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BioRationality: A Calculated View on the Future of Biosimilars


Sarfaraz K. Niazi, PhD, recapped his answers to a recent interview where he discussed his predictions on the future of the biosimilar industry in the United States.

I was recently interviewed by a prominent market research company. I was asked about the impact of the Inflation Reduction Act (IRA) as well as the removal of interchangeability designations for biosimilars and phase 3 comparative clinical studies, the expansion of biosimilars entrants and market over the next decade. So, here is my composite analysis:

  • The IRA allows CMS to reduce the price of innovator biologics that had market exclusivity for 12 years with no biosimilars competition. Big pharma benefits by either not have biosimilar competition or having competition in a system that doesn’t allow for automatic substitution. I foresee a deluge of new companies entering with multiple biosimilars out of over 200 candidates—the current list of innovators facing biosimilar competition has only 12 molecules. Biologic drugs may not qualify for a price reduction if others have a much higher volume, as is the case now.
  • The removal of interchangeable status is imminent, based on scientific understanding.1 It is hard enough to demonstrate clinical equivalence in the first round of biosimilar testing due to lack of statistical strength, let alone when the same study is now repeated in three switching and alternating. I anticipate this change to happen within 12 months, and this will remove the perception of 2 classes of biosimilars, bring higher confidence in biosimilars, and allow smaller developers to compete with larger companies.
  • Removal of phase 3 clinical studies—placebo-controlled efficacy studies in patients—is forthcoming for the remaining products that do not have pharmacodynamic (PD) biomarkers such as monoclonal antibodies. The FDA is working diligently to identify newer PD markers, but I believe that this exercise may not be necessary. An orthogonal choice is already available for testing receptor binding.2 I do not foresee FDA making a blanket statement; it will come down to developers presenting an argument to FDA for not testing on patients. But viewed correctly, this option is available now to developers. When the perception settles, the development cost will reduce by more than 70%, bringing in dozens of new players. The prices will plunge by 70% to 80%.
  • Regarding the price impact for biologic drugs, I suspect the highest prices will see the most significant percentage decline—possibly an 80% reduction in some cases. In countries where socialized medicine allows tender purchases, the impact will be uncertain because the suppliers act very differently. It will, however, be significant.
  • Fully integrated biosimilar companies will expand their portfolio by outsourcing, so it’s the new entrants who will not want to establish research, development, and commercial supply in-house. Mid-range companies will add more research units to expand their portfolio and add commercial manufacturing or contract manufacturing organizations; the latter possibility is a long-term benefit. The startups will rely entirely on contract development and manufacturing organizations for development and supply. After licensing, the manufacturing can be shifted to in-house under ICHQ5E, which is a much better return on investment, reducing the risk of capital investment before having a sellable product.
  • The competition with biosimilars and other pharmaceuticals will intensify, and big pharma will lose because their cost of goods can never compare with smaller companies. The role of big pharma was vital when the development cost was high. Once it drops, that advantage will go away. In 10 years, I predict that all biosimilars will be supplied by pure-play smaller biosimilar companies.
  • The timeline of these events has also shrunk, with the FDA already allowing waiver of efficacy testing in patients for many molecules, and, hopefully, will extend to all molecules by the end of this year. However, most mid-size and pure-play companies are still hesitant, but this will change once the FDA makes its guidelines more conducive to low-cost development. I foresee much happening within the next 2 years.
  • The final question asked was, “Why do I have such confidence in my predictions.” I told very simply, “Read history. I am not Nostradamus, my thoughts are not random.”


  1. Niazi SK. No two classes of biosimilars: Urgent advice to the US Congress and the FDA. J Clin Pharm Ther. 2022;47(9):1352-1361. doi:10.1111/jcpt.13743
  2. Niazi S. Scientific rationale for waiving clinical efficacy testing of biosimilars. Drug Des Devel Ther. 2022;16:2803-2815. doi:10.2147/DDDT.S378813
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