Betting on biosimilars
February 2012
by Jeffrey Bouley  |  Email the author


THOUSAND OAKS, Calif.—Sharing a belief that the development and commercialization of biosimilar products will not follow a pure brand or generic model—and will require significant expertise, infrastructure and investment—Amgen and Parsippany, N.J.-based Watson Pharmaceuticals Inc. will collaborate to develop and commercialize, on a worldwide basis, several oncology-related antibody biosimilar medicines. These products are expected to be sold under a joint Amgen/Watson label.
Under the terms of the agreement, Amgen will assume primary responsibility for developing, manufacturing and initially commercializing the oncology antibody products. Watson will contribute up to $400 million in co-development costs over the course of development, including the provision of development support, and will share product development risks. Watson will initially receive royalties and sales milestones from product revenues. The collaboration will not pursue biosimilars of Amgen's proprietary products.
"Our efforts will include direct financial contribution as well as in-kind development services—for example, work performed at Eden BioDesigns and through our Salt Lake City-based R&D and manufacturing facility," notes Paul Bisaro, president and CEO of Watson.  
In addition, Watson will contribute its expertise in the commercialization and marketing of products in highly competitive specialty and generic markets, including to help effectively manage the lifecycle of the biosimilar products, which are expected to begin with a more branded feel—because they will need to be marketed more heavily than traditional generic drugs—and then move toward a more traditional generic model.
"Likely Amgen will be more involved in commercialization in the early years of products reaching the market, when they are likely to be of a more branded nature, and Watson will be more involved as they trend more toward becoming of a traditional generic nature," according to Bisaro. "Joint labeling with both companies' names involved makes it easier for products to move from one company to the other and for contributions to shift toward or away from one of the partners, offering flexibility in an uncertain market with an uncertain future."  
"The pairing of Amgen's 30 years of experience in biologics together with Watson's substantial generics and specialty pharmaceutical experience and complementary commercial and distribution capabilities provides great potential for worldwide patient access to high quality oncology biosimilar medicines," said Robert A. Bradway, president and chief operating officer at Amgen, in the news release about the deal. Bradway is set to become CEO of Amgen in late May. "Biosimilars provide an exciting long-term growth opportunity for Amgen. We have a dedicated team to leverage existing capabilities and capacity and drive the success of the collaboration."  
Watson's decision to partner with Amgen was a prudent one, Bernstein Research analyst Ronny Gal wrote in an investor note.  
"Watson picked as blue-chip a partner as they come, with deep pockets, science and regulatory expertise. It probably got less of the pie, but odds are higher that the products will make it to the market and gain some market traction … generic companies are used to operating on much shorter investment cycles and are generally more fiscally conservative. Watson is being prudent—settling for the 'bird in the hand' early in the development of the business," Gal wrote.  
Zacks Investment Research, which gives Watson an "Outperform" recommendation and a Zacks #2 Rank (Buy rating) in the short run, pointed out in an investor note that the month leading up to the Amgen deal was eventful, with Watson—along with partner Antares Pharma Inc. —announcing the U.S. approval of topical oxybutynin gel 3 percent. That same month, Watson announced the launch of its generic version of Teva Pharmaceutical Industries Ltd.'s LoSeasonique, for the prevention of pregnancy, as a part of a settlement agreement between the two companies.  
In addressing the Amgen deal specifically, Zacks wrote in the investor note, "We believe that this deal will help expand Watson Pharma's biosimilar and generic portfolio, which will help drive the company's long-term growth."
Bisaro says that the collaboration came about because both parties were looking for markets in which they could develop and market biosimilars, and their different market perspectives meshed well.  
"We'd done a fairly substantial analysis on those (biosimilar) products, including the competitive landscape, and had spent time over approximately the past 15 or 16 months talking with potential partners who were at least proposing to have such products in their portfolios," Bisaro said in conference call to investors. "We came across Amgen just about the same time they came across us … and I think what we found was that we can create flexibility and a mutual view on how we'll develop these products, with a clear sense of the advantages from both sides as to what we brought—and that pulled us together pretty quickly."
Code: E021223

1000 N West Street, Suite 1200,
Wilmington, Delaware, 19801
Ph: 888-781-0328 |  Fax: 705-528-0270
© Copyright 2020 Old River Publications LLC. All righs reserved.  |  Web site managed and designed by OffWhite.