Financial Analysis of Biosimilar Development Candidates: A Case Study on the US Biosimilar Business

Abstract

This case study investigates the US biosimilar business and the approach that should be implemented when financially analyzing biosimilar development candidates. To challenge the theory that the biosimilar business will be best suited for biologics experiencing the largest sales figures, this case study applied a financial analysis towards two biosimilar development candidates with contrasting sales. Using Soliris (eculizumab) and Remicade (infliximab) biosimilars as a test case, this case study hypothesized that a Soliris biosimilar has the opportunity to create more value over time—despite Soliris® having less sales than Remicade®—due to its favorable market outlook.

Over the next few years, the US biosimilar landscape is expected to evolve into a profitable business venture as the first wave of biologics, particularly monoclonal antibodies, begin to lose patent protection. With some biologics experiencing more than $5 billion in annual sales, many analysts believe biosimilars to these biologics will generate more value than a biosimilar to a reference biologic making under $5 billion in sales. However, based on the findings from this case study, the opposite was true. Using a product- and market-driven net present value (NPV) evaluation, this case study uncovered that a Soliris biosimilar candidate has the potential to generate more value than a Remicade biosimilar. Demonstrating that the reference biologic’s sales did not translate to a greater valuation for the Remicade biosimilar, this case was able to substantiate the importance in financially analyzing biosimilar development candidates beyond the sales of a reference biologic. In addition, this case study was able to demonstrate the utility in using a product- and market-driven valuation approach in the value determination of biosimilar development candidates.