Lupin, it seems is making slow and steady strides in its biosimilar portfolio.
The company shortly after submitting its application for arthritis biosimilar Etanercept or Enbrel in Japan ($11 billion global market size), announced a tie up with Japanese company Nichi-Iko to commercialise it in the Japanese markets.
But that wasn’t all, Lupin that applied for European approval of the biosimilar in May, on June 28 announced a tie up with US pharma company Mylan for it.
The agreement between Mylan and Lupin entails commercialising Enbrel in Europe, Australia, NewZealand, Latin America, Africa and most of Asia.
Lupin will be entitiled to get a milestone of $15 million upfront and equal share in net profits with Mylan.
Lupin’s Europe approval will entail a process such as facility inspection, hence could take 1-2 years to eventually enter the market.
Lupin is expected to be the third or fourth company to enter the European Union (EU) market for Enbrel according to Morgan Stanley and can make $200-250 million of gross revenue and $40-50 million of profit factoring in a profit share with Mylan in 2-3 years.
This is positive news for Lupin as it indicates the company is differentiating its portfolio and subsequently itself by entering the higher margin and less competitive biosimilar market.
While this is positive news for Lupin, the street remains divided on what this means for Biocon.
Remember, Mylan and Biocon have a tie up for a range of biosimilars and insulin products.
Their recent achievements (in 2017-2018) include US approval for cancer therapy biosimilars trastuzumab and pegfilgrastim and Europe and Australian approval for diabetes biosimilar insulin glargine.
But, Mylan had tied up with Biocon on Etanercept as well, the same biosimilar that Mylan has now tied up with Lupin for. And this is not the first instance.
In April 2018, Mylan tied up with Japanese company Fujifilm for arthritis biosimilar Humira or Adalimumab in Europe.
Humira by Abbvie is one of the best selling drugs in the world with a $16 billion global market size and a $4 billion market in Europe.
Humira or Adalimumab is another biosimilar that Mylan had a tie up with Biocon for.
While Biocon retains economic interest, the reason Mylan tied up with Lupin and Fujifilm respectively was because Biocon was behind both Lupin and Fujifilm in terms of timeline of approval for both of these opportunities respectively.
For Etanercept, Biocon is in pre-clincial stages. Compare this to Lupin that has already applied for approval in Europe and Japan.
For the US, experts expect the Etanercept market to only open up a few years down the line, hence the street will watch how Mylan and Biocon could monetise it.
It’s important to note that Lupin hasn’t decided its strategy for Enbrel in the US market as yet, whether it wants a partner or go solo.
For Humira or adalimumab, Biocon has completed global phase III studies.
The biosimilar market for Humira in Europe opens up in October 2018 and Biocon’s monetisation of the Humira opportunity in EU will be limited to the economic interest they have with Mylan on the tie up with Fujifilm.
Mylan has the option of extending the relationship with Fujifilm to other markets such as US and Biocon has said there is time to take a decision on how to pursue Humira in the US and other markets ex Europe.
Like Etanercept, how the Humira opportunity will be eventually monetised for Mylan and Biocon in other markets ex of the US will be as closely watched.
As mentioned earlier, Biocon has an economic interest in both these opportunities.
As per Morgan Stanley Mylan-Biocon has around a 35% profit share with Mylan.
Hence for the Mylan-Lupin deal which has a 50-50 profit share, Biocon will get 35% of the 50% of profit Mylan receives.While other positives include Biocon a profit share with lower development costs, the street can’t help but take note of these two events.