The United States government has been introducing a series of policies that could significantly impact the biotechnology industry, drawing considerable attention to how these changes might affect the domestic sector. While these policies are generally viewed as favorable for the domestic industry, experts emphasize the need for meticulous preparation due to the potential intensification of global competition seeking to capitalize on these benefits.
The U.S. Food and Drug Administration (FDA) has recently accelerated efforts to abolish the "interchangeability" certification system for biosimilars. Unlike synthetic drugs, it is challenging to create an identical product due to the biological nature of biopharmaceuticals, which is why they are termed "biosimilars." Consequently, pharmacists in the U.S. have been unable to substitute biosimilars for original drugs without additional clinical trials proving interchangeability. Thus far, 13 products have been designated as interchangeable biosimilars.
However, the FDA has recently begun revising guidelines to state that studies demonstrating interchangeability between original drugs and biosimilars are no longer necessary. This decision is supported by numerous studies showing no significant safety differences between patients prescribed biosimilars and those who are not. Industry analysts suggest that the high cost of pharmaceuticals in the U.S. is a fundamental reason behind this move. The Biden administration previously announced plans to allow substitution prescriptions for all biosimilars as part of the Inflation Reduction Act (IRA) to reduce the country's high medical costs. The fact that Humira, a blockbuster autoimmune disease treatment, still holds over 80% market share despite the launch of its biosimilars in the U.S. last year, has likely spurred this policy change.
In South Korea, biosimilar developers like Celltrion and Samsung Bioepis are expected to benefit significantly from this change, as they currently invest substantial time and resources into securing interchangeability during the biosimilar development process.
Another critical policy shift is the introduction of the Biological Security Act, aimed at curbing the activities of hostile biotechnology firms in the U.S. to prevent the leakage of American genetic information. The Act has passed both the Senate and House committees and awaits final approval. Once enacted, the Act will prohibit specified Chinese companies, such as the Beijing Genomics Institute (BGI) and WuXi AppTec, from conducting transactions with U.S. administrative agencies or companies receiving U.S. government support.
Industry attention is particularly focused on WuXi Biologics, a subsidiary of WuXi AppTec involved in contract development and manufacturing (CDMO), which is one of the global "Big Four" CDMOs. The potential cessation of its dealings with Western countries presents a significant opportunity for domestic CDMO firms. As South Korea is considered a friendly nation by the U.S., local pharmaceutical and biotech companies could see increased demand for CDMO services.
Jeong Yoo-kyung, a researcher at Shinhan Investment Corp., noted, "Products subject to the Biological Security Act will not be handled (reimbursed) by public insurance programs like Medicare and Medicaid under the Centers for Medicare and Medicaid Services (CMS). As a result, global pharmaceutical companies with multiple drugs may expedite their efforts to sever ties with affected firms." This sentiment was evident at the recent Bio International Convention (BioUSA) in the U.S., where numerous Korean CDMO firms, including Samsung Biologics, Lotte Biologics, SK Pharmteco, ST Pharm, and Prestige Biologics, actively sought partnerships.
An industry insider commented, "It's clear that policies like the IRA and the Biological Security Act are favorable for Korean companies. However, the biosimilar market still faces numerous patent-related challenges, and the competitive advantage from the Biological Security Act's secondary benefits must be carefully navigated, given the presence of similarly competitive players in Japan and Europe. Therefore, it is crucial to develop robust competitiveness to turn these favorable conditions into tangible benefits.