Fresenius Kabi Reveals €800m Biopharma Ambitions By 2026

Fresenius Kabi has laid out ambitions for its major investments in its Biopharma business to treble or even quadruple by 2026 the business unit’s 2022 sales of around €200m ($215m), while “significantly improving margins” as part of a long-held commitment for the business to break even at the EBITDA level from 2024.

Management spoke at length about Kabi’s strategy for growth under the company’s ‘Vision 2026’ roadmap during a lengthy and comprehensive capital markets day highlighting the perceived value of the business – the first such event held by the Fresenius unit in several years.

Kabi’s investments in biosimilars, not least its €495m acquisition of a 55% stake in mAbxience alongside organic endeavors, has spawned a pipeline of 10+ candidates, powered by three multi-product biologic drug substance facilities. With the mAbxience deal, meanwhile, Kabi expanded its biosimilar focus beyond autoimmune diseases to oncology.

Currently, the firm offers its Stimufend (pegfilgrastim-fpgk) biosimilar to Amgen’s Neulasta pre-filled syringe in the US, albeit on a “small scale” so far, while it is only weeks away from launching its Idacio (adalimumab-aacf) biosimilar to Humira in the US, having already moved on launches across Europe.

Kabi’s management confirmed that the company is continuing to work on a proposed biosimilar to the Neulasta Onpro on-body injector formulation, with a “clear ambition” to be “one of the top three launches. The target launch is scheduled for next year.”

“In the [coming] years, we talk also about tocilizumab, with the trade name Tyenne. Ustekinumab and rituximab are the next ones. Denosumab is another one, and some more in the outer parts of this decade,” observed Michael Schönhofen, president of Biopharmaceuticals for Kabi.

“We invested significantly into biosimilars. It is about development, clinical trials, but now also about sales forces, market access teams, and whatever you think about. So, it’s time to commercialize, which means it’s time to pay off our investments,” Schönhofen underlined.

Pointing to the ambition to quadruple potentially the unit’s sales in three years, Schönhofen noted, “the 2021 to 2022 is already a doubling, [albeit] from a smaller scale. But nevertheless, I think the dynamic is there. And I’m confident that these are the targets we will achieve.”

Tech Transfer Brings Substantial Savings

The US is vital to Kabi’s ambitions, Schönhofen outlined, with a plan to move first with its proposed biosimilar to Roche’s Actemra (tocilizumab). “We will be on the market with an IV formulation as well as with a subcutaneous formulation. There is no biosimilar on the market yet. And the target is, to be clear, the number one when we will launch.”

At the same time, ex-US markets are set to “contribute a significant part of our growth as well,” especially Europe, where Idacio holds an 11% share of the market.

Reiterating the 2024 EBITDA breakeven target, having previously moved the anticipated date from 2023 to 2024, Schönhofen explained that this would be achieved by marketing and manufacturing costs scaling back after significant capital investment to get the business off the ground.

“Tech transfer of the drug substance from Merck, and we are in a good agreement here how we run that, [is progressing] into the mAbxience facilities. And adalimumab and tocilizumab are the first two examples on that,” he disclosed.

“More than 30% cost saving can be realized on that. And on top of that, you have additional benefits like a better grip on the quality control, much better flexibility when it comes to regulatory changes or demand requirements. And at the same time, planning from a customer perspective is of course much easier and flexible.”

Kabi’s CEO Pierluigi Antonelli, the former Sandoz head for Western Europe who took up the role only on 1 March, added, “I think [those savings] are essential because, in biosimilars, you need to be cost competitive in the long term to stay in the game.”

“Therefore, we have the pipeline, we have the infrastructure, we made the investment, and now, we’re going to be driving sales and profits, and it will become profit accretive in our midterm horizon.”

Out-Licensing, CDMO

Turning to another potential avenue for growth, Schönhofen acknowledged, “Well, why does he talk about Biopharmaceuticals instead of just calling it biosimilars?”

Via mAbxience, he explained, “there’s a second business model. We do not need to sell all our molecules to the end customers. There’s a chance to also out-license some of the molecules, depending on the needs, depending on the benefits for us, to external industrial partners. And mAbxience has started this business. We know this business also from our own in small molecules. And I think it’s a nice add-on to the classical biosimilar franchise, to play on a bigger scale.”

“And the third leg,” Schönhofen concluded, “which you should think about a little bit more mid- to long-term, is the classical CDMO business. And that allows us also to play a role in the continuously growing outsourcing market or the outsourcing trend in the biological field.”

Summarizing, Kabi’s Biopharma head insisted, “I strongly believe – and I know that some of you are a little bit skeptical on that,” he acknowledged – “that this market is attractive. And it will be even more attractive. And we have the clear ambition to outgrow that market.”

“We have competitors, of course. There are other global big players. But I think we are well equipped. We have a strong entry position in the market, in many markets, in many territories, [and we have] the portfolio. Within the portfolio, of course, you can also have differentiations here and there. So you need really attractive products to [appeal to] the customer needs.”

Forecast Upgraded From “Low Ball Gift”

Reflecting on Kabi’s disclosures and perceptions, J.P. Morgan wrote in a same-day note: “Given the stops and starts in the biosimilar market, and lack of visibility on pricing and share gains, we suspect investors will remain relatively skeptical on the revenue targets and therefore also, the drop through to margins.”

And while there “was some further high-level disclosure around margins by segment and path forwards from here” during the call, “we suspect buy-side and sell-side would have liked more,” the investment bank added.

During the call, Kabi revealed that it was revising upwards its financial guidance for 2023 from low- to mid-single-digit percentage revenue growth to mid-single-digit, and its EBIT margin from c13% to c14%, on the back of a strong first quarter. (Also see "Fresenius Brings In Transparency Change For Kabi Unit" - Generics Bulletin, 18 May, 2023.)

Meanwhile, for 2026, “our ambition is to move towards the upper end of the structural margin band of 14% to 17%.”

Presciently, J.P. Morgan had forecasted earlier this year, “We think the new Kabi CEO has been gifted low-balled guidance that is likely to be upgraded at the capital markets day.”

They added: “Given that cost savings appear to be the key driver [of EBIT margin guidelines], the implied margin compression in Q2 to Q4 looks overly conservative and we think the stage is set for a Kabi guidance raise.”