‘You Have To Play On A Pretty Broad Part Of The Piano’: Fresenius Kabi On Biosimilar Commitment

“We want to be a first-class biosimilar supplier worldwide. And here, I would say, we are on a really good pathway,” the president of Fresenius Kabi AG’s Biopharma business, Michael Schönhofen, tells Generics Bulletin.

Speaking exclusively in the weeks following the launch of the firm’s Idacio (adalimumab-aacf) biosimilar to Humira in the US as part of the eight-strong second wave to reach the market, Schönhofen discusses the seminal event for industry, alongside his perception and expectations for the growing US biosimilars market – one he predicts “will see a lot of changes and adaptions” in the coming years.

“We are far away from a saturated market. And this is not just on the competitive side,” Schönhofen says of the adalimumab biosimilar market, as well as the US market in broader terms. “I think it’s also from the way in which the market is being run.”

More broadly, he details Kabi’s commitment to the global biosimilars space as a core tenet of the firm’s long-term growth strategy, underlining: “We are not there to play on one market, we like to be in many markets.”

Meanwhile, a key theme for Schönhofen is the advantages provided by greater control of the supply chain, brought about by Kabi’s significant investment in infrastructure, as well as how the company’s acquisition of a majority 55% stake in mAbxience – now just under a year past completion – will help the company pivot into new and exciting growth opportunities.

Set in motion by the company’s landmark September 2017 acquisition of Merck KGaA’s biosimilars business, Kabi’s biosimilars ambitions were given a greater shot in the arm by the company’s acquisition of a 55% stake in mAbxience, the Madrid-based biopharma unit, now run as a joint venture between Fresenius Kabi and Insud Pharma. A put/call option scheme for the remaining 45% has been put in place.

“Cost leadership is key – and being there, on the whole value chain, will be a competitive advantage long term, I am absolutely convinced,” underlines Schönhofen, a 32-year veteran with the Fresenius group, of which almost two decades has been spent with Fresenius Kabi.

“If you look back to the history of Kabi, I think you could see that we always believed that,” he says, pointing to the company’s vertical integration strategy for generics. “If you look to the whole value chain, major parts of the value chain should be covered by yourself.”

You Cannot Run As A One Trick Pony

Kabi’s ambitions to become “a significant player in this field,” backed by its vertically integrated business model alongside a collection of licensing deals, were made clear during a recent capital markets day, during which Kabi detailed its strategy for growth under the company’s ‘Vision 2026’ roadmap.

The Germany-originated firm 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. (Also see "Fresenius Kabi Reveals €800m Biopharma Ambitions By 2026" - Generics Bulletin, 14 Jun, 2023.)

“If I say that a significant amount of [Kabi’s overall growth ambitions], both bottom and top line, we assume should come from the biosimilars or from the wider biopharma world, it is easy to follow,” Schönhofen says.

Alongside Idacio, the firm offers its Stimufend (pegfilgrastim-fpgk) biosimilar to Amgen’s Neulasta pre-filled syringe in the US, albeit on a “small scale.” Meanwhile, back in development, Kabi is aiming to be first to market with the firm’s Tyenne (tocilizumab) proposed biosimilar to Roche’s Actemra/RoActemra.

“We applied for a registration but have not received the approval yet. The FDA had a couple of observations related to specific steps of our fill-and-finish drug product manufacturing process,” says Schönhofen. “We are working to address these points and get back to the FDA to obtain a timely approval. I think we are on a very good path here.”

Kabi has also made progress recently with its proposed biosimilar to Amgen’s Prolia/Xgeva (denosumab), while penning deals to bring on board commercial rights to proposed Stelara (ustekinumab) and MabThera/Rituxan (rituximab) biosimilars.

Of Kabi’s dual strategy, Schönhofen admits that “it’s clear that you cannot run as a one trick pony, because if this would be the case, how would you afford all those investments? So that means portfolio is an important play.”

Nevertheless, by owning the value chain for biosimilars like adalimumab, tocilizumab and denosumab, “you create a much better sustainability and much better reliability. And also, I think, bigger flexibility in case of needs, and that covers from early stage development to the different sales channels and marketing channels at the end with different market segments.”

mAbxience Deal Gave Three Strategic Advantages

Schönhofen continues on the importance of vertical integration, “I would apply the same rule here to our majority stake acquisition of mAbxience. We have gained actually three different things,” he notes, naming “a really world class drug substance manufacturing capability,” access to technology platforms as a contract development and manufacturing organization player “which even go beyond the monoclonal antibodies,” and a growing business-to-business model.

“I said that we like to own the whole value chain, but I think it would be pretty arrogant to say that we can do everything on our own and everywhere in the world,” Schönhofen admits.

“It probably would also overrun our capabilities, human resource wise, money wise. And so therefore, to also have a second business model, where you can out license molecules to other partners I think is a pretty, pretty nice additive play.”

What did Kabi envisage from its new capabilities? “Deals in both ways,” Schönhofen says.

“You will see launches in both ways. And you might even see that we launch a molecule here, in a business-to-consumer model on a captive Fresenius Kabi channel; and then the same molecule in another in another area in the world, or in another country, you would see in a B2B model.”

“We are trying to maximize the value of our investments in the most proper way. And we are dedicated to both channels, absolutely.”

“I think we did a pretty decent job as a wave two launcher – we are satisfied how we have grabbed market share.”

Kabi’s US launch of Idacio was preceded four years ago by its entry into European markets, around a year after other major biosimilar adalimumab sponsors.

“We knew at the time that we were not in the first wave of the launches,” Schönhofen observes, “although at this time, the whole IP settlement discussion was not that pronounced.”

“But at the end of the day, it turned out that the delta between the waves was shrinking exactly because of the IP settlement situation. But, nevertheless, we were in ‘wave two,’ and since then, we have launched the molecule in close to 40 countries in the world. And I think we did a pretty decent job as a wave two launcher – we are satisfied how we have grabbed market share.”

With “national tenders, local tender systems, promotion markets, it is quite a diverse picture” in Europe, Schönhofen says, presenting a unique set of opportunities and challenges. “Nevertheless, I think we have now a pretty decent position in a lot of markets. So that means Kabi really showed that we could enter this new segment.”

Moreover, the European biosimilars market “for sure is a little bit more settled. I mean, whenever you have a tender system, it is there. Maybe some rules are changing, maybe some criteria are changing, but the system as such is not changing anymore.”

US Market Will Evolve

On the other hand, Schönhofen predicts, “in the US I think we will see quite a lot. I mean, the big discussion at the moment is about the role of the pharmacy benefit manager,” pointing to bipartisan bills introduced by the Senate Finance Committee or pending before Congress, including one on transparency requirements or bans on spread pricing. (Also see "PBM Compensation 'Delinked' From List Price, Utilization In Medicare Part D Under Senate Bill" - Pink Sheet, 14 Jun, 2023.)

“I think we will see over the next months, maybe even years, still an evolvement of that market. And I think here to play successfully long term, one key element will also be that you need to be flexible and adaptive to your customer needs.”

Irrespective of the differences between the two markets, Schönhofen remains upbeat, having seen the extent to which traditional generics evolved to dominate the landscape in the last three decades.

“If we look to the competition in the biosimilar field, in some areas, not everywhere, probably in five to 10 years, we will have a similar picture there,” he predicts.

Much would hinge however on if “the medicines are standardized, if the key opinion leaders are convinced that the biosimilar is actually as good as an originator product, if the affordability is key, which I think it has to be,” Schönhofen comments.

“We have seen already in Europe that as soon as some of the price tickets have been somewhat lowered, the consumption of the drug is increased. More patients who need these drugs, get those drugs.”

Missing Out On National Formularies

For now, in the US, PBMs continue to enjoy a significant amount of sway over biosimilar sponsors’ ability to drive penetration and return investment to developers.

Alongside first-mover Amgen’s Amjevita (adalimumab-atto), major gains have been made for Sandoz’s Hyrimoz (adalimumab-adaz) along with Boehringer Ingelheim’s Cyltezo (adalimumab-adbm), the latter the only adalimumab biosimilar carrying a designation for interchangeability with Humira.

“So far, the selections – of Express Scripts as well as of OptumRx – have been pretty harmonized, I would say. So that means all the other competitors at the moment are in the same boat as us,” Schönhofen observes.

“But we are not there now to grab each and every opportunity. I mean, to assume that we can would be pretty silly. And I think we have a lot of plays to come – not only the national formularies, we have the regional formularies; we have different market access pathways, different health care plans. I think we are in good shape to address these.”

While it was of course “always good to be on the national formulary,” even that “doesn’t guarantee you that you really will make it, because a formulary position doesn’t mean that you make your business at the end of the day,” Schönhofen comments.

“You have to guarantee the pull through. And then I think of things like supply chain excellence, reliability, patient support programs, any kind of additional services you can do for your stakeholders, starting with the patient programs and then other services for specialty pharmacies, and so on and so on. I mean, there are a lot of things you have to have, and therefore, I think we will make our way.”

“I personally believe that the ‘two WAC’ strategy is important. I can tell you that you will have a second option available later this year as well.”

What then, of Kabi’s pricing strategy for adalimumab, given eye-catching headlines recently from the likes of Coherus BioSciences and Organon? (Also see "Coherus Plots ‘Lowest Price Adalimumab’ With Huge Discount, Ties Up With Mark Cuban" - Generics Bulletin, 1 Jun, 2023.)

“We are pricing Idacio like many others. So that means the wholesale acquisition cost is about 5% below the Humira price,” Schönhofen reveals.

“But if you now look at it for the price which ends up with the end consumer, this is far away from where it is,” he notes. “So, at the end of the day, the net selling price is what counts.” With “a lot of discounts, and also, the benefits to the different stakeholders and the rebates into the different pockets, that of course paints a completely different picture.”

Furthermore, Schönhofen discloses, “I personally believe that the ‘two WAC’ strategy is important,” like the one announced by Amgen when it launched Amjevita in January.

“I can tell you that you will have a second option available later this year as well. But at the end of the day, what is the ultimate solution? I think we will learn much later,” Schönhofen feels.

“And I think that we will still see a lot of changes, a lot of things happening, until we can speak about a saturated market, where everybody knows exactly how to play.”

No Golden Rule For Success

Summing up his thoughts on the state of the global biosimilars market, and Kabi’s existing place in it, Schönhofen posits: “We don’t believe that we can measure our success now on a month, on a quarter or, even on a year.”

“The markets for the molecule in biosimilars are flexible – some people might say volatile – in any case, it is fragmented. And I think there is not a golden rule, one where you can say one molecule is always the same as in all the markets in the world.”

Ticking off the challenges biosimilar sponsors were continuing to face down, Schönhofen names “competition, reimbursement, market access, a lot of things are playing a role there. And so therefore, I think you have to be aware that you have to play on a pretty broad part of the piano.”

“And basically, this is why we think that we have to offer the full range in terms of services. The portfolio play for us is important on the long-term view, long term horizon, with the vertical integration being key.”

“We have invested a significant amount of money into this business,” Schönhofen acknowledges. “And now of course, it’s time to harvest.”