Consensus Market Model – The Global BioGenerics Market in 2010

Executive Summary
Market Analysis

BioGenerics is an umbrella term used to define the market for bioequivalent products based
on the same biological substance used in off-patent biologics. Some classes of
biopharmaceuticals have emerged as particularly attractive for biogeneric development,
including the relatively simple structures found in growth hormones, colony stimulating factors
and erythropoeitins.

The BioGeneric market is set to develop slowly in the major pharmaceutical markets, as a
result of regulatory hurdles and continued protectionism from patented biopharmaceutical
marketers. Once the market does begin to evolve, the biogeneric companies entering the
market early will derive significant value.

There are currently no biogeneric products sold in major pharmaceutical markets. However,
as sales of branded biopharmaceuticals grow significantly and key biopharmaceuticals
continue to lose patent protection, a significant opportunity for biogenerics has emerged.

Current off-patent blockbusters, such as erythropoietin, represent a significant opportunity for

the development of biogeneric products. The key driver for potential growth in biogeneric
sales will be the scale of trials required to achieve regulatory approval, which will impact on
both the cost of development and speed to market.

Biogenerics are not currently available in any of the major pharmaceutical markets. However,
there is a significant biogeneric presence in unregulated markets such as China, South-East
Asia and Latin America. Australia has approved one biogeneric product, Sandoz’s
Omnitrope. The EU has developed regulations for the approval of biogenerics, while the US
is unlikely to approve a biogeneric product before 2008.

The key biogeneric product is currently the human growth hormone, Omnitrop(e), since this is
the one closest to launch in the major pharmaceutical markets. This will change as soon as
more products are approved, particularly in the EU. The significant obstacles associated with
manufacturing and marketing biogenerics in Western markets has reduced the number of
potential biogenerics companies to less than ten. These include biotech start-ups,
established generics companies and specialty pharmaceutical companies.

© 2005 Urch Publishing Ltd 1

THE GLOBAL BIOGENERICS MARKET IN 2010

Market Forecast

Although no biogeneric product has yet been introduced to a major pharmaceutical market,
trends in the growth of branded biopharmaceuticals, and the patent expiry of key products,
give an indication of future market potential. Historical annual growth rates for the
biopharmaceutical market range between 15.6% and 23.5%. It is also estimated that 50% of
the 2001 market for biopharmaceutical has now been opened up to potential biogeneric
competition.

The potential market for biogeneric drugs has been widely quoted as $12 billion in 2010.
Additional future market trends state that more than $10 billion of branded
biopharmaceuticals will have lost patent protection by 2006, while biopharmaceutical
products will contribute 50% of all new drug approvals by 2010.

Three key market events have been identified, which together will define the evolution of the
market. The first is the approval and launch of the first biogeneric in a major market, likely to
be Omnitrop(e) in Australia in late 2005 or early 2006. Launch in the EU will follow, but a US
launch is likely to be delayed beyond 2006.

The second key market event will be the clarification of biogenerics regulation in the US.
Regulations will be required before the US launch of biogenerics, but any significant
clarification remains unlikely before 2007.

The final key market event is growing number of patent expiries. An estimated $10 billion
worth of the branded biopharmaceutical market will have lost patent protection by 2006.
Large-protein molecules with relative simple manufacturing processes, including human
growth hormones and insulin, are particularly vulnerable to biogenerics.

The greatest uncertainty with regard to the biogenerics market is currently in the US, since
the EU now has much of its regulation in place and is likely to approve its first product in late
2005 or early 2006 whereas the US is considerably further behind. Key future market
scenarios, therefore, focus predominantly on the US but also impact on uptake in the EU.

In the best case market scenario the US would clarify favourable biogeneric regulations by
late 2006 or 2007, followed by a launch in late 2007. In the best case market scenario the US
would agree strict biogeneric regulations in 2009, with the first product launch in 2010.
However, the most likely market scenario would see the biogeneric regulations similar to
those agreed in the EU set-up in the US by 2008 with the first product launched in 2009.

Basing forecasts on key market conditions rather than on headline ‘potential’ figures, reveals
a consensus market model forecast for the global biogenerics market in 2010 of $2.3 billion.
This is a more modest forecast than other published forecasts, which refer to a potential 2010
market of $12 billion, and is limited by the continued delays in agreeing appropriate
biogeneric regulations in the US.

Running the best and worst case scenarios for the biogenerics market reveals that the
potential 2010 market ranges between $0.8 billion and $5.4 billion. The key drivers for a
successful biogenerics market are the early ratification of US regulations and a rapid market
uptake driven by clear and abbreviated biogeneric trial requirements.

© 2005 Urch Publishing Ltd 2