Discount Drugs

I liked the headline of a story in FierceBiotech in early April:  “Samsung Plans Ambitious Rollout of Biosims at Deep Discounts” (FB story).  Samsung is best known in the US for its attractively-priced consumer electronics (like my TV) but is an industrial conglomerate ala the Japanese keiretsu so adding making “discount” generic biological pharmaceuticals to nuclear reactors and rice cookers is logical for a company playing the long game (also see Fujifilm which bought Merck’s biomanufacturing group last year to form Fujifilm Diosynth Biotechnologies). The FB story recapped an interview in the Financial Times (Financial Times article) with the president of the newco which is called Samsung BioLogics (SB).  Here are some salient points on SB; the company will:

  • start with a $2 billion capitalization;
  • have as first products monoclonal antibody (mab) drugs (e.g., Rituxin);
  • be on the market in 2015; and
  • aim to sell products at prices 50% lower than those of similar current products currently (although the Times author notes that analysts are skeptical of achieving more than a 10% lower price).

Interestingly, SB got off on the right foot with a partnership to manufacture mab drugs with BiogenIdec which was announced at the end of 2011 and valued at $300 million (15% put in by BiogenIdec) ( Joint press release).  The tie-up makes sense since BiogenIdec has several biologics coming off patent in the next few years (including Rituxin which is marketed by Roche) and its CEO, George Scangos, has said good things about the biosimilar/”follow-on” biologics market.  Of course, even if SB sold its biologics at a 50% discount, they still would be not affordable for most of the world (an annual course of Rituxin is priced at about $20K), so if Samsung intends to sell at a price affordable in developing world markets it will need to bring its manufacturing costs down.  My guess is that this is part of the plan and SB has a strong process improvement group that will invent cost-saving know-how or acquire it from smaller companies, following the path trod by companies making vaccines (another biologic) that are priced in the dollars per dose (see my post, More Grease on the COGs, 12/29/11).  After all, when Samsung entered the consumer electronics business in 1970, few could imagine 40-inch LCD TVs selling for $800.

One way to accelerate manufacturing improvements and cost-efficiencies is through public-private consortia that address fundamental problems and find solutions that the industrial members of the consortia can take in-house and adapt for their own benefit and cost-competitiveness.  I did not find any examples of fully-fledged biomanufacturing consortia but note that Massachusetts has the necessary elements:  substantial biomanufacturing companies (and lots of small ones), academic research programs, and public intermediate-scale manufacturing facilities.  For big companies, I know of three in Massachusetts:  Abbott (Abbott Bioresearch Center in Worcester), Pfizer (the Andover facility acquired through Wyeth), and Bristol-Myers Squibb (in Fort Devens); and one nearby:  Lonza (in Portsmouth, NH).  As for academic centers, there are two that are still in a growth phase:   MIT’s Center for Biomedical Innovation has a Biomanufacturing Research Program (MIT CBI); and  UMass Lowell’s Biomanufacturing Center (UMass BC).  To transition a process from lab-scale to full-scale, its inventors test it in pilot facility, and a consortium could use the equipment and personnel at the state’s former Massachusetts Biologics Laboratories and now UMass Biologics (UMass Biologics) or at UMass Dartmouth’s “biomanufacturing accelerator” that is under construction now in Fall River (UMass Accelerator).  What is lacking is a programmatic infrastructure and some politico to push the idea of making Massachusetts the world center for low-cost biologics manufacture (I’ll add it to my project list).

A historical footnote on the importance of patents and the perception of their contribution to the economy:  while at an exhibit of patent models at the American Art Museum in Washington, DC, recently (AAM exhibit), I concluded that patents were considered a very important grant of the Federal government when I saw that a 1794 patent to a chap (from Massachusetts, of course) for a alkalinization process used in soap making was signed by the President (George Washington), the Secretary of State, and the US Attorney General.


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