How Samsung’s biosimilar became covered in the US

in the private health insurance sector

Significance of entering the world’s largest pharmaceutical market…various risk factors exist

Thorough simulation is required due to a lack of manpower and network infrastructure.

Language barriers, insufficient handling of administrative issues related to regulations and visas, difficulties in recruiting and managing local personnel, and lack of a network infrastructure were pointed to as barriers to the Korean pharmaceutical companies’ entry into the U.S.

 

Entry into the U.S.

 

market holds significance in the industry as it is the world's largest pharmaceutical market that leads global technological standards.

 

However, due to the various risk factors that exist, thorough preliminary research and simulation are necessary before making an attempt.

 

The '2023 Global Pharmaceutical-Bio Market Export Support Report' that was issued by the Korea Health Industry Development Institute on the 21st published the difficulties and entry strategies for domestic companies seeking to enter the US market.

 

First, the report said that companies should consider a strategy of being listed in the private insurance market through pricing, like Celltrion Healthcare and Samsung Bioepis.

 

Celltrion Healthcare's Humira biosimilar’ Yuflyma’ was listed on the formulary of OptumRx, which is a subsidiary of one of the top 3 PBMs in the US, United Healthcare.

 

The company pursued a high price strategy of setting the price at USD 6,576, which is only 5% cheaper than the original Humira.

 

It is said that the high drug price allows room for much margin, increasing rebate resources and being advantageous in negotiations with PBMs.

 

Samsung Bioepis’s Humira biosimilar ‘Hadlima’ was listed as a preferred drug in the formulary of Cigna Healthcare, a major private insurance company.

 

The company had set the Wholesale Acquisition Cost (WAC) of its drug at USD 1,038, which was the lowest among all Humira biosimilars in competition in Korea, and 85% lower than that of the original.

 

On the other hand, SK Biopharmaceuticals had prepared a direct sales approach due to a lack of network infrastructure.

 

When using a direct sales system, profitability increases as the number of products sold increases, but initially, it imposes a huge fixed cost burden as the company needs to establish a local corporate body and hire professional sales and marketing personnel.

 

SK Biopharmaceuticals explained that its SG&A expenses have continued to rise for the company since 2019 when it began preparing for a direct sales system.

 

According to KAPAL (Korean-American Professional Association in Life Sciences), difficulties faced by Korean companies entering the US include language barriers, poor administrative management related to regulations/visas, difficulties in recruiting and managing local personnel, and lack of a network infrastructure.

 

It also advised that preliminary research, thorough simulation, and advice from local experts and the experienced should be used to address the difficulties.

 

In other words, companies need to understand and overcome local environmental and cultural differences, including by thorough localization of personnel and business operations, understanding and accepting the high wages and flexible working conditions, and taking a long-term approach based on an understanding of the relatively slow business progress and invest the time for information collection and networking to continuously develop its technology and intelligence property to successfully enter the US market.

 

Although the CDMO infrastructure in the US is saturated, the government announced a policy to strengthen manufacturing.

 

This is expected to expand medical and pharmaceutical production facilities and bases in the US, and the situation could be used in favor of the Korean companies as it would allow the companies to receive incentives and secure leadership in local production.

 

New investment in the field of new drug development and clinical trials has been increasing in the US, and the government has been investing particularly in cancer treatment.

 

Anticancer drug development and clinical trials account for 40% of all clinical trials conducted in the US, therefore, companies can seek entry into relevant fields through licensing out, technology transfers, and M&A with companies related to anticancer drug development.