Financial evaluation of value-creating biosimilar development candidates: a business case study of low-, medium- and high-sales biosimilars

ABSTRACT

Background

Selection of a biosimilar development candidate requires detailed and careful analysis to ensure value creation.

Research design and methods

We applied the net present value (NPV) model for financial evaluation of biosimilar development candidates for the global market. Biosimilar development candidates from three categories were identified based on the global sales of their respective original biological products (OBPs): >$1 and ≤$4 billion, >$4 and ≤$7 billion and >$7 and ≤$10 billion. The standard NPV and risk-adjusted NPV (rNPV) were calculated under the base-case and various scenarios related to development costs, sales, selling, general and administrative expense, cost of goods sold, and discount rates.

Results

A biosimilar to an OBP with sales of $1.6 billion has some financial risk. Biosimilars to OBPs with sales of $5.5 billion and $9.4 billion have very less financial risk under the base-case scenario of analysis. Sales of an OBP had impact on the financial valuation and attractiveness of a biosimilar. Sensitivity of rNPV to different parameters varied for three biosimilars. Discount rates, sales and development costs were important parameters affecting financial valuation of biosimilars.

Conclusion

Biosimilar development candidate selection requires a thorough financial evaluation considering product-, company- and market-specific aspects.

KEYWORDS:

• Biosimilar
• financial evaluation
• net present value
• portfolio
• sensitivity analysis
• value

Author contributions

R Patel conceptualized the work, collected the data, developed the NPV model, and analyzed the results. T Nuwal reviewed the data and results. Both authors participated in the preparation and review of this manuscript. Both authors reviewed and approved the final manuscript.

Declaration of interest

R Patel and T Nuwal are employees of Intas Pharmaceuticals Ltd., which is involved in development, manufacturing, and marketing of biosimilar products. The work presented in this article was non-sponsored and independent analysis of authors. The authors have no other relevant affiliations or financial involvement with any organization or entity with a financial interest in or financial conflict with the subject matter or materials discussed in the manuscript apart from those disclosed.

Reviewer disclosures

Peer reviewers on this manuscript have no relevant financial or other relationships to disclose.

Supplementary material

Supplemental data for this article can be accessed online at https://doi.org/10.1080/14737167.2022.2072830

Additional information

Funding

This paper was not funded.