Pfizer's $160 billion deal to acquire Irish drugmaker Allergan got a lot of attention for the tax advantages Pfizer would enjoy from moving its New Jersey headquarters overseas to Dublin.
There wasn't much talk, though, about how much the deal would expand Pfizer's footprint in biosimilars, a burgeoning business in which the company has already made significant inroads with its $15 billion acquisition of Hospira in September.
As the field of competitors begins to narrow, a handful of companies will gain significant leverage to set higher prices on biosimilars, medicines that some experts say could help save more than $40 billion in drug costs over the next decade as the cheaper alternative to biologics.
Pfizer itself has at least five products in Phase 3 clinical trials. They include versions of AbbVie's blockbuster Humira, Johnson & Johnson's Remicade, and Genentech's big sellers Avastin, Herceptin and Rituxan. Hospira had been developing versions of those same drugs as part of a collaborative agreement with Celltrion, causing Pfizer to divest some of those products to avoid an antitrust challenge from the Federal Trade Commission.
Still, the company gained a number of other biosimilars by acquiring Hospira, including versions of Amgen's cancer drugs Epogen and Neupogen, as well as Genentech's injectable diabetes medication Lucentis.
Allergan, meanwhile, is collaborating with Amgen to develop four oncology biosimilars, including versions of Avastin, Herceptin and Rituxan.
An Amgen spokeswoman said the agreement with Allergan provides “protections” that would allow Amgen to retain the rights to those products. But the Pfizer-Allergan deal is likely to alter the timing of the projects, according to Tim Gamble, an analyst at Datamonitor Healthcare, a pharmaceutical industry research firm.
“Pfizer is currently competing with Amgen to lead the biosimilars category, and Allergan is in partnership with Amgen to develop several biosimilar oncological products,” Gamble said. “By targeting Amgen's partner for acquisition, Pfizer would disrupt their pre-launch commercial activities.”
The moves are allowing Pfizer to roll up a significant share of a market that some analysts estimate will be worth more than $20 billion by 2020.