By Jonathan Cheng in Seoul and Jonathan D. Rockoff in New York
SEOUL -- South Korea's Samsung conglomerate won approval from
U.S. regulators Friday for a lower-priced copy of the blockbuster
rheumatoid-arthritis drug Remicade, clearing the way for Samsung to
begin selling complex pharmaceuticals in the world's biggest drug
market.
The newly approved biosimilar would be the second copy of
Johnson & Johnson's top-selling drug to hit the market, after
Pfizer Inc. began selling its Remicade biosimilar Inflectra late
last year. The approval is the first in the U.S. for Samsung, which
has been trying to diversify beyond electronics.
Samsung said it wouldn't yet announce the price of its new drug,
named Renflexis. Companies have priced the handful of biosimilars
approved so far, including Inflectra, about 15% less than the list
price of the original drug, though analysts expect prices will drop
as more enter the market.
Renflexis may not go on sale until late this year, as companies
have had to wait six months after approval to begin sales of
biosimilars under a court's interpretation of the Affordable Care
Act. The 2010 law created an abbreviated pathway for the Food and
Drug Administration to approve biosimilars, which are copies of
complex biologic drugs made from living cells. The U.S. Supreme
Court is reviewing the sales delay and expected to issue a decision
before July.
For Samsung, the approval of Renflexis comes on the same day the
conglomerate's technology business began selling its premium Galaxy
S8 smartphone.
The South Korean giant is already the world's biggest
manufacturer of smartphones, televisions and memory chips, and has
interests in shipbuilding, insurance, construction and fashion. But
Samsung's growing presence in pharmaceuticals underscores the
breadth of businesses that the country's biggest and best-known
conglomerate is engaged in, even as it struggles through its most
challenging corporate crisis in a generation.
About six years ago, Samsung's third-generation leader Lee
Jae-yong helped push the conglomerate into biologic drugs, betting
that biologic drugs could drive growth for Samsung as the long-term
outlook for smartphones became more uncertain.
One of the major pieces of that effort is Samsung Bioepis Co.,
which was founded five years ago. It is 29.4% owned by Samsung
Electronics and 40.5% owned by Samsung's de facto holding company
Samsung C&T Corp.
In five years, Mr. Lee has plowed about $1.3 billion into
Samsung Bioepis, the conglomerate's biotech unit, to develop
biosimilars.
Earlier this year, however, Mr. Lee was indicted on corruption
charges tied to a political corruption scandal that has taken down
South Korea's president. Mr. Lee, who is undergoing trial, has
denied wrongdoing.
Mingi Hyun, a spokesman for Samsung Bioepis, said that the
company "remains committed" to developing biosimilars, adding: "We
will continue to advance one of the industry's strongest biosimilar
pipelines."
Biosimilars were authorized in the U.S. as part of the
Affordable Care Act as a way to lower the hefty sums paid on costly
biotech drugs, among the most expensive drugs in the world, just as
generics offer a lower-priced alternative to pills.
J&J said Monday that it hadn't seen yet seen much of an
impact from Pfizer's biosimilar Remicade and expected patients
would shift slowly to using the copies.
Many industry officials and analysts, nevertheless, expect
biosimilar sales will grow in coming years, in no small part
because they promise to help control spiraling health-care
spending.
Samsung has struck a deal with Merck & Co. to sell Renflexis
in the U.S. Renflexis had previously won regulatory approval in
Europe, Australia and South Korea.
In January last year, Samsung became the first biosimilar maker
to win regulatory approval in Europe for a copy of Pfizer's
Enbrel.
Since then, it has racked up more than $100 million in sales of
its Enbrel knockoff in Europe, Samsung Bioepis said Friday.
Remicade and Enbrel each generate about $9 billion in revenue a
year, making them two of the five best-selling biologic drugs in
the world.
Samsung Bioepis is 93.3% owned by Samsung BioLogics Co., which
is a contract manufacturer of biologic drugs developed by companies
such as Roche Holding AG and Bristol-Myers Squibb Co. Samsung
BioLogics, in turn, is 75% owned by Samsung Electronics and Samsung
C&T.
Just six years old, Samsung BioLogics is already one of the
world's biggest contract biologic drugmakers by volume.
After a public listing last year, Samsung BioLogics' stock has
climbed 30%, valuing the company at about $11 billion.
Samsung Bioepis was on track for an IPO on the Nasdaq Stock
Market last year, but the offering was shelved amid market
volatility. A spokesman said Friday that it is still "evaluating
U.S. market conditions to determine the optimal timing" for the
listing.
Write to Jonathan Cheng at Jonathan.Cheng @wsj.com and Jonathan
D. Rockoff at Jonathan.Rockoff@wsj.com
(END) Dow Jones Newswires
April 21, 2017 17:18 ET (21:18 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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