Written by Hanzhong Bai, Edited by Charlotte Pugsley and Daniele Guido.
In Part 1 of the story we discussed the birth of Spinraza and its market access in
China. Here in Part 2, we will continue the story on the competitive landscape of
SMA drugs and Biogen’s revenue challenges in 2021.
Read Part 1 of the story here: Behind Spinraza's 95% price drop in China: desperate or pre-emptive? Part 1.
Challengers on the rise
Despite a suboptimal performance in China, Spinraza still leveraged its market
exclusivity to establish significant presence in the global SMA market, with its annual
revenues hitting a peak of US$2,097M in 2019 (1). However, this “monopoly” was
brought to an end by Novartis’ launch of Zolgensma in 2019 and Roche’s launch of
Evrysdi in 2020.
Using viral vectors to deliver a functional copy of the SMN1 gene (Read Part 1 of the
story for the function of SMN1 gene in SMA), Zolgensma was the first gene therapy
approved by the FDA and treats SMA once and for all (2). In contrast, both Spinraza
and Evrysdi use small molecules to correct the splicing of the SMN2 gene and
require life-long use (3, 4). With great power comes a great price, and Zolgensma
came with a hefty one, costing over US$2M for the single-dose injection (2019 list
price) (5). It is currently still the most expensive single-dose drug in the world. As a
result, sales of Zolgensma heavily relied on insurance or national payer
reimbursement schemes, instead of out-of-pocket payments by patients, and
experienced reimbursement hurdles in several markets due to its price (6). On the other hand, Evrysdi has a more flexible pricing model than Spinraza that
allows patients to be charged per kilogram of body weight (7). Roche estimates that
the 1st-year treatment of Evrysdi would cost US$100k for new-borns and US$340k
for toddlers, which is considerably cheaper than Spinraza’s universal US$600k
treatment plan (7, 26). Aside from the visibly lower prices, Evrysdi is taken orally
whereas Spinraza has to be administered by intrathecal injection (i.e. penetrating of
spinal cords), limiting the administration process to be done by trained staff at well-
equipped medical centres(3,4). Within 14 months of its launch, Evrysdi had become
the most prescribed SMA drug in the US, snatching US$221M revenues and about
20% of the total market share in 2021 Q4 (8, 9).
The full-throttle offensive by Evrysdi and Zolgensma has forced Spinraza to retreat.
In the US, Spinraza’s sales have been steadily dropping since 2019 Q4, and its
quarterly revenue has declined to US$150M by 2021 Q4, representing a 38%
decrease from its peak (1, 10). In addition, the majority (69%) of Spinraza's revenue
came from markets outside the US, where it still enjoyed a first-mover
advantage (10). With Spinraza’s key patents scheduled to expire in 2027, little time is
left for Biogen to capitalise on Spinraza before generics entry (11). In Biogen's 2020
Q4 earnings update, the company indicated an objective to expand to untapped
markets in order to drive sales (12). And where is the biggest SMA market outside
the US? I think we all know the answer at this point - the Chinese market.
On top of competition intensifying on the outside, Biogen is plagued with internal
conflicts too. The multinational corporation is known for its strong presence in
neurodegenerative diseases. Multiple sclerosis (MS) is Biogen's particular forte, with
6 drugs in its portfolio (12). Tecfidera was their best-selling MS drug and achieved
US$3,841 M revenue in 2020, representing 28.9% of Biogen’s annual total revenue.
However, things took a turn in June 2020, when the U.S. District Court in West
Virginia ruled Tecfidera’s patent invalid. The generic pharmaceuticals company
Mylan took full advantage of this ruling and flooded the market with cheaper
alternatives (13). As a result, Tecfidera’s revenue shrank by a staggering 49% in
2021 (10).
In parallel, Biogen's long-awaited Alzheimer's disease drug Aduhelm provoked
massive controversies in June 2021 as the US FDA approved the drug, despite an
absence of strong evidence of clinical efficacy (14). Even the FDA’s own advisory
panel voted ten to zero against the drug, and the investigation of inappropriate
interactions between Biogen and FDA officials is ongoing (15, 16). To date, Biogen
has yet to prove that Aduhelm works for Alzheimer’s disease, and the drug’s latest
update in March 2022 showed opposed results from the previous EMERGE and
ENGAGE trials, which only raised more questions about the drug's actual medical
benefit (17). All these controversies have negatively impacted Aduhelm's market
performance, which is reflected in the drug’s abysmal sales of US$3 M in 2021 and
Medicare’s recent decision to limit Aduhelm coverage to patients in trials only (10, 18).
These factors have together resulted in a drastic 18% drop in Biogen’s revenue in
2021, which is ~3 times higher than the decline seen in 2020 (10). As their second
most profitable drug, accounting for 17% of total revenues in 2021, Spinraza carried
a heavy weight to boost Biogen’s revenue streams.
On Dec 3rd 2021, China’s National Healthcare Security Administration (NHSA)
published the 2021 National Reimbursement Drug List. Among those included was
Spinraza, at a historically low price of CNY33,000 per dose, a 95% price drop from
its list price of CNY700,000 (19). By sacrificing profit margins and risking potential
repercussions from other markets, Spinraza gained government reimbursement that
will supposedly grant unparalleled competitive advantage. But the question lingers
on everyone’s mind: is the gain really worth the sacrifice?
When Spinraza was first introduced to the market in 2017, it checked all the boxes
for premium pricing: unprecedented medical efficacy, no competitors on the market
and a group of long-suffering customers willing to pay exorbitant prices. This worked
in many wealthy countries, and by 2019 Biogen had successfully negotiated
reimbursed patient access of Spinraza in 38 countries/regions worldwide, most of
which are in Europe and the Asia-Pacific region (20). However, the same playbook
didn’t work out in China, and the reason is twofold:
However, there are two hurdles Spinraza that needs to consider in order for a
successful patient access. The first hurdle is the under-diagnosis of SMA in China.
Based on the published reimbursement price, annual treatment of Spinraza would
cost CNY200k in the first year and CNY100k in the following years (19). If Biogen
could access all 30 thousand patients with SMA, China could potentially generate a
revenue of CNY860 M in 2022 and CNY430 M from 2023 onwards until patent
expiry/end of exclusivity (22). However, due to the rare nature of SMA, it is often
mistaken for lesser diseases, causing major diagnosis delays or misdiagnosis for
patients worldwide (23). In addition, the wide genetic variations and different onsets
seen in SMA necessitate genetic screening for proper diagnosis (24). Such assays
are only commissioned at comprehensive medical facilities concentrated in major
Chinese cities, which makes diagnosis in rural areas extraordinarily challenging.
China hasn’t disclosed any specific data of SMA diagnosis rates; however, we could
gather an inkling of the issue through data published by the biggest Chinese SMA
foundation, Meier Advocacy & Support Centre. By May 2021, there were only 2,000
registered patients at the foundation, which is less than a tenth of the "30k SMA
cases" estimated by clinicians/government officials (25). Therefore, it is imperative for
Biogen to raise awareness of SMA and increase diagnosis/treatment rates in order
to fully tap the Chinese market. Considering additional post-reimbursement
challenges such as logistics and regional tendering, Spinraza still has a long road to
go.
The second hurdle for Spinraza is its global pricing. It is unclear how many countries
use China for international price referencing, but the drastic 95% price cut will
inevitably affect Spinraza’s pricing power elsewhere. In upcoming negotiations,
payers will focus on Spinraza's Chinese price to push for a bigger discount. Although
it is unlikely that other markets could reproduce Spinraza's discount in China, a
bigger than usual discount is expected from Biogen's side, especially in markets
where pharmaco-economic evaluation is not as stringent.
With that being said, Biogen has gained the unparalleled competitive advantage of
government reimbursement in China, and nobody can take that away from them. In
front of its SMA drug, rivals are nothing but a boarding pass to a bitter price war or a
waiver of competition. It is foreseeable that Spinraza will quickly take most of the
serviceable obtainable market in China and generate a stable stream of income for
Biogen, if no further challenges arise. And let us look at the bright side of the story
here: Biogen will give tens of thousands of SMA patients in China a second chance
at life, regardless of its motivation.
So, what do YOU think, was the price drop desperate, or pre-empted?
1. Biogen Inc. BIOGEN REPORTS FULL YEAR 2019 REVENUES OF $14.4
BILLION [Internet]. 2020 [cited 2022 Jun 19]. Available from:
https://investors.biogen.com/static-files/a2645e02-f862-4eac-9f69-
511eeb95a704
2. Novartis Gene Therapy Inc. How Zolgensma Works [Internet]. 2022 [cited
2022 Jun 19]. Available from: https://www.zolgensma.com/how-
zolgensma-works
3. Genetech USA Inc. About Evrysdi [Internet]. 2022 [cited 2022 Jun 19].
Available from: https://www.evrysdi.com/
4. Biogen Inc. Official HCP HomePage | Spinraza (Nusinersen) | HCP.
https://www.spinraza-hcp.com/?cid=aff-spinraza-
header_visithealthcareprofessionalsite-spinrazahcp_hp. 2022.
5. Nuijten M. Pricing Zolgensma – the world’s most expensive drug. Journal
of Market Access & Health Policy. 2022 Dec 31;10(1).
6. Loos A van SJCD. The cost of cures: what does Zolgensma teach us about
the use of cost-effectiveness assessments? . HTA Quarterly [Internet].
2019 [cited 2022 Jun 19]; Available from:
https://www.xcenda.com/insights/htaq-fall-2019-the-cost-of-cures-
zolgensma-cea
7. Richard Staines. Roche takes on pricey rivals as FDA approves SMA drug.
pharmaphorum [Internet]. 2020 Aug 10 [cited 2022 Jun 19]; Available
from: https://pharmaphorum.com/news/roche-takes-on-pricey-rivals-as-
fda-approves-sma-drug/
8. Roche Inc. Finance Report 2020 [Internet]. 2021 [cited 2022 Jun 19].
Available from:
https://assets.cwp.roche.com/f/126832/x/db9d31e8a7/fb20e.pdf
9. Nathan Aisenstadt. PTC Therapeutics: One Of The Leaders In The
Treatment Of Rare Diseases. Seeking Alpha [Internet]. 2022 Apr 11 [cited
2022 Jun 19]; Available from: https://seekingalpha.com/article/4500727-
ptc-therapeutics-leader-rare-disease-treatment-upside-potential
10. Biogen Inc. Annual Report 2021 [Internet]. 2022 [cited 2022 Jun 19].
Available from: https://investors.biogen.com/static-files/316c17ed-0bff-
458c-9204-5d38e65e3526
11. Spinraza Drug Patent Profile [Internet]. DRUG PATENT WATCH. 2022 [cited
2022 Jun 19]. Available from:
https://www.drugpatentwatch.com/p/tradename/SPINRAZA
12. Biogen Inc. Annual Report 2020 [Internet]. 2021 [cited 2022 Jun 19].
Available from: https://investors.biogen.com/static-files/0b109c48-3d3c-
4554-8249-74b06c09797e
13. ben Fidler. Biogen loses patent dispute with Mylan, putting its top drug’s
future in doubt. Biopharmadive [Internet]. 2020 Jun 18 [cited 2022 Jun
19]; Available from: https://www.biopharmadive.com/news/biogen-loses-
tecfidera-patent-case-mylan/580096/
14. U.S. Food and Drug Administration. Drug Approval Package: Aduhelm
(aducanumab-avwa) [Internet]. [cited 2022 Jun 19]. Available from:
https://www.accessdata.fda.gov/drugsatfda_docs/nda/2021/761178Orig1s
000TOC.cfm
15. Noah Higgins-Dunn. FDA chief asks for independent investigation into
approval of Biogen’s Alzheimer’s drug Aduhelm. Fierce Pharma [Internet].
2021 Jul 9 [cited 2022 Jun 19]; Available from:
https://www.fiercepharma.com/pharma/fda-chief-requests-independent-
investigation-into-approval-biogen-s-alzheimer-s-drug-aduhelm
16. U.S. Food and Drug Administration. November 6, 2020 BLA 761178:
Peripheral and Central Nervous System Drugs Advisory Committee
Meeting [Internet]. 2020 Nov 6 [cited 2022 Jun 19]. Available from:
https://www.fda.gov/media/143505/download
17. Budd Haeberlein S, Aisen PS, Barkhof F, Chalkias S, Chen T, Cohen S, et al.
Two Randomized Phase 3 Studies of Aducanumab in Early Alzheimer’s
Disease. The Journal of Prevention of Alzheimer’s Disease. 2022;
18. Marisa Wexler M. Medicare Coverage of Aduhelm Will Be Limited to
Patients in Trials. Alzheimer’s News Today [Internet]. 2022 Apr 11 [cited
2022 Jun 19]; Available from:
https://alzheimersnewstoday.com/news/medicare-coverage-of-aduhelm-
will-be-limited-to-patients-in-trials/
19. General Office of the Ministry of Human Resources and Social Security. 国
家基本医疗保险、工伤保险和生育保险药品目录(2021 年) [Medicines List for
National Basic Medical Insurance, Work-Related Injury Insurance and
Maternity Insurance(2021)] [Internet]. 2021 Nov [cited 2022 Apr 18].
Available from:
http://www.gov.cn/zhengce/zhengceku/2021-12/03/content_5655651.htm
20. TreatSMA. Spinraza access by country [Internet]. 2019 [cited 2022 Jun
19]. Available from:
https://www.treatsma.uk/treatments/spinraza/spinraza-access-by-country/
21. The World Bank. GDP per capita (current US$) - OECD members [Internet].
[cited 2022 Jun 19]. Available from:
https://data.worldbank.org/indicator/NY.GDP.PCAP.CD?locations=OE
22. Yunqi Li. “小群体”的曙光！天价药谈成背后：国内过半罕见病药已进医保 [Dawn
for the Minorities; Behind the negotiations of astronomically priced drugs -
Over half of rare diseases have been included in the NRDL]. 新京报 [New
Beijing Newspaper] [Internet]. 2021 Dec 3 [cited 2022 May 1]; Available
from: https://www.bjnews.com.cn/detail/163852819514618.html
23. Lin CW, Kalb SJ, Yeh WS. Delay in Diagnosis of Spinal Muscular Atrophy: A
Systematic Literature Review. Pediatric Neurology. 2015 Oct;53(4):293–
300.
24. Lin Y, Lin CH, Yin X, Zhu L, Yang J, Shen Y, et al. Newborn Screening for
Spinal Muscular Atrophy in China Using DNA Mass Spectrometry. Frontiers
in Genetics. 2019 Dec 17;10.
25. Meier Advocacy & Support Centre. 国际SMA 关爱日：《中国SMA 患者生存现
状白皮书》发布 [International SMA Care Day: “Whitebook on the Living
Conditions of Chinese SMA Patients”] [Internet]. 2020 [cited 2022 Jun 19].
Available from: https://mp.weixin.qq.com/s/PZCMARSGBzd-IZXfSPs54A
26. Fortune. 2022. How this gene therapy drug earned its $2.1 million price
tag. [online] Available at: <https://fortune.com/2020/02/07/zolgensma-
high-drug-prices/> [Accessed 17 July 2022].
Sign up for our monthly newsletter of upcoming events, recently published insights and SEC updates.