together, those drugs – which treat everything from arthritis to colon cancer – had sales of $44 billion in 2013, according to filings. Amgen initially plans to launch five biosimilars between 2017 and 2019, but how it ultimately fares may rest on how many other biosimilars of its own products get approved first. Other Amgen drugs that are being targeted for biosimilar copycats include Epogen, with $1.9 billion in sales and a patent expiration date later this year, and Aranesp, which also had 2013 sales of $1.9 billion and loses protection in 2016. Cory Kasimov, an analyst at J.P. Morgan Chase in New York, noted in a January research report that Amgen’s “downside risks include competitive biosimilar threat to the core products.” Amgen has long supported the idea of biosimilars, as long as they are safe. In an email to the Business Journal, the company said that it sees the future biosimilar market as more like the “branded biologic” drugs that it now produces, rather than other generic drugs because of the complexity of manufacturing and marketing. While a new prescription drug can cost well over $1 billion to develop, Amgen estimates it still costs more than $200 million to launch a biosimilar. “While the entry of biosimilars may increase competition, it will require significant investment to reach approval and to maintain high quality and adequate supply,” the email stated. Christine Andersen, an analyst at Morningstar Inc. in Chicago, also noted that Amgen will benefit from new proprietary drugs that won’t face biosimilar competition. Among those are Kyprolis, a drug that came with Amgen’s 2013 acquisition of Onyx Pharmaceuticals for $10.4 billion, and cholesterol medication evolocumab, an in-house project designed to compete against blockbuster drug Lipitor. “We think the firm is capable of average annual 3 percent top-line growth and 7 percent bottom-line growth through 2019,” she wrote in a research report. Andersen puts the fair market value for Amgen shares at $189, a 20 percent premium over its price of $157.10 on April 1. ICU Upgrade Glendale Adventist Medical Center has contracted with Loma Linda University Medical Center for “consultative services” in the intensive care unit. Doctors from both hospitals will form a team to offer critical care 24-7, with constant physician attendance, providing the Glendale hospital capacity to care for more complex cases. The teams will include experts in controlling sepsis, a common hospital infection that is life-threatening. Dr. Arby Nahapetian, vice president of medical affairs and quality at Glendale Adventist, said the motivation for the program is to reduce deaths and improve post-surgery care. “There will be no change in our patients’ relationship with their primary care physician,” Nahapetian said in a statement. “The admitting PCP will remain the ‘captain of the ship.’” The next phase of the program, scheduled to deploy later this year, will include Adventist Health, the Sacramento-based parent non-profit of the hospital. It will provide tele-ICU services for other Adventist Health hospitals in California, Oregon, Washington and Hawaii. Alicia Gonzalez, a spokeswoman for Glendale Adventist, said the contract with Loma Linda to care for the sickest patients represents “a significant investment” for the hospital. Martin Gallegos, vice president at the Hospital Association of Southern California, a Los Angeles trade group, said these contractual deals are common for emergency rooms, radiology, obstetrics and other specialties. “Since California is one of only five states in the country where physicians cannot be employed by hospitals, this is one option for hospitals to bring in specialty services,” he said. “The quality and patient safety improves and infection rates are lowered. Typically, the outcomes are improved also with the use of specialized groups of providers.” Staff Writer Joel Russell can be reached at (818) 316-3124 or jrussell@sfvbj.com.

Joel Russel
Joel Russel
Joel Russell joined the Los Angeles Business Journal in 2006 as a reporter. He transferred to sister publication San Fernando Valley Business Journal in 2012 as managing editor. Since he assumed the position of editor in 2015, the Business Journal has been recognized four times as the best small-circulation tabloid business publication in the country by the Alliance of Area Business Publishers. Previously, he worked as senior editor at Hispanic Business magazine and editor of Business Mexico.
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