1. The Role of Biosimilars in Driving
Innovation in the
Biopharmaceutical Industry
Thomas Vanden Boom, Ph.D.
Vice President,
Hospira Global Biologics R&D
BioProcess International Convention
Providence, Rhode Island
September 23, 2010

2. Biosimilars Regulatory Framework
Continues to Evolve Worldwide
WHO
2009
WHO
2009
Canada
2010
Canada
2010
US
2010
US
2010
Europe
2005
Europe
2005
Japan
2009
Japan
2009
Australia
2006
Australia
2006
Dates represent year when primary guidelines,
guidance or legislation adopted

3. Growing Biologics Market Driving
Interest in Biosimilars Space
Rest-of-World
$18 B
Rest-of-World
$18 B
Europe
$26 B
Europe
$26 BUS
$50 B
US
$50 B
Japan
$6 B
Japan
$6 B
2009 Global Biologic Sales2009 Global Biologic Sales
Source: Hospira analysis of Datamonitor IMS data, December 2009

4. Biosimilars Represent a Distinct New
Sector of the Biopharmaceutical Industry
Biosimilars
Originator
Products
Generics
Development
Environment
Development
Environment
Probability of
Success
Cost
Time
Development
Low (~30%)High (~90%)
High (>$800 M)Low (<$5 M)
Long (8-12 yrs)Short (3-4 yrs)
Barriers to
Entry
Point of
Differentiation
Other
Dynamics
HighLow
Product profile,
marketing
Price, breadth
of portfolio
Competitors
Investment
Pricing
Marketing
Few, well differentiated
Many, little
differentiation
HighLow
PremiumCommodity
Source: FTC Report June 2009 and HSP internal analysis

5. What is the state of innovation in
the industry?

6. 0
10
20
30
40
50
60
1996 2000 2005 2009
0
10
20
30
40
50
60
70
NDA BLA R&D Investment
6
FDA approvals used as a frequent
measure of biopharmaceutical industry
innovation (and productivity)
R&DInvestment($USB)
FDAApprovals
Adopted from Nature Rev. Drug Discov. 9, 89-92; 2010
and http://www.phrma.org/key_industry_facts_about_phrma

7. 7
Executive Survey Rankings of
Top 50 Most Innovative Companies
Survey
Number of
Biopharmaceutical
Companies in
Top 50 Ranking
Boston Consulting Group/ BusinessWeek 0
FastCompany 2
Source: Innovation 2010: A Return to Prominence-and the Emergence
of a New World Order, A BCG Senior Management Survey, January 2010
and FastCompany Issue 143, March 2010

8. Innovation Executive Survey Results
BCG Innovation Survey
Results by Industry
Number Company
1 Pfizer
2 GlaxoSmithKline
3 Bayer
4 Novartis Corporation
5 Merck & Company
Number Company
8 Novartis Corporation
26 Synthetic Genomics
FastCompany Top 50
Innovation Survey Results

9. What impact do biopharma insiders
think biosimilars will have on
innovation?

10. “The majority of biopharma
executives see the increasing
market share of generics as a
threat to companies in the
industry and to investment in
innovation.”
Quintiles
The New Health Report, 2010
A Survey of Biopharmaceutical
Stakeholders in the New Health

11. 81%
78%
46%
Failure of some biopharma companies
Decline in investment in new therapies
Worsening of public health
81%
78%
46%
Failure of some biopharma companies
Decline in investment in new therapies
Worsening of public health
How likely are each of the following to occur if generics
continue to gain market share in biopharma?
How likely are each of the following to occur if generics
continue to gain market share in biopharma?
Adopted from: The New Health Report
A Survey of Biopharmaceutical Stakeholders in the New Health
Quintiles, 2010
Biopharmaceutical Executive Survey
Results

12. How will biosimilar companies impact
innovation in the biopharmaceutical
industry?

13. Defining the Innovation Space
Radical
Substantial
Incremental
Value-Add
Newness
Adopted from: www.ceoforum.com.au/articles.cfm?k=Invetech, February 2005
and Morgan S, Lopert R, Greyson D. Open Med. 2008; 2(a):e4-7.
Commercial
Comparative
Effectiveness
Gravity of
Unmet Need
Radical
Substantial
Incremental
Biopharmaceutical

14. Where will biosimilar companies
compete in this innovation space?
Value-Add
Newness
Radical
Substantial
Incremental
Biosimilar companies
will compete in the
areas of Incremental
and Substantial
innovation

15. The Competitive Nature of the Biosimilars Space
Will Lead Companies to Innovate Fully and
Aggressively Around Products and Processes
 Process
– Manufacturing
– Clinical development
– Process development
 Product
– Quality
– Dosage form
– Stability
– Packaging
– Customer convenience and safety
 Strategy
– Commercial
– Regulatory and IP
– Development
– Supply Chain
– Distribution
Innovation

16. Layered Incremental Innovations Will Offer
Substantial Innovation Value to Patients and
Customers
Substantial
Incremental
Value-Add
Newness
Biosimilar
Innovation Space

17. Innovation Project Portfolios Must be
Carefully Managed to Ensure They
Drive Value
Substantial
Incremental
Value-Add
Newness
Biosimilar
Innovation Space
Substantial
Incremental
Substantial
Incremental
Newness
Newness
Value-AddValue-Add

18. What are the trends among
biopharmaceutical companies in this
innovation space?
Radical
Substantial
Incremental
Value-Add
Newness
“Companies are
raising their
emphasis on the
conservative end of
the innovation
spectrum”
Innovation 2010: A Return to
Prominence-and the Emergence
of a New World Order
A BCG Senior Management Survey,
January 2010

19. 0
25
50
75
100
2007
2008
2009
2010
Boston Consulting Group
2010 Innovation Survey Results
New-to-the-world
offerings
New offerings
that allow
expansion into new
customer groups
New offerings for
existing customers
Minor changes to
existing offerings
Cost reductions for
Existing offerings
Percentage of Pharma respondents
selecting ‘important’ or ‘very important’
+78%+78%
+12%+12%

20. A few closing thoughts on the
potential dark side of innovation

21. 0
200
400
600
800
1000
2004 2005 2006 2007 2008
Prior Approval Non-Prior Approval Total
+38%+38%
BLA Manufacturing Supplements:
Are we choking the FDA with “innovation”?
Prior approval BLA manufacturing
supplements increased 38% and
reached a 5-year high of 333 in
2008
Prior approval BLA manufacturing
supplements increased 38% and
reached a 5-year high of 333 in
2008
Source: 2008 FDA PDUFA Performance Report

22. Conclusions
 Biosimilars represent a distinct new sector of
the biopharmaceutical industry
 The emergence of the biosimilars sector is
driving increased competition and enhanced
innovation around biologic products and
processes
 Biosimilar companies will compete primarily
in the incremental and substantial areas of
the innovation space

23. Conclusions
 Layered incremental innovations will result in
meaningful cost reductions and enhanced
product offerings for patients and customers
 Over the past several years biopharmaceutical
companies have increased their emphasis on
conservative innovation projects
– Biosimilars competition may encourage companies
to reverse this trend
 Innovation project portfolios should be carefully
managed to ensure the best use of industry and
health authority resources

24. Acknowledgments
Special thanks to
Boston Consulting Group
for providing
unpublished data
and analyses