HSP

In the race to enter the nascent U.S. biosimilars market, major drug makers face an uncertain but potentially expensive fork in the road in deciding which regulatory route to take.

The drugs, the closest thing to a generic for a biologic therapy, got a pathway to approval in March's health-care overhaul, but the Food and Drug Administration has yet to provide formal guidance on their development. Such treatments are large complex molecules made from living cells, as opposed to traditional chemical-based drugs.

That leaves a tough choice for companies like Pfizer Inc. (PFE), Teva Pharmaceutical Industries Ltd. (TEVA) and Hospira Inc. (HSP) that already are taking steps to be early to the market. They must decide whether to develop the drugs as if they are new products, performing extensive and costly clinical trials, or move forward on a shorter route, expected to be similar to that used by generic drugs but which may prove to be different when the regulator releases details.

The decisions could put the companies at the front of the line when the FDA starts to review biosimilars.

Companies are eager to begin development because biosimilars take longer to develop than traditional chemical-based generics and will likely be sold under a distinct brand, as they are in Europe. That means companies will be fighting for market share, using more than just pricing to attract users. Getting to the market early could be important in establishing a beachhead, as branded companies defend their franchises and subsequent biosimilars launch.

"This is going to be a marathon, not a sprint. It can take years to facilitate adoption of a [biosimilar] product," said Andy Pasternak, a consultant with Bain & Co. with experience advising companies on biosimilar strategy.

An FDA spokeswoman said the agency is evaluating ways to implement the new provisions and has formed a group to establish policies and procedures, but declined to comment on specifics.

Those guidelines are expected to allow, as they do for generic drugs, the biosimilar application to reference clinical trial results of the original, avoiding the cost of new trials.

But companies will likely have to provide clinical data to show that their products are similar to the branded version with no meaningful differences in safety, purity and potency, a process that may take a significant amount of time.

"For us to wait may cause us not to be ready when the market opens up...so we need to move now," said Hospira's Chief Scientific Officer Sumant Ramachandra, who said he thinks the FDA's guidance may not be available until next year.

Hospira recently launched a Phase I trial of a biosimilar version of Amgen Inc.'s (AMGN) blockbuster anemia treatment Epogen and plans to begin a Phase III trial in 2011. It already sells the drug in Europe as Retacrit.

Without formal FDA guidance, Hospira has talked with the agency about its development plan. Ramachandra said that the agency is meeting with individual companies that have expressed an interest in biosimilars and providing some input.

Hospira has expressed confidence in using the generic-like pathway in developing its Epogen product and acknowledges the risk that the FDA's ultimate guidance may be different from the route it is taking.

Like Hospira, pharmaceutical giant Pfizer says getting an early jump on development is key to its strategy.

"We have to be able to develop and be in the first wave of launches, before biosimilar market share starts to go to other leaders," David Simmons, head of the company's Established Products unit, said recently at a conference.

Both Pfizer and Hospira are confident that the process's initial steps are going to be similar, regardless of the route to the market. While moving early may have its advantages, Pasternak notes that it also means being a pioneer and not learning from the missteps of others.

Because biologic drugs are complex and difficult to manufacture, they can be hard to copy and there is the risk of clinical trials failing.

For the world's largest generic company, Teva, the clearest road to development is preferable.

"Why would you take the [generic-like] route, which is very uncertain as to how to go down that path now?" William Marth, head of Teva's Americas division, said last month. He stressed that it is "much simpler" to use the traditional marketing application for now.

Teva already has filed such an application for a biosimilar version of Amgen's Neupogen, used to prevent infections in chemotherapy patients, and has started a clinical trial of cancer and rheumatoid arthritis drug Rituxan, sold by Biogen Idec Inc. (BIIB) and Roche Holding AG (RHHBY ROG.VX).

Marth has hinted that it may soon be moving forward with its own biosimilar of Epogen, a product that may end up competing with Hospira's.

-By Thomas Gryta, Dow Jones Newswires; 212-416-2169; thomas.gryta@dowjones.com

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