Turkey’s Nascent Biopharma Sector: The Transition to Large Molecules

May 15, 2020

Image courtesy of Florabio

Representing 17% of the total prescriptions share in Turkey, the biopharma sector grew by 30% in 2018 to reach US$859 million. More impressively, the biosimilars market rose by 42.2% in the same year to a total value of US$47.5 million. However, the 250 biologics and 83 biosimilars currently on the Turkish market are mostly imported products, putting a significant burden on the healthcare budget.

Although the localization instrument may prove useful in obliging local production for chemical drugs, this is not a practical option for biopharma. International biotech companies would be unable and unwilling to make the transfer of sophisticated technology to Turkey. As such, the best alternative left for the government is to incentivize the creation of a local biopharma sector. Despite the heavy task at hand, Turkey puts its faith in its potential: “We believe the biopharma industry will be among the first three to strengthen the country’s economic power,” said Professor Berrin Erdag, chief senior researcher of state agency Tübitak.

The first isolated attempts at developing biopharmaceuticals took place in the early 2000s. However, systematic efforts and the de facto birth of the industry began in 2013, when the government made substantial funds available for this sector. Organizations like Tübitak, The Scientific and Technological Research Council of Turkey, and Tüseb, Turkey’s Health Institute became prominent actors in facilitating grants to the sector for both early and later-phase development, including clinical studies. Nobel, Atabay, Deva and Ilko were the first recipients of non-refundable money granted to encourage the first steps in building biotech capabilities and other companies followed suit. Centurion made a US$37 million investment in 2015 to build a biotech plant for the development of biosimilars in Ankara.

The foundation of Turkish biotech differs greatly from other countries. A young industry worldwide, biotech is typically made of young SMEs stemming out of campus-based research labs. By contrast, the Turkish biopharma component is not an endogenous new segment, but an additional component grown by the existing pharma businesses. The chemical pharmaceutical companies that accepted to grow these new legs were incentivised by both the funding put at their disposal, as much as by upcoming limitations in chemical drug production.  As fewer original chemical drugs are expected to lose patent in coming years, the biopharma segment counteracts with considerable opportunities. Prof Berrin Erdag, at Tübitak Mam Generic Engineering and Biotech Institute (GEBI), believes 30 out of the 50 best-selling molecules will be biopharmaceuticals.

Some pharma companies have been quick to jump on the opportunity, replicating the power structures they established in the traditional pharma industry. A market leader in traditional pharma, Abdi Ibrahim proportionately invested in a large biotech drug facility, AbdiBio, in 2010: “Biologicals will shape the future of the pharma industry, and I believe companies should be investing so that they are not left behind,” urged Süha Taşpolatoğlu, Abdi’s CEO.

Whether Turkey’s investment in biopharma is too hasty or not fast enough is a matter of debate. Professor Tanıl Kocagöz of Acibadem University believes Turkey has awoken to the importance of biopharma very late, but there is still a chance to catch up. Creating a biopharmaceuticals ecosystem is a lengthy process; while building a manufacturing site may take as little as 18 months, the development of a biosimilar molecule is a much longer commitment, stretching over years. Süha Taşpolatoğlu provides insight into this timeline: Abdi Ibrahim, employing more than 4,500 people worldwide, expects to have its first fill and finish product ready in 2021 and the first biosimilar in 2027. Going as far as developing original molecules is a dream so far not thought of.

Five years ago, there were more than 19 companies making investments in biotech and today, 39 projects, including one biobetter, are bustling in the pipeline and expected to launch by 2024. While some have jumped headfirst into the promising sector, other players have taken a more conservative stance. Philipp Haas, chairman of Deva, one of the first recipients of funding for biotech, is more cautious about the future: “Biopharma is a challenging arena that one cannot rush into,” he explained.

Even if the government has kick-started construction of facilities, many of the players with hopes in biotech have a long path ahead before their investments bear fruit. At this point, there are few Turkish biomolecules on the market.  Turgut İlaç, the recipient of the largest governmental grant in biotech, is to market its first biosimilar in 2021. From there, the company hopes to follow with another launch yearly. However, many of the starters in biotech have still not launched any products. Large parts of the sector have resorted to importing biosimilars or conducting fill-and-finish services.

Milestones in the distribution sector of biopharma should not be undervalued though; for the first time in Turkey, local start-up TR Pharm managed to receive the first non-EU and non-U.S. marketing authorization for cancer drug Reditux of the Indian company Dr. Reddy’s. A Turkish company obtaining the rights to commercialize the biosimilar ahead of European and American competitors marks a leap in the country’s effort to attest itself as a capable player in the global biotech sector.

Nonetheless, without the internal production of the protein or polypeptide, the new entrants in the biopharma field remain dependent on importing these cell lines from abroad and subscribing to their suppliers’ prices. FloraBio is the first and only cell line and media development company to have licensed-out its products from Turkey to Europe. Owning the master cell bank is what differentiates Cinnagen, the largest biotech company in the MENA region, with 12 molecules on the market. Ferhat Farsi, CEO and co-founder of Cinnagen, had worked for many years in traditional pharma without failing to study the developments taking place in biopharma: “10 years ago, I realized there will be a big change in the pharma sector; I dreamed of implementing these changes in Turkey,” he said.

Even if public money helped to jump-start the manufacturing side, there are many missing links without which the biopharma sector will not be able to fully take shape. “In order for Turkey to compete effectively in this field, a supportive ecosystem needs to be established,” said Turgut Tokgöz, Secretary General of IEIS.

The ecosystem would involve adequate legislation to facilitate market entry for biosimilars, creating awareness about the use of biosimilars to doctors and patients, knowledge building in specialized fields together with university partners and, perhaps most importantly, investors who can provide substantial funding over an extended period.


Opportunities and legal loopholes in biosimilars

Between executing simple fill-and-finish processes and the more far-fetched hope of developing originals, Turkish companies' best chance is in biosimilars. Producing a biosimilar follows a comparable pathway to that of a biologic, with the significant exception that the development phase can be up to 80% cheaper. Zafer Toksöz, CEO of Arven, spelled out this compromise: "Realizing that biologicals are the future of the industry, but without the capital to invest in developing new drugs, we decided to focus on the biosimilar space.”

Like Arven, many of the companies active today in the biopharma space are developing biosimilars. Murat Barlas, chairman of pharma importer Liba and President of the Turkish Biopharmaceuticals Platform (TBP), is of the opinion that the biosimilar market is already too crowded, even before the products are launched.

Often thought of as the generics of large molecules, biosimilars actually bear little resemblance to small molecule generics in terms of the physical structure and manufacturing processes, though a comparable pricing philosophy applies. Since the first FDA approved use of recombinant human insulin in 1982, the growth of biopharma has outpaced classic pharma as the new category of medicines were not merely controlling the symptoms of diseases, but also intervening in the functioning of the body’s immune system. The business model of biosimilars diverges from the “one size fits all” generic model, in which a blockbuster drug is used for long periods by a large population segment. A biosimilar, like a biologic, could potentially cure a disease, shifting the business model to more personalized treatment, or what has gained currency as “precision medicine.”

However, the pricing relationship between an originator-generic applies to the biologic-biosimilar duo.  The innovator molecules, whether small or large, occupy a privileged position rewarded through higher prices for a given time, until competition from imitator drugs can bring prices down. Nevertheless, the extent to which these prices are brought down is a sensitive consideration, especially in biopharma, because of the need to recoup larger investments. With the current reference Turkish price system in use today, prices are brought down by 30% to 40% of the real-market price of the product. The pricing roadmap can get even blurrier in terms of the competition with originators. Multinationals with the ownership of the original drug can reduce prices by up to 70% to obtain tenders, which effectively closes the market for biosimilars. Without a more defined legal framework for biosimilars, the message for investors in this space is a conflicting one.

To stay competitive biosimilars producers are forced to drastically reduce prices, which saves the government significant money. For instance, high-tech drug importer TR Pharm recently secured a biosimilars tender in which the Turkish government saved 400 million TL against the originators price. Besides sparing public finances from high expense bills, biosimilars bring much needed treatment for patients who do not have access to biological drugs. In the treatment for cancer, biologics or biosimilars are used only as a secondary option where the patient does not respond to chemical treatments. "The products we target are very efficient and show limited side effects but, despite their existence, it is a shame that not every patient can reach them," said Deniz Demir, general manager of Dem İlaç, a company that is the first biosimilar licence owner and currently investing in a bio-manufacturing site for the development of monoclonals.

Because they are large molecules, biosimilars cannot travel everywhere into the body and are thus more targeted towards a specific location; this reduces the toxicity experienced in the case of a highly dispersible chemical drug. Nevertheless, biosimilars are yet to revolutionize access to treatment, mainly because there are barriers to approving these molecules. Guidance on biosimilars around the world is still considered vague in terms of establishing “high similarity” or “no clinically meaningful differences,” the key correlative attributes that legitimize a biosimilar's use. Pursuant to the United States’ Public Health Service Act (PHS), biosimilarity is described as “high similarity to a reference product notwithstanding minor differences in clinically inactive components,” and no “meaningful differences” in terms of safety, purity and potency. The European Medicines Agency (EMA), the drugs regulatory body of the EU, has a similar definition. The evaluation of these criteria occurs through a rigorous stepwise approach, involving evidence to eliminate any uncertainty, starting from technology for characterization, animal studies for toxicity and comparative pharmacokinetic and pharmacodynamic studies, together with a clinical immunogenicity assessment and even head-to-head clinical studies from Phase 1 to Phase 4.

Murat Barlas, chairman of Liba İlaç, believes regulation in biosimilars needs to be better tailored to Turkey to reduce some of the bottlenecks facing clinical trials by using advanced analytical tools to prove bioequivalence: “Turkey needs to develop its regulatory affairs first. We cannot just copy the United States’ FDA or Europe’s EMA. The upcoming projects in biosimilars and biobetters are very interesting with huge investments. However, the biggest challenge for all these companies is that they get less time to market,” he said.

Skipping some of the clinical steps to prove equivalence is an issue addressed outside of Turkey’s context too. This is referred to as “Abbreviated licensing pathway,” a legal recognition based on the assumption that the “copy” drug has the same efficacy and safety as the original and therefore the clinical development programme can be reduced. Clinicians and patients expressed their hesitance that biologicals are not as verifiable as chemically synthetized drugs; produced in living organisms and thus showing intrinsic variability, or microheterogeneity, there are no two identical biologicals, and the manufacturing conditions influence their quality. Thus, a “highly” similar rather than identical paradigm is applied. Dr. Gizem Dinler, associate professor at Istanbul Technical University (ITU), is confident in the power of analytical tools to prove bioequivalence: “It is vital for pharmaceutical companies to have good biophysical infrastructure to pass through the pre-clinical work.” Gizem’s department obtained a government grant to buy the sophisticated instruments for structural biology.

In the EU the regulatory pathway to approve biosimilars was established in 2003 and, by November 2018, 50 biosimilars were authorized. Biosimilars market penetration in the EU is better than in the rest of the world, but substitution policies are dependent on each member state. For instance, in Spain hospital tenders do not allow biosimilars except for naïve patients (a patient who has never undergone treatment for the illness targeted by the experimental drug), while the Nordic countries accept full interchangeability at pharmaceutical level. Full interchangeability is the ultimate step in granting biosimilars recognition as an equal substitute to biologics.

As healthcare costs increase, developed economies like Europe, the United States, Japan, Canada and South Korea are increasingly looking at biosimilars, but the way these jurisdictions adopt biosimilars will have an impact on the acceptance of these drugs worldwide. Differences in the regulatory pathway across countries can be an obstacle for biosimilar development in coming years, but global harmonization is likely to occur as in the case of generics. One way that these obstacles are tackled is through biobetters, or biosimilars that are not mere copies of the innovator, but which bring improved characteristics, be it improved stability or a more patient-friendly mode of administration. For instance, the first generation of biological, such as human insulin or the early versions of human growth hormone, are immediate-release drugs administered through infusion or subcutaneously, but biobetters of these molecules use glycol-engineering to reduce the risk of immunogenicity, which makes the drug safer and requires lower doses, with a prolonged effect on the target.


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