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Understanding the Biosimilar Ecosystem: Regulation, Stakeholders, and Market Dynamics of Competition
Chapter of the 2025 Global Biosimilars Report
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Since the 2009 passage of the Biologics Price Competition and Innovation Act (BPCIA) in the United States (US), the pharmaceutical industry has witnessed a significant shift towards the development and commercialization of biosimilars, a class of biological products that are highly similar to an already approved biological reference product. Unlike traditional generics, which are exact chemical replicas of small-molecule drugs, biosimilars are almost identical, but not exact copies, of original biologics.
The advent of biosimilars represents a pivotal evolution in healthcare. As patents expire on leading biologics – which are among the best-selling drugs in the world – biosimilars offer a unique opportunity to improve access to critical treatments.
By offering comparable therapeutic benefits at a lower cost, biosimilars not only enhance patient access but also have the potential to help alleviate the financial burden on health systems.
This article explores the global biosimilar ecosystem — it examines the evolution of regulatory frameworks, the roles of key stakeholders, and the competitive market dynamics shaping adoption.
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Key Definitions
Generics are small-molecule drugs, chemically synthesized and designed to be identical to their brand-name counterparts that are no longer protected by patents and have lost exclusivity. While their active ingredients are the same, the manufacturing process and adjuvants may differ, but do not change the drugs’ efficacy or safety. In contrast to biosimilars, generics match both the chemical composition and the active ingredient of the original drug. Biosimilars are developed to be comparable versions of already approved biologics—the “reference products” or “originator biologics.” Minor variations differentiate biosimilars from their reference products, but these differences are not clinically meaningful. The inherent complexity of biosimilars mandates a more intricate regulatory approval process compared to generics, ensuring biosimilars match the quality, safety, and efficacy of the originator biologics. |  |
Biobetters are modified versions of existing biologics that aim to improve aspects like efficacy, side effects, or performance. Modifications in formulation or structure require that biobetters undergo the full standard regulatory approval process as new biologics.
Biosames are follow-on biologics that are identical to the reference product, require no additional development, and use the same manufacturing lines as the original. The company that developed the originator biologic can essentially launch a biosame immediately upon patent expiration and loss of exclusivity for the original, edging out the competition.
Generics are small-molecule drugs, chemically synthesized and designed to be identical to their brand-name counterparts that are no longer protected by patents and have lost exclusivity. While their active ingredients are the same, the manufacturing process and adjuvants may differ, but do not change the drugs’ efficacy or safety. In contrast to biosimilars, generics match both the chemical composition and the active ingredient of the original drug.
Biosimilars are developed to be comparable versions of already approved biologics—the “reference products” or “originator biologics.” Minor variations differentiate biosimilars from their reference products, but these differences are not clinically meaningful. The inherent complexity of biosimilars mandates a more intricate regulatory approval process compared to generics, ensuring biosimilars match the quality, safety, and efficacy of the originator biologics.
Biobetters are modified versions of existing biologics that aim to improve aspects like efficacy, side effects, or performance. Modifications in formulation or structure require that biobetters undergo the full standard regulatory approval process as new biologics.
Biosames are follow-on biologics that are identical to the reference product, require no additional development, and use the same manufacturing lines as the original. The company that developed the originator biologic can essentially launch a biosame immediately upon patent expiration and loss of exclusivity for the original, edging out the competition.
A Timeline of Regulatory Frameworks for Biosimilar Approval
The Food and Drug Administration (FDA) and the European Medicines Agency (EMA) are the leading regulatory bodies that serve as a global reference for regulatory guidance on biosimilars.
In the US, the BPCIA, passed in 2009 and signed into law in 2010, formalized the path forward for biosimilar approvals in that market. This initial step granted the FDA the authority to both approve biosimilars and apply the interchangeability designation. Further guidance in 2012 provided industry guidelines for the recommended approach on biosimilar development. As the agency—and the industry—gained experience with biosimilars, the FDA published new interchangeability guidelines in 2017 and updated them again in 2024 to lower the barriers for a biosimilar to obtain interchangeability status.
Source: “Biosimilar Program Updates and What’s New Under BsUFA III.” Regulatory Education for Industry (REdI) Annual Conference 2023.; Alira Health analysis.
The European Union (EU) pioneered biosimilar development and adoption and continues to lead on biosimilar guidance. Directive 2001/83/EC laid the legal groundwork for biosimilar regulation in the EU. This foundational piece of legislation established the mandate that biosimilars meet rigorous standards for quality, safety, and efficacy—like all medicines—before they can be marketed in the EU. The subsequent Directive 2004/27/EC was instrumental in establishing a clear legal pathway for the approval of biosimilars in the EU, based on the demonstration of similarity to an already approved reference product.
Source: Jimenez and Brake. “Biosimilars in the European Union – regulatory perspectives”. ICH GCG ASEAN Training Workshop on ICH Q5C, 30-31 May 2011, Kuala Lumpur.
The Development and Regulatory Approval Process
Originator biologics typically require eight to ten years and upwards of $1 billion in development cost from discovery to regulatory approval. Biosimilars follow an abbreviated development pathway and can gain approval after only seven or eight years. Overall development costs are reduced to $100-200 million.
The development pathway for new biologics follows an extensive process from discovery to regulatory approval and launch. Each step is highly regulated, with country-specific agencies, like the FDA, or regional regulatory bodies, like the EMA, providing guidelines that outline the data required for approval.
Source: Alira Health analysis.
Regulatory advantages for biosimilars:
- Reduced development costs
- Fewer clinical trials
- Shorter timeline to market entry
After initial discovery, potential biologic candidates move into preclinical development where researchers evaluate their safety, efficacy, pharmacokinetics, and pharmacodynamics. These data are a key input for determining the optimal dosage and identifying potential side effects. Early data to inform indication selection are also attained at this stage.
Once the application to begin human trials is approved by regulatory bodies, the candidate biologic proceeds through a standard track of clinical trials to evaluate the compound’s safety and efficacy in humans.
The objective of Phase I trials is to assess safety, tolerability, pharmacokinetics, and pharmacodynamics. The objective of Phase II trials is to evaluate efficacy and further assess safety. Finally, in Phase III trials, the objective is to confirm efficacy, monitor side effects, and compare with commonly used treatments. By the time a biologic is approved, the costs of that program can exceed $1 billion.
By contrast, biosimilars follow an equally rigorous, but more condensed developmental pathway. Across the globe, local frameworks for biosimilar development and approval often follow the guidelines set forth by the World Health Organization (WHO), the FDA, and the EMA. The goal of a biosimilar development program is to demonstrate that there are no clinically meaningful differences in safety and efficacy compared to a reference product. Regulatory approval for biosimilars is granted based on the complete biosimilar data package, including analytical similarity, comparative pharmacology, and clinical studies.
Formulation development and bioanalytical testing represent one of the main hurdles to biosimilar development. Comparative non-clinical and quality studies demonstrate that biosimilars have no meaningful bioanalytical differences from their reference products. Non-clinical studies provide toxicology or pharmacology information about the biosimilar.
In general, biosimilar developers can avoid costly extended clinical development programs since biosimilars build on the knowledge of safety and efficacy from reference products. Phase I clinical pharmacology studies demonstrate the pharmacokinetic and pharmacodynamic features of a biosimilar. Phase III studies provide the final confirmation that the biosimilar has no clinically meaningful differences from the reference product in a particular indication. While it is customary to perform Phase III trials in biosimilar development programs, according to the regulatory guidance from FDA and EMA, Phase III trials are only required when there is residual uncertainty about the safety and efficacy of a biosimilar compared to its reference product.
Once a biosimilar is approved, via the regulatory principle of extrapolation, its approval can be extended to all approved indications of the originator. By avoiding Phase III trials for each indication, biosimilar developers capture significant cost savings. From discovery to launch, the full cost of a biosimilar development program can range between $100 and $200 million.
The regulatory landscape in the US and the EU has a clear path forward for biosimilar approval and serves as the reference framework for the rest of the world. Key geographies like Canada, Latin America, and Asia-Pacific harmonize their biosimilar regulatory approval processes to EMA, FDA, and WHO guidelines and decisions.
Some markets, like the MEA, are still in the early stages of biosimilar adoption. Recent WHO guideline revisions are aimed at streamlining the approval process for biosimilars, thus improving access to these medicines for patients in the Middle East and Africa region. While there is unrealized potential for biosimilars in the Middle East and Africa market, low stakeholder awareness, local healthcare system structures, and the absence of biosimilar-specific regulatory guidance present challenges for biosimilar developers interested in entering this market.
Key Stakeholders for Biosimilar Adoption
Biosimilars promise a significant cost-saving opportunity for patients and payers, and various stakeholders play a role in biosimilar adoption. Certain key challenges, in particular the lack of awareness and insurance coverage, need to be addressed more strongly in order to fully realize the cost benefits of biosimilars.
Patients
Many patients are aware of biosimilars and their financial advantage but concerns around efficacy and potential adverse effects impact their willingness to switch from reference biologics. Educating patients about the safety and efficacy of biosimilars is crucial to gaining their confidence and acceptance. Effective patient engagement and patient-centric care—including the financial impact—are essential strategies for improving biosimilar adoption.
Payers
Insurance coverage and payer policies play an important role in the adoption and uptake of biosimilars. Payers, including insurance companies, decide which medications are covered and at what cost to the patient. Their policies can drive biosimilar utilization through pricing strategies and cost-saving measures. The extent to which payers cover biosimilars compared to reference biologics can influence both healthcare provider recommendations and patient choices.
Healthcare Providers
Healthcare providers, such as physicians, hospitals, pharmacists, and nurses, play a pivotal role in the adoption of biosimilars through patient education and their prescription practices. However, providers may not initially know which biosimilars are available or coming to market, and whether these biosimilars are covered by their patients’ health insurance. Their recommendations and confidence in biosimilars significantly impact patient willingness to switch from reference biologics to biosimilars.
Regulatory Agencies
Regulatory agencies like the FDA and the EMA set the local standards for biosimilar approval. Established guidelines and policies affect the speed and ease with which biosimilars can enter the market. Changing regulations from both agencies create a more biosimilar-friendly environment that will positively impact biosimilar adoption in years to come.
Market Dynamics of Biosimilar Competition
Over time, biosimilar launches have become more successful, with recent launches achieving almost 70% volume share two years after launch. The potential savings that biosimilars can bring become evident with the increasing market adoption and subsequent reduction in treatment cost.
The effects of increasing biosimilar market adoption and subsequent competition in the market are illustrated by the recent successful biosimilar launches in the US.
The volume share of biosimilars compared to the sales of the respective reference product typically increases over time as providers become more aware of the biosimilars and are inclined to switch patients to these medicines. Looking at the historic sales volumes of biosimilars in the US, stark differences in market share were achieved.
Sources: IQVIA; Alira Health analysis
The three molecules with the most recent biosimilar launches in 2019, bevacizumab, trastuzumab, and rituximab, have performed better than previous biosimilar launches in the comparison of volume shares 12 and 24 months after the first biosimilar launch. The volume shares achieved by those biosimilars were comparable and ranged from approximately 40% market share after 12 months up to 69% after 24 months.
In contrast, pegfilgrastim and epoetin alfa, which both had initial biosimilar launches in 2018, only achieved market shares ranging from 16.4% to 28.4% 12 and 24 months after launch, respectively.
Infliximab biosimilars that launched in 2016 performed the worst in our sample with a market share of only 3.8% after 12 months, rising to 7.2% after 24 months.
The better launch performance of the more recent biosimilars is a clear indication that the biosimilar market is becoming increasingly more mature, and that policy and regulatory changes are succeeding in creating a more biosimilar-friendly environment to improve biosimilar adoption.
Biosimilars are typically priced at a discount compared to the reference biologic which primarily contributes to lowering the overall treatment cost. By offering cheaper access to the drugs, biosimilars also indirectly impact the cost of the reference product as originator companies will attempt to safeguard a portion of their existing sales volume by lowering prices themselves. The impact of biosimilar launches on the total cost per unit, including the cost of the reference biologic, varies from molecule to molecule, but a negative correlation with the level of adoption is clear.
The greatest cost reductions (between 22.1% and 31.9% 24 months after biosimilar launch) in our sample were achieved by the most recent 2019 biosimilar launches of bevacizumab, trastuzumab, and rituximab. This is in line with the higher market penetration that those biosimilars achieved compared to previous launches. In contrast, infliximab, with low market adoption, also saw the smallest reduction in cost with 0.8% and 9.6% after 12 and 24 months, respectively. Note that when comparing the cost reduction 12 months after launch, the level of cost reduction achieved by the 2019 and 2018 biosimilar launches was in a comparable range, between 11.4% and13.3%. As the group of biosimilars launched in 2019 achieved almost double the volume share compared to the 2018 group of biosimilars during the same time period, it is possible to conclude that the biosimilar companies also captured a greater share of the value in those 12 months.
Sources: IQVIA; Alira Health analysis.
Key Takeaways
The lack of awareness and confidence in the effectiveness of biosimilars has historically impeded and delayed market acceptance. Over the years, engagement and education around biosimilar use has become an important tool in driving biosimilar adoption. Relatedly, incentives for switching to biosimilars, both at the health system and provider level, can positively influence biosimilar uptake.
While barriers to switching to a biosimilar from a reference product are still present worldwide, recent changes in biosimilar regulations and guidelines favor the uptake of biosimilars. The Inflation Reduction Act in the US, which increases biosimilar reimbursements, and the simplified FDA guidance around biosimilar interchangeability standards are two elements that will contribute to biosimilar growth in that market. The EU has maintained a positive, supportive position towards biosimilars since its first global approval in 2006, and the market is expected to remain an attractive playing field for biosimilars.