Samsung Releases Arthritis Drug in First Foray Into U.S. Pharmaceuticals

By Timothy W. Martin and Jonathan D. Rockoff 

Americans suffering from arthritis can now find relief from an unexpected new player in the pharmaceuticals market.

South Korea's Samsung conglomerate, best known for its smartphones and televisions, will make available on Monday in the U.S. its lower-price copy of Johnson & Johnson's blockbuster rheumatoid-arthritis drug Remicade, the second such alternative on the market. The Samsung-developed drug will be marketed to health-care providers by Merck & Co.'s U.S. sales team and will be sold for about a 35% discount off Remicade's current list price.

The move follows an April approval by the Food and Drug Administration. It is the Samsung business empire's debut treatment in the world's biggest drug market and reflects its desires to diversify beyond electronics.

Samsung Bioepis Co., the group's new biotechnology company, is targeting the creation of near replicas of so-called branded biologic drugs, like Remicade, which are made out of living cells and address complex diseases including cancer or arthritis. These "biosimilars" are sold more cheaply than brand-name treatments that often cost tens of thousands of dollars a year.

The lucrative biologic drug market will gradually open up as patent protections of those treatments expire, creating opportunities for biosimilars made by Samsung and others. Biologics had $202 billion in world-wide sales last year, and the drugs are expected to have $214 billion in sales this year, according to EvaluatePharma, a source of pharmaceutical market data and analysis. It estimates sales will reach $276 billion in 2020.

Samsung said in a statement its new drug, called Renflexis, would be priced at about $750 per vial.

Pfizer Inc. and partner Celltrion Inc. launched their own Remicade near-replica in November, selling it then at 15% below J&J's list price. But J&J has said patients pay a significantly lower price for Remicade after discounts.

What remains unclear is to what extent U.S. doctors and patients will embrace these new types of medication amid concerns about the safety and efficacy of biosimilars.

But adoption across Europe, where biosimilars have been available for years, has "drastically" improved, while perceptions are getting better among U.S. health-care providers, said Klaus Falk, a Samsung Bioepis vice president who heads commercial strategy, in an email.

"I am convinced that the good experiences we've seen in Europe will be repeated in the U.S.," Mr. Falk said. "That said, there is still a way to go in educating the relevant stakeholders about the science behind biosimilars."

A vial of J&J's Remicade listed for more than $1,100 in November of last year, with a year's treatment typically listed then at around $29,000. It is among the top-selling drugs in the U.S., with $4.5 billion in sales last year.

Adoption of the Pfizer-Celltrion copy of Remicade -- called Inflectra -- has been limited. Pfizer reported the biosimilar generated just $17 million of U.S. sales in the first quarter. In its second quarter earnings call last week, J&J CFO Dominic Caruso described the impact of biosimilar competition on Remicade sales as less than J&J expected. Pfizer declined to comment.

Samsung, whose biotechnology push is five years old, has muscled into the drug world on an unusually fast timeline, industry analysts say. Its association with South Korea's largest conglomerate gives the Bioepis unit deep pockets to invest heavily in research and development, as well as the ability to price aggressively.

Pfizer has offered just small Inflectra discounts so far, opting not to lower prices to spur sales, according to Sanford C. Bernstein & Co. analyst Ronny Gal.

Mr. Gal said Merck and Samsung would probably have to discount Renflexis even further, during contract talks with health plans, if the biosimilar was going to succeed in getting Remicade patients to switch over. J&J is already heavily discounting off Remicade's list price.

J&J has acted forcefully to protect its franchise by, for instance, negotiating exclusive contracts with the managed-care organizations that pay for the drug and giving rebates on other company products to hospitals that keep using Remicade, according to Mr. Gal.

Samsung sells two of its drugs already in Europe. Last month, a third received a positive opinion from the European Medicines Agency. A fourth drug, for treating breast cancer, was submitted for regulatory approval in Europe last year.

Write to Timothy W. Martin at [e-mail] and Jonathan D. Rockoff at [e-mail]

(END) Dow Jones Newswires

July 24, 2017 11:29 ET (15:29 GMT)

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