Who wins and who loses with the end of patents on biopharmaceuticals?

A number of patents on important drugs are set to expire in the coming years. Patents recognize medical innovations and protect them by law for 20 years: 10 years for research and 10 years for exclusive marketing. In this period, only the pharmaceutical company that holds the patent is allowed to manufacture and sell the drug. But this period is coming to an end for well-known drugs such as Lucentis (ranibizumab), developed by Novartis, which helps people with vision problems caused by damage to the retina, and Aubagio (teriflunomide), from Sanofi Genzyme, which treats patients with multiple sclerosis.

A study by Iqvia called Global Use of Medicines 2022 estimates that this will cost the main European brands in France, Italy, Germany, the United Kingdom and Spain €13 billion over the next five years. “Off-patent drugs belong to very diverse clinical areas,” explained Marie Fischer-Sabatie, vice president of Moody’s investment department. “By volume, the biggest patent to recently expiry is Humira, a drug to treat various conditions such as rheumatoid arthritis, psoriasis and Crohn’s disease, with a turnover of around €17.5 billion.”

Fischer-Sabatie estimates that “exposures in 2023 will exceed those of 2022 and 2021, which will contribute to a lower growth rate for the pharmaceutical industry.” In the case of Humira, its patent expired in 2018 and set off a market rush for biosimilars, biologic drugs that are almost an identical copy of the original, which are made from living organisms, such as proteins or antibodies.

When a patent comes to an end, there are two options for competing pharmaceutical companies: the biosimilars market and the generics market. A biosimilar is more complex to develop than a generic drug, whose chemical composition has the exact same concentration and dosage as the original. Fewer companies are able to develop biosimilars.

Encarna Cruz, the CEO of the Spanish Biosimilars Association (BioSim), argues that the size of the off-patent biologic drug market will be substantially larger in the coming years compared to the 2010-2023 period, peaking around 2027-2028 with an estimated €8 billion, which could be subject to biosimilar competition. She also believes that increased competition will drive down the costs of some drugs.

According to Cruz, the size of the biosimilars market in Europe is an indication of the weight they have in pharmaceutical spending. In Spain, for example, where the national healthcare system provides broad coverage, “access to biologic drugs exerts significant economic pressure,” she said. Indeed, of the top 20 most consumed drugs in Spain, 15 are biologics, according to a report published by the Spanish Ministry of Health.

And this means significant savings for government health spending. Since the first biosimilar was released in Europe in 2006, public healthcare systems have been making steady cost savings. In Spain, BioSim estimates that the country saves €1 billion annually — a figure that grew more than 6.7% between 2021 and 2022, and which continues to rise.

“From 2024 to 2026, seven new drugs will become generics. If there were none, those seven drugs would cost the health system €1.7 billion; with generics, we will pay €900 million. In other words, the end of seven patents in the next few years will save Spain around €800 million,” said Ángel Luis Rodríguez de la Cuerda, the head of Spain’s Generic Medicine Association (AESEG)

Rodríguez de la Cuerda lists the benefits of the generic medicine market. “We generate 40,000 jobs, we have 20 manufacturing plants. After Italy, Spain is the country with the most plants; seven out of 10 generics are manufactured in our country, we export 30% of production and invest 27% in R&D. We contribute to GDP.”

Big pharma, on the other hand, is facing an expected drop in revenue in the United States. But for Olaf Tölke, director of corporate ratings at Scope Ratings, “in Europe, unlike the U.S., there is no dramatic patent cliff facing the industry at present,” with some notable exceptions such as GSK.

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