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Investor Insights - Issue 2

June 14, 2012

Investor Perspective: Biosimilars and Sandoz

With the recent US Food and Drug Administration (FDA) hearing held on May 11, 2012 in Washington, DC, biosimilars are back in the news – and with good reason. The significant market opportunities that exist with biosimilars have been discussed for some time now. A look at some compelling pharmaceutical industry trends tells us why.

Based on the growing market for biologics, the biosimilars opportunity is clear. Novartis is focused on addressing unmet medical needs in all patient segments. Thus, we create novel biologics as well as biosimilars to improve patient access both to critical novel medicines and to well-established drugs. Development and commercialization of biosimilars are actually expected to ensure that true competition for all biologics will lead to increased innovation. Sandoz is already the world leader in developing, manufacturing and commercializing biosimilars, and is well-positioned to capture the near- and long-term opportunities from biosimilars for Novartis investors:

Development expertise

  • Pioneer – developing biosimilars since 1996
  • 8-10 molecules in development, including monoclonal antibodies (mAbs) with multiple clinical trials ongoing (e.g. rituximab)
  • Novartis therapeutic area expertise in pharmaceutical clinical development – especially in Oncology (collaboration underway on various clinical trials between our Sandoz Division and our Pharmaceuticals Division’s Oncology Business Unit)

Manufacturing experience

  • Producing recombinant proteins in the EU since 1980
  • Industry-leading capabilities across Novartis: microbial, cell culture & fill/finish
  • Share manufacturing expertise, capacity and talent across Novartis Group

Commercial experience

  • Market leader with around 50% of the global biosimilar market (includes all biosimilars approved in the highly regulated markets of Europe, US, Canada, Japan and Australia)
  • Broad global presence with strong marketing & sales capability (marketing biosimilars in ~50 countries)
  • Continue to occupy #1 biosimilar position across all three marketed products (Omnitrope®, Binocrit®/ outside the US and Zarzio®/outside the US)
  • Unparalleled market experience with over 50 million patient exposure days for the three marketed Sandoz products
  • Ability to leverage Novartis Group experience and capabilities in public affairs, market access and commercial operations in countries where Sandoz does not have a strong presence

Biologic Sales are expected to be ~USD 130 bn in 2012 and expected to grow to ~USD 170 bn by 2017enlarge

By 2017, ~USD 70bn in originator sales are losing patent exclusivityenlarge

The US, Eu and RoW countries represent major market opportunities for biosimilarsenlarge

Longer-term, Sandoz has a strong biosimilars pipeline:

  • Zarzio® (filgrastim) US – Phase III
  • LA-EP2006 (pegfilgrastim) – Phase III
  • GP2013 (rituximab) – Phase II in rheumatoid arthritis and Phase III in oncology
  • Several other non-disclosed molecules in pre- and clinical development

Of course, how significant the opportunity for biosimilars ultimately becomes will largely be driven by the regulatory pathways in key countries. Here is a brief synopsis of the current status of biosimilars in the EU, US and Japan:


EMA continues to demonstrate worldwide leadership in biosimilar regulations by applying science in a risk-based manner that safeguards patient safety without compromising patient access to these important therapies. EMA has had an established pathway in place since 2004 that has led to the approval of 14 biosimilars.

We welcome the EMA concept paper on revisions to their guidance related to the quality requirements of biosimilars. The latest EMA guidelines are based on sound scientific principles which rely on their past experience in regulating all biologics, including evaluation of manufacturing changes.

Additionally, EMA is close to pioneering guidelines regarding development of biosimilar monoclonal antibodies (mAbs).


Overall, the US FDA draft guidelines provide sufficient flexibility to allow for a science-based approach to develop bioimilars. Sandoz supports the following key elements of the draft guidelines:

  • The proposed step-wise approach (in-line with Sandoz’s own Biosimilar Concept) and the use of physicochemical and biological data to develop a molecule with overlapping characteristics to the originator (termed “highly similar”)
  • Comparative PK/PD data may be sufficient to establish biosimilar efficacy under certain conditions
  • Extrapolation across indications that share Mechanism of Action is possible
  • The potential use of a non-US comparator product is possible (if appropriate bridging data is submitted) and this fosters global development
  • Interchangeability or substitution may be possible

Sandoz views the following as key challenges in the draft FDA biosimilars guidelines that will need to be addressed:

  • A possibly complex clinical development path with immunogenicity and dose response studies
  • The requirement to address pediatric studies for non-interchangeable biosimilar products; thus potentially
  • lengthening and adding an additional hurdle to the development process
  • Guidance related to interchangeability is virtually absent in the draft guidelines

Mark McCamish, Head of Sandoz Global Biopharmaceutical Development, presented the Novartis/Sandoz position on biosimilars at the recently held FDA public hearing on biosimilars held in May 2012.
Dr. McCamish identified his key takeaways from the meeting as:

  • FDA is engaged and listening to multiple stakeholders which is very helpful
  • The flexibility expressed in the draft guidance should be incorporated in the final guidance documents
  • Topics outside of the guidance documents were discussed and may be critical to commercial success of biosimilars. This includes naming of biosimilars wherein some are suggesting creating an entirely new naming convention that could be confusing to physicians, payors, and patients. Novartis supports the same, universal naming convention using a unique brand name and the same international non-proprietary name (INN) as the originator.


Japan established its biosimilar pathway in March 2009. It is very similar to the EU pathway in that they require a thorough comparability exercise to prove similarity to the reference product. However, Japan requires that the comparability exercise be performed with reference product sourced in Japan. They do accept clinical data with foreign-sourced product provided:
a) Analytical data exists to prove similarity to the Japanese reference product
b) There is a bridging study (Phase I) done in the Japanese population
To date, Sandoz’s Omnitrope® and one epoetin-alfa product are the only biosimilars approved in Japan.

Sandoz well positioned to capture future opportunities from biosimilars

Biologic drugs have revolutionized modern medicine and are expected to continue to do so, but patient access is increasingly limited by high costs and growing demand. High-quality, clinically-proven biosimilars, pioneered by Sandoz, are making biologics more affordable. Sandoz continues to collaborate with governments, payors and health care professionals to maximize access and benefits for patients.

Sandoz has the portfolio, capabilities, investment, and commitment necessary to sustain its market leadership in this fast-growing segment of the industry.

Sandoz biosimilars continue to gain market shareenlarge

Sandoz biosimilars net sales grew with a ~50% CAGR from 2008 to 2011enlarge


This presentation contains forward-looking statements that can be identified by terminology such as “potential,” “expected,” “will,” “planned,” or similar expressions, or by express or implied discussions regarding potential new products, or potential new indications or labeling for existing products; regarding potential future revenues from any Novartis Group products or potential products; regarding potential future sales or earnings of the Group or any of its divisions; or by discussions of strategy, plans, expectations or intentions. You should not place undue reliance on these statements. Such forward-looking statements reflect the current views of the Group regarding future events, and involve known and unknown risks, uncertainties and other factors that may cause actual results to be materially different from any future results, performance or achievements expressed or implied by such statements. There can be no guarantee that any new products will be approved for sale in any market, or that any new indications or labeling will be approved for any existing products in any market, or that any approvals which are obtained will be obtained at any particular time, or that any Group products will achieve any particular revenue levels. Nor can there be any guarantee that the Group, or any of its divisions, will achieve any particular financial results. In particular, management’s expectations could be affected by, among other things, unexpected regulatory actions or delays or government regulation generally; unexpected clinical trial results, including additional analyses of existing clinical data or unexpected new clinical data; the Group’s ability to obtain or maintain patent or other proprietary intellectual property protection, including the ultimate extent of the impact on the Group of the loss of patent protection on key products which commenced last year and will continue this year; unexpected product manufacturing issues, including the potential outcomes of the Warning Letter issued to us with respect to three Sandoz manufacturing facilities, and the potential outcome of the suspension of production at the Consumer Health manufacturing facility at Lincoln, Nebraska; government, industry, and general public pricing pressures; uncertainties regarding actual or potential legal proceedings, including, among others, actual or potential product liability litigation, litigation and investigations regarding sales and marketing practices, shareholder litigation, government investigations and intellectual property disputes; competition in general; uncertainties regarding the after-effects of the recent global financial and economic crisis; uncertainties regarding future global exchange rates; uncertainties regarding future demand for our products; uncertainties involved in the development of new healthcare products; the impact that the foregoing factors could have on the values attributed to the Group’s assets and liabilities as recorded in the Group’s consolidated balance sheet; and other risks and factors referred to in Novartis AG’s current Form 20-F on file with the US Securities and Exchange Commission. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described herein as anticipated, believed, estimated or expected. Novartis is providing the information in this presentation as of this date and does not undertake any obligation to update any forward-looking statements as a result of new information, future events or otherwise.

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