If Pfizer's Right, Hospira Biosimilar Gold Rush Begins

Hospira (HSP), the injectable generic drug maker Pfizer (PFE) is buying for $90 a share, is making its biggest foray yet into the business of cheaper “generic” biologic drugs this week, launching the biosimilar to the pricey autoimmune drug Remicade in Europe.

Hospira will begin selling Inflectra, also known as infliximab, as a treatment for rheumatoid arthritis, Crohn’s disease and other autoimmune disorders in Germany, France, Spain and Italy, markets where Merck (MRK) tallied sales valued at more than $2 billion globally in 2013. Johnson & Johnson (JNJ) sells Remicade in the U.S. where it costs more than $20,000 a year per patient.

But U.S. regulations under the Affordable Care Act are changing so drugs derived from biotechnology such as autoimmune brands like Remicade, Humira and Enbrel have cheaper competition. Unlike the U.S., Europe has had regulations to approve biosimilars. In the U.S., however, biologic drugs in equivalent forms have been unavailable because they were not part of the landmark 1984 Hatch-Waxman law, which cleared a regulatory path for cheaper generic copies of prescriptions derived from chemicals. The Affordable Care Act changed that.

How Hospira’s biosimilar version of Remicade does in Europe will be a barometer of how it does in the U.S. where a Food and Drug Administration regulatory panel in March will decide whether to recommend it be approved here.

Hospira isn’t disclosing a price, but analysts expect it could be 20 to 30 percent cheaper than brand Remicade and still be a multi-billion dollar product, eating into other autoimmune brand sales. Remicade was the world’s No. 8 top-selling drug in 2013 with rival  Enbrel, sold by Amgen (AMGN) and Humira, sold by Abbvie (ABBV), reaping $7.9 billion and $9.8 billion in sales, respectively. “With more and more people living with chronic inflammatory diseases like rheumatoid arthritis, we need to find more cost-effective treatment solutions without compromising on quality, safety or efficacy,” said Joseph Smolen, rheumotology department chair at Medical University of Vienna in a statement provided by Hospira.

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