汇丰银行-全球-制药行业-生物科技更新：2019-2023年累计销售风险超过4000亿美元-2019.8.22-29页.pdf

Disclosures&Disclaimer This report must be read with the disclosures and the analyst certifications in the Disclosure appendix,and with the Disclaimer,which forms part of it.Issuer of report:HSBC Bank plc View HSBC Global Research at:https:/ USD400bn+in biologic drug sales at risk from biosimilars 2019-2023;a significant headwind for the Pharma sector Lilly now has the first USD1bn+biosimilar drug;China could become a highly attractive market for biosimilar companies Roche,Novo Nordisk and Sanofi will continue to face biosimilar price pressure;Novartis likely a net beneficiary Significant headwind for sector growth:Whichever way you look at it,with over USD100bn per annum in branded biologic drug sales at risk from biosimilars amounting to over USD400bn from 2019-2023 and equal to c.10%of global branded Pharmaceutical sales the Pharma sector faces a prolonged and significant headwind that could restrain revenue and earnings growth for multiple companies.Dynamics in EU and Japan similar;US has differences,especially in Oncology:Biosimilars have a rapid,significant and prolonged impact on the price and sales of branded biologic-based drugs in Europe,Japan and the US.The dynamics of the impact are slightly more benign in the US and,in contrast to the impact of Oncology biosimilars in Europe and Japan,we expect a slower rate of penetration in the US.Most lose,but some win:Roche,Novo Nordisk and Sanofi will continue to face either direct or indirect biosimilar pricing pressure in multiple markets over a prolonged period of time,creating headwinds to varying degrees for each business.However,Novartis with its biosimilar business within Sandoz,should be a net beneficiary as biosimilars continue to gain market share at lower prices from branded biologic-based drugs.Eli Lilly,with Basaglar its biosimilar version of Sanofis Lantus now has the first biosimilar drug with a USD1bn+sales run rate.China and Chinese biosimilar companies could have significant commercial opportunities:We view three main opportunities for biosimilar companies in China:1.Genericisation of branded biologics(same as in EU,Japan and US);2.The opportunity to create a new,lower-priced biologics market where branded biologics have been too expensive and have not gained traction;3.The ability to manufacture biosimilars at low cost in China and distribute in the US and Europe.Ratings and target prices Current Upside/Market cap 2019e 2020e 2019e 2020e Company Ticker Currency price TP Rating downside (USDm)P/E P/E EV/EBITDA EV/EBITDA Novartis NOVN SW CHF 87.6 88 Hold 0%226,236 17.7 16.1 14.2 13.0 Novo Nordisk NOVOb DC DKK 344.6 223 Reduce-35%95,462 20.6 19.7 11.2 11.3 Roche ROG SW CHF 273.0 225 Reduce-18%240,287 14.0 13.9 9.5 9.2 Sanofi SAN PA EUR 77.1 79 Hold+2%106,998 13.1 12.2 7.3 6.9 UCB UCB BR EUR 67.9 78 Hold+15%14,642 14.9 14.3 9.6 8.2 Source:Bloomberg,HSBC estimates.Priced as of close at 20 August 2019 22 August 2019 Steve McGarry*Analyst HSBC Bank plc +44 20 7991 3164 Julie Mead*Analyst HSBC Bank plc +44 20 7991 9643 *Employed by a non-US affiliate of HSBC Securities(USA)Inc,and is not registered/qualified pursuant to FINRA regulations Biosimilar update Equities Pharmaceuticals Global USD400bn+in cumulative sales at risk in 2019-2023 Equities Pharmaceuticals 22 August 2019 2 USD400bn+in branded biologic drug sales at risk in 2019-2023 Sales of branded biologic drugs(currently c.USD120bn globally)have begun to face competition from multiple lower-priced biosimilar competitors.Biologic drug sales at risk represent c.10%of global pharmaceutical sales.Over the 2019-2023 period,we estimate there are over USD400bn+of branded biologic drugs sales that are likely to come under price pressure from biosimilar competitors.The amount and timing of biosimilar competitive threats depends on regulatory timelines but also litigation and settlements with branded biologic companies.On the latter,for example,AbbVie has settled with multiple companies that are developing biosimilar versions of Humira.Those settlements have generally followed the same pattern,where AbbVie will not continue to litigate(and as a result,biosimilar versions of Humira have now been launched in Europe and elsewhere outside the US),but no biosimilar versions of Humira are due to be launched in the much larger and more profitable US market until 2023.Of course,sales of branded biologic drugs will continue after 2023 and,therefore,sales at risk from biosimilars will not disappear overnight.USD400bn+sales at risk Significant,prolonged headwind that could restrain revenue and earnings growth for multiple companies in the sector Novartis could be a net winner amongst a small group of companies with global scale in biosimilars China could be a significant commercial opportunity in the biosimilars space;domestic companies arguably better positioned Biologic drug patent expiries/loss of exclusivity Source:USPTO,Espacenet,Company announcements,HSBC 2016201720182019202020212022Herceptin EURituxan EULantus GlobalRemicade EUEnbrel EUSynagis GlobalXolair EUNeulasta GlobalAranesp EUVictoza ChinaNorditropin GlobalRituxan USXolair USHumira EUAvastin USLucentis USLevemir US,EULyxumia GlobalLixiLan GlobalVictoza GlobalTanzeum GlobalLucentis EUAvastin EUErbitux US2023Humira US 3 Equities Pharmaceuticals 22 August 2019 Four important takeaways as the biosimilar landscape evolves Over USD100bn in annual sales of branded biologic drugs are at risk from biosimilar completion,equating to c.10%of global Pharma sales and amounting to over USD400bn by 2023 The biosimilar impact in Oncology in Europe and Japan seems to follow a similar pattern and appears no different from other therapy areas that have seen biosimilar competition.We do,however,believe the dynamics in the Oncology space in the US will differ from Europe and Japan The impact of biosimilars on primary care biologics in the US,against a backdrop of ongoing price pressure anyway,is as significant as in Europe,although as noted above,Oncology dynamics in the future are likely to initially be more benign China could become a significant commercial opportunity for biosimilar companies;there are three opportunities for China-focused biosimilar companies to:1.Cannibalise sales of branded biologic drugs;2.Create a de novo biosimilar market where branded biologics have failed to gain traction due to high prices;and 3.Launch biosimilars in other territories in Asia(and the US/Europe?)that could also be commercially attractive The biosimilar landscape continues to develop apace and there are now multiple biosimilar versions of several branded biologic drugs on the market in Europe and the US.In this report,we provide an update on developments in the biosimilar area globally and highlight the main key takeaways from recent developments.And a second wave of biosimilar patent expiries later in the decade As noted in our report:Pharma 2030:Re-shape or de-rate,28 November 2018,there will be a second wave of biosimilars by the end of the next decade as anti-PD1 and anti-PDL1 drug patents begin to expire.This is likely to lead to significant downward pressure on the sales of branded anti-PD1/PDL1 drugs,leading to a re-basing of Oncology drug costs.As we have seen from the impact of complex biosimilars on branded drugs over the last few years,Oncology drugs are unlikely to be protected from biosimilar competition.Further,the regulatory and legal pathways should have been largely ironed out in the US and elsewhere by the time this second wave of biosimilar genericisation comes to pass.As can be seen from the charts in this report,the impact on sales of the branded biologic is severe and prolonged and that includes lower-priced Diabetes biologics as well as higher-priced Oncology biologics.With most anti-PD1/PDL1 drugs having headline prices of USD150,000 for a course of treatment,we see no reason to expect any lower impact from biosimilars of these drugs by 2030.Equities Pharmaceuticals 22 August 2019 4 Patent expiries of anti-PD1 and anti-PDL1 drugs and likely timing of biosimilar entrants Source:USPTO,Espacenet,Annual reports,HSBC Magnitude of biosimilar price impacts is large The discount offered by biosimilar companies for biosimilar versions of branded biologic drugs in Europe has been anywhere in the range of 20-75%relative to the price of the branded comparator.Biosimilar companies can offer such large discounts and still be profitable due partly to the advent of disposable biologic manufacturing(obviating the need to build a USD500m+manufacturing plant),and also due to the yield improvements available for manufacturing biologicals and greater efficiencies in the downstream processing of harvested biological raw materials.In the US,we expect price discounts to only reach the same level as Europe once there are multiple biosimilar versions of a drug available.At that point,the main differentiating factor is price.EU and Japan biosimilar dynamics are similar So far and taking biosimilar versions of Rituxan and Herceptin as examples the dynamics of the impact of biosimilars on branded biologic drugs in Europe and in Japan are fairly similar.While there is generally a high utilisation of generic drugs across most of Europe(and reference pricing reduces the average price as well),generic drug utilisation in Japan has taken time to increase.The Japanese Ministry of Health Labor and Welfare target is for 80%of prescriptions in Japan by 2020 to be for generic alternatives.US biosimilar dynamics somewhat different The dynamic for biosimilars in the US is different from Europe and Japan mainly due to the overall structure and the different payor systems;rebates and net versus gross pricing also complicate matters.For example,when the first biosimilar version of Johnson&Johnsons Remicade was launched in the US at a discount of 10%to the gross price of branded Remicade sales struggled,as the net price of branded Remicade was lower due to rebates.It was only when the second biosimilar version of Remicade was launched at a much steeper discount that US sales of branded Remicade began to be impacted.20252026202720282029203020312032OpdivoEUYervoyUS,EU,JapanOpdivoUSKeytrudaUS,EUImfinziUS,EU,JapanOpdivoJapanKeytrudaJapanSales(USDm)PUBLICTecentriq US,EU,JapanBavencio US,EU,Japan 5 Equities Pharmaceuticals 22 August 2019 Other aspects of the US system that suggest the dynamics in the US will continue to be different from elsewhere are:Litigation.See above on Humira litigation Branded company pre-emptive price cuts in return for preferred Formulary access.Branded biologic drug companies can negotiate bigger rebates(effectively pre-emptive price cuts)in return for continued preferred positioning on a Pharmacy Benefit Managers formulary.While this may work initially ahead of biosimilars reaching the US market,it is also a strategy likely to be used increasingly by biosimilar companies.Since biosimilars are likely to have little differentiation,the only way to gain formulary positioning is on price,so biosimilar companies have a bigger incentive to offer bigger discounts in due course US physician incentivisation infused drugs.As clinicians are paid to provide intravenous infusions and that price can be set relative to the cost of the drug being infused,clinicians are arguably dis-incentivised to administer lower-priced biosimilars.However,this is likely to come under pressure in due course from Medicare and Medicaid reimbursement models and from patients whose co-pays would be lower for biosimilar drugs Hospital pharmacy mark-ups infused drugs.US hospitals can inflate the cost of specialty drugs and effectively use their pharmacy capabilities as profit centres.While there is nothing wrong with this business model,when hospitals can charge multiples of the costs of administering a drug relative to a non-hospital setting,there is arguably an in-built incentive for such hospital groups to administer the highest-price biologic drug China could be an opportunity for biosimilars and Chinese biosimilar companies The Chinese market(and beyond)could become an important opportunity for biosimilars to become commercially attractive.We see three main opportunities:Genericisation of those branded biologics that have gained commercial traction in China As many branded biologic-based drugs have not become significant commercial successes in China due to high prices or have failed to create any market at all,there is an opportunity to generate a market for biosimilars of those products at lower prices If Chinese manufacturers can demonstrate that they can manufacture to the same standard as those companies in Europe and the US,that would open up the possibility that Chinese companies could sell biosimilars into Europe and the US(akin to Celltrion and Samsung BioLogics doing the same from South Korean manufacturing sites).That could alter the biosimilar landscape further in due course Companies that could dominate in biosimilars;China the wild card Although there are a large number of biosimilar versions of various biologic drugs in development,in our view it is those companies that have manufacturing scale that can provide security of supply to US payors and national health services elsewhere that are likely to be the major players in the biosimilars space over the long term.As such,the biosimilar market could remain relatively concentrated.Below,we outline the list of companies that in our view currently are likely to be dominant players in biosimilars.However,as we note in this report,Equities Pharmaceuticals 22 August 2019 6 China and China-based biosimilar manufacturers could change this landscape in due course:Novartis(Sandoz)Amgen and partner Allergan Samsung BioLogics/Samsung Bioepis(with partners Biogen and Merck&Co)Celltrion Boehringer Ingelheim Pfizer Eli Lilly(only in basal insulins)7 Equities Pharmaceuticals 22 August 2019 Lantus the prime example Sanofis Lantus is the prime example for what happens when a more mass-market-type biologic suffers pressure from biosimilar competition.Sales of branded Lantus have fallen by double digits almost every quarter since the beginning of 2016.We estimate that the pricing of basal insulins in the US is now less than 30%of 2015 levels(i.e.down by over 70%).For Sanofi,arguably there is now less to lose and most of the damage has already been done to the Lantus franchise,but Lantus still generated c.EUR1.6bn in sales in the US in 2018 and almost EUR700m outside the US.Toujeo is nowhere near making up the shortfall.So although we would agree the worst is over for sales of branded Lantus and quarter-on-quarter declines are likely to abate in magnitude,downside remains.Lantus sales US after biosimilar launches Lantus sales EU after biosimilar launches Source:Company reports Source:Company reports Collateral damage for Novo Nordisks insulin franchise In general,it is usually only sales of the branded drug that are negatively impacted by generic or biosimilar comp