Recently in the global pharmaceutical industry, corporations that focused on generic (synthetic drug copy) businesses have been announcing a string of mergers and acquisitions (M&A) to enter the biosimilar (biosimilar) market.
Analysts say this is not a simple expansion in size but a strategic move to replace the stalled growth of generics and boost dominance in the biosimilar market.
According to the pharmaceutical and biotech industry on the 4th, there were two announcements of biosimilar corporation acquisitions in April.
First, U.S. major generic company Amneal Pharmaceuticals said it would acquire biosimilar-focused corporation Kashiv BioSciences for about $1.1 billion (1.6 trillion won). Then India's largest drugmaker Sun Pharma drew industry attention by agreeing to buy U.S.-based Organon for $11.75 billion (about 17 trillion won).
Amneal made clear its strategy to move away from a generic-centered business structure and make biosimilars a core growth pillar. By acquiring Kashiv, it secured integrated capabilities from development to manufacturing and global production facilities, laying a foundation for expansion. Sun Pharma is also seeking to enter the global top tier by strengthening both women's health and biosimilars through the Organon acquisition.
Celltrion, Samsung Bioepis, Amgen, and Sandoz are cited as leading players in the current biosimilar market. Behind the steady arrival of new latecomer corporations are changes in the pharmaceutical industry structure and the institutional environment.
First, the market has entered a "second patent cliff" phase in which the exclusivity of major original drugs that have dominated the global market is being lifted en masse. According to the industry, patents will expire between 2024 and 2030 for drugs whose combined annual sales amount to about $200 billion (about 295 trillion won).
In fact, competition among biosimilars began in earnest for the autoimmune disease treatment "Stelara" after its U.S. patent expired in 2023. The world's top-selling immuno-oncology drug "Keytruda," with annual sales exceeding $25 billion, also faces patent expirations in Korea and the United States in 2028, intensifying development competition among biotech corporations.
Sandoz CEO Richard Saynor said at the JP Morgan Healthcare Conference in January that "well over $600 billion worth of medicines are expected to lose exclusivity over the next 10 years," calling it "a golden decade of unprecedented opportunity."
Strong "biosimilar-friendly policies" by governments are also influencing these strategies by corporations. As medical costs surge due to global aging, governments including the United States and Europe have made biosimilars, which are 30% to more than 50% cheaper than original drugs, a key to easing the burden on health care finances.
Governments are actively encouraging wider biosimilar use and accelerating improvements to the regulatory environment. In the United States, with the implementation of the Inflation Reduction Act (IRA), the government is directly engaging in drug price negotiations, while also offering carrots such as increasing the incentive (additional charge) paid to medical institutions for prescribing biosimilars compared with before.
With streamlined clinical requirements centered on the U.S. Food and Drug Administration (FDA), the development period for biosimilars is being shortened from about seven years to around five, and the expense is being cut by nearly half.
In Europe, the agreed "Pharma Package" to be implemented by the end of 2025 shortens the data exclusivity period for original drugs and significantly strengthens the "Bolar exemption," which allows products to be launched immediately upon patent expiry.
Another reason investment continues is that biosimilars have relatively high barriers to entry.
Generics can be produced at relatively low expense if the chemical formula is known, leading to dozens or even hundreds of corporations crowding into a single item. This inevitably results in intense price competition and deteriorating profitability.
By contrast, because biosimilars involve processes handling living cells, they require advanced culture technology, large-scale facility investment, and large clinical trials, limiting the number of corporations that can enter initially. In other words, unlike the bloodletting competition in the generic market, biosimilars can be oligopolized if players have strong technology and capital.
Attention is also on whether the spate of M&A will reshape the biosimilar market landscape. While some expect competition to intensify as more biosimilar corporations emerge, others say the market could instead harden into a "big-player-centric structure" reorganized around a handful of large corporations.
An industry official said, "In the biosimilar market, not only technological competition but also cost reduction through large-scale production facilities and sales strength using broad portfolios are important," adding, "the global market share landscape could change depending on economies of scale by corporation and strategies to accelerate businesses."
The official added, "However, unless a latecomer slashes prices dramatically through innovative process improvements, it will not be easy to overcome the barriers posed by the top three to five corporations that already have robust data and supply chains."