Biosimilar Battlegrounds How originator companies face up to the biosimilar challenge A Scrip Webinar presented by Jessica Merrill and Eleanor Malone

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About the Presenters Jessica Merrill Eleanor Malone eleanor.malone@informa.com | @ScripEleanor Editor in Chief of Informa Pharma Insights Europe, overseeing Scrip, Pink Sheet, In Vivo and Generics Bulletin Jessica Merrill jessica.merrill@informa.com | @Jessicaemerrill US-based Senior Editor for Scrip, Pink Sheet, In Vivo

Overview Originator firms on the front line of biosimilar competition Key biologic brands facing competition Extent of exposure for key firms Defense tactics US biosimilars landscape European biosimilars landscape Q&A

Those On The Front Line Key Originator Companies with blockbuster biologicals whose market exclusivity has expired or will soon expire

Key Products Facing Biosimilar Competition 2017 Sales ($m) 2017 US Sales ($m) 2017 5EU Sales ($m) Humira 18,427 12,361 4,147 Mabthera/Rituxan 7,500 4,194 1,392 Remicade 7,152 4,525 1,281 Herceptin 7,120 2,738 1,975 Avastin 6,789 2,938 1,641 Enbrel 7,885 5,206 1,167 Lantus 5,155 2,813 629 Neulasta 4,534 3,931 503 Humalog 2,865 1,717 402 Epogen/Procrit 2,068 1,771 152 Aranesp 2,053 1,114 470 Neupogen 549 369 77 TOTAL 68,808 43,677 13,836

Extent of exposure for key firms Amgen Johnson & Johnson AbbVie Roche

Projected Sales 2025 (change from 2017)* Extent of Exposure: Amgen Product 2017 Sales (change from 2016) 2018 Sales YTD Projected Sales 2025 (change from 2017)* Biosimilars Enbrel (etanercept) $5,433m (-9%) $3,699m $2,772m (-49%) In US: Erelzi (Sandoz), launch delayed by patent case (Amgen claims 17 yrs of exclusivity from 2011). In EU: Benepali (Samsung Bioepis, approved 2016), Erelzi (Sandoz) Neulasta (pegfilgrastim) $4,534m (-2%) $3,306m $2,738m (-40%) Mylan launched Fulphila in US in July 2018. Coherus’ Udenyca just approved. Aranesp (darbepoetin alfa) $2,053m (-2%) $1,403m $1,243m (-39%) Epogen (epoetin alfa) $1,096m (-15%) $746m $341m (-69%) Retacrit (Pfizer) approved in US, May 2018, but not launched. First European biosimilar approved in 2007. Neupogen (filgrastim) $549m (-28%) $290m $344m (-37%) In US: Zarxio (Sandoz) and Nyvestym (Pfizer). In EU, biosimilar filgrastim has been marketed for some years. Total Product Sales $21,795m (0%) $17,517m $26.5bn (+22%) *Source: Datamonitor Healthcare

Extent Of Exposure: Amgen Enbrel, Neulasta, Neupogen, Epogen are all facing biosimilar competition Amgen is hedging by building its own portfolio of biosimilars, which is expected to be a key growth driver for the company in the coming years Defending its brands with price concessions and where possible, lifecycle management strategies, like Neulasta Onpro.

Evolution of Sales To 2025 ($m) Amgen Biosimilar Risk vs Portfolio Growth Evolution of Sales To 2025 ($m)

Projected Sales 2025 (change from 2017)* Extent of Exposure: Johnson & Johnson Product 2017 Sales (change from 2016) 2018 Sales YTD Projected Sales 2025 (change from 2017)* Biosimilars Remicade (infliximab) $6,315m (-9.3%) $4,088m $3,648m (-42%) Inflectra (Pfizer/Celltrion) and Renflexis (Merck/Samsung Bioepis) in US. Inflectra/Remsima, Flixabi (Samsung Bioepis), Zessly (Sandoz) in EU. Procrit (epoetin alfa) $972m (-12%) $767m $313m (-68%) Stelara (ustekinumab) $4,011m $3,712m $4,624m (+15%) Expected in 2023/24 in US/EU Total Pharma Product Sales $36,256m (+8%) $30,544m $44.8bn *Source: Datamonitor Healthcare

Projected Sales 2025 (change from 2017)* Extent of Exposure: AbbVie Product 2017 Sales (change from 2016) 2018 Sales YTD Projected Sales 2025 (change from 2017)* Biosimilars Humira (adalimumab) 18,427 $15,018 (+10.3%) 14,930 Multiple biosimilars were launched in the EU in October 2018. Several firms have settlement agreements allowing launch of biosimilars in the US in 2023. Total Pharma Sales 28,216 $24,428 (+19.5%) 47,646 *Source: Datamonitor Healthcare

Extent of Exposure: Roche Product 2017 Sales ($m) (change from 2016) 2018 Sales YTD Projected Sales 2025 (change from 2017)* Biosimilars Avastin (bevacizumab) 6,789 (-2%) 5,090 (+2%) 2,761 (-59%) US expected in 2019: Mvasi (Amgen). EU expected 2022. Herceptin (trastuzumab) 7,120 (+3%) 5,288 (+2%) 3,078 (-57%) US expected 2019 with multiple entrants. EU launched March 2018: Ontruzant (Samsung Bioepis). Rituxan/Mabthera (rituximab) 7,500 (-1%) 5,092 (-9%) 2,805 (-63%) Already launched in EU (Truxima: Mundipharma/ Celltrion launched 2017). Expected in US in 2019 after delays. Total Pharma Product Sales 41,843 (+5%) 32,584 (+7%) 47,445 (+13%) *Source: Datamonitor Healthcare

Defense Tactics What can originator firms do to protect their top and bottom lines?

The Patent Thicket

Defense Tactics - Bundling, Rebates

Defense Tactics: Life Cycle Management Image source: Amgen Neulasta Onpro promotional website Defense Tactics: Life Cycle Management

Defense Tactics If you can’t beat ‘em, join ‘em – part 1

* When they go low, you go lower Defense Tactics If you can’t beat ‘em, join ‘em - part 2: * When they go low, you go lower

Defense Tactics: Weaponize Patients DTC campaigns in US Europe less susceptible as no DTC advertising

Defense Tactics - Innovate Optimise your R&D pipeline to replace expiring products Next-generation product development New technologies Partnerships

Defense Tactics Round-up Grow a Patent Thicket Tie in customers with discounts, bundles, rebates Life cycle management Make/sell biosimilars Compete on price Target patients INNOVATE!!

US and Europe

US and Europe: Two Very Different Biosimilar Markets Around 50 biosimilars launched for drugs including: Sanofi's Lantus (insulin glargine) Amgen's Epogen (epoetin alfa) Amgen/Pfizer's Enbrel (etanercept) Amgen's Neupogen (filgrastim) Amgen's Neulasta (pegfilgrastim) Johnson & Johnson/Merck's Remicade (infliximab) Roche's Rituxan (rituximab) Roche's Herceptin (trastuzumab) AbbVie's Humira (adalimumab) Sandoz Zarxio (filgrastim)/ Amgen's Neupogen Pfizer Inflectra (infliximab)/ J&J's Remicade Merck Renflexis (infliximab)/ Mylan Fulphila(pegfilgrastim)/ Amgen's Neulasta Pfizer Nyvestym (filgrastim)/ ~50 biosimilars launched in Europe and 5 launched in the US

US Biosimilar Landscape

US Payers Expect To See Biosimilars Usurp Biologics US and Europe: Two Very Different Biosimilar Markets Payer Strategy US Payers Expect To See Biosimilars Usurp Biologics Pharmacy Benefit Managers Able & Prepared To Switch Patients to Biosimilars ”While they may not be interchangeable, biosimilars will be delivered to patients who today are on the branded product” ”Biosimilars are being included as a component of our 2017 standard formulary strategy replacing higher-costs drugs” Timothy C Wentworth, CEO, Express Scripts Holding Co 2017 JP Morgan Healthcare Conference David M Denton, CFO & EVP, CVS Health Corp Company Analyst Day, 15 December, 2016

In The US, Mixed Biosimilar Success In the US, biosimilar uptake has remained limited, but varies by category and is impacted by category-specific issues and general challenges like multiple payers, rebates, lack of interchangeability and physician/patient education. Branded Remicade holds onto 93% share of infliximab market two years post biosimilar entry -chronic medication, which leaves biosimilar market to new scripts -J&J defensive contracting has blocked biosimilar infliximab from the market -Pfizer lawsuit against J&J could impact contracting for biosimilars Branded Neupogen only holds 37% share of filgrastim market three years post biosimilar entry -acute treatment, so a steady flow of new patients -administered in a cancer care setting in which patients often don’t know what brand they are receiving

A category in need of cheaper options Insulin: A category in need of cheaper options Sanofi’s Lantus (insulin glargine) has been facing competition in the US from Eli Lilly/Boehringer’s Basaglar since 2015. Sales of Lantus fell 19% in the first 9 months of 2018 to €2.7bn, with some of the decline offset by Sanofi’s newer glargine formula Toujeo. In the US, Basaglar has performed well, though it was not approved as a biosimilar under US regulatory guidelines, but rather a complex small molecule. Basaglar generated $569m in the first nine months. But the market could be restricted to just two products for now. Merck said it won’t launch its insulin glargine version, Lusdana.

Is Enthusiasm For Biosimilars Diminishing in the US? Lackluster uptake of some early biosimilars is raising concerns drug developers might hit the pause on biosimilar development if momentum doesn't pick up. -Mylan, early to biosimilars development, announced it is exploring strategic alternatives in August. Slow uptake of complex generics like Copaxone and biosimilars has been one challenge. -Momenta said it is exiting biosimilar development to focus on novel drug development in October, pointing to the slow path to value creation and uncertainty in the market. -Merck, in October, said it will not commercialize biosimilar version of Sanofi's insulin Lantus, after market assessment. Merck said it remains committed to biosimilars, however. -Sandoz has abandoned its rituximab biosimilar in the US after the FDA called for another pivotal study. -CRLS for biosimilars approved in Europe and elsewhere.

Payers Sound the Alarm in US "If [the US market is] not able to produce movement … to the biosimilars and generate a return for those manufacturers that have gone down this biosimilar pathway and invested in those molecules I think they will just realize over time that they have to close up shop and move on. America would have missed a very significant opportunity." Kaiser Permanente's national pharmaceutical contracting leader Ambrose Carrejo, 2017

Biosimilar Market: commentary on outlook "Do they want to continue to benefit from monopoly rents today, or help generate a vibrant biosimilar market that can help reset biologic pricing – and drug pricing more generally – through competition. These are binary choices. You can't have your cake – or in this case, your rebates – and a vibrant market for biosimilar competition too." Scott Gottlieb speaking to US insurers at America's Health Insurance Plans (AHIP) National Health Policy Conference, March 2018

Signs of Life Tony Hooper “Some of our competitors and public officials have made statements that the US biosimilar market is not working. We have a different point of view … The fact that a biosimilar now holds the majority share of [filgrastim] segment less than three years post-launch proves that biosimilars can find a meaningful place in the US market just as they have in Europe." Tony Hooper Amgen Former Exec VP-Global Commercial Operations

Give it time… “We’re still in the infancy in the US” – Chrys Kokino, head of biologics for North America at Mylan “If we look at what’s happened in Europe, what’s happened in other regulated markets, it’s a really bright future for the US.” – Mike Woolcock, senior VP at Apobiologix “It’s an exciting time for biosimilars in the US today.” – Gary Deeb, senior VP global licensing and business development, Lupin Ltd.

Next up: Neulasta the next bellwether for US biosimilar uptake Mylan launched Fulphila in July Mylan priced aggressively lower versus the brand, a WAC of $4,175 per syringe, 33% discount to Neulasta WAC Acute treatment administered in cancer care setting could result in more encouraging uptake Still early days

European Biosimilar Landscape

More Products, Longer History >50 launched biosimilars Multiple molecules and competing products Diversity of market type across Europe

Europe: Varied, But Tougher To Defend

Prospects For Originator Firms In Europe Compete on price to share the market Play to strengths in other areas: Education and support Logistics and inventory management Delivery device and administration mode Environmental impact of production Focus on use of savings from biosimilars

A Turning Point For Humira The first adalimumab biosimilars launched in Europe in October, all competing for a piece of AbbVie's $4.4bn in European revenues It's the first time four biosimilars have launched at the same time, including Sandoz' Hyrimoz, Samsung Bioepsis/Biogen's Imraldi, Amgen's Amgevita and Mylan/Fujifilm Kyowa Kirin's Hulio and more on the way in 2019. How will AbbVie defend its brand? Early signs suggest the company will be competing on price. AbbVie has won one undisclosed tender for an 80% discount off the price of Humira

Eventually… Biosimilars will take their place, even in the US, though it will be driven by European markets. Some at the starting line may not stay the course, but big pharma’s presence in biosimilars could bring credibility to the market. The speed and magnitude of price and market share erosion may be less painful for originators than some originally thought. But eventually, biosimilar uptake is needed if global health care systems are going to be able to afford pharma’s next wave of innovative launches.

Questions?

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