The future is now
/ Korea Times photo by Choi Won-suk
‘Biosimilars are changing the landscape of the global pharmaceutical industry’
By Jung Min-ho, Kim Eil-chul
Speaking with some business people in the early 2000s, Seo Jung-jin said huge opportunities were on their way in the drug industry.
As a business consultant, he advised them to develop technology for the making of biosimilars or generic versions of biologics, which are derived from living systems or organisms. He predicted that new opportunities would emerge for those who are capable when the patents on conventional drugs expire in coming years.
But no one showed interest. Many were concerned about high development costs and conservative drug regulatory systems; some boldly asserted that such generic drugs would never be allowed in any developed country.
“But the opportunity seemed too good to pass, so I decided to set up my own company to do the job,” the 58-year-old chairman of Celltrion said in an interview.
In less than a decade, Celltrion successfully developed Remsima, a lower-cost replica of a bestselling arthritis medicine Remicade. In 2013, the European Medicines Agency confirmed Remsima’s safety and effectiveness and approved it as the first biosimilar monoclonal antibody.
Remsima, which is exported to more than 65 countries, including Germany and Japan, is now seeking approval from the U.S. Food and Drug Administration (FDA). Seo believes his firm can start selling the drug in the world’s biggest pharmaceutical market sometime next year.
Seo Jung-jin, second from right, signs a contract with a business partner in 2002 to establish Celltrion in Korea. / Courtesy of Celltrion
Meanwhile, Celltrion’s two other biosimilars for lymphoma and breast cancer are in the final stages of clinical trials in Europe.
“Three of our biosimilars are the world’s best and there are four more in the pipeline,” Seo said. “What we do affects the business strategies of global pharmaceutical firms such as Roche and Johnson & Johnson and they closely observe our every move.”
Today, Celltrion is a giant in the tech-focused KOSDAQ market, boasting a market value of around 9 trillion won ($7.8 billion). Yet Seo believes the company’s future is much greater than its glorious past.
“All the world’s top pharmaceutical companies are now trying hard to catch up. Nonetheless, no matter how much money they have and how big their names are, they will not be able to avoid making the mistakes we made along the way,” Seo said. “I’m confident that we will continue to maintain the lead.”
Taking the lead in the burgeoning field is a matter of survival or demise for all the major players in the pharmaceutical industry. The state-run Korea Health Industry Development Institute expects the global biosimilars market to grow to $23.9 billion in 2019 from $1.2 billion this year.
In the 20th century, some pharmaceutical companies identified a steady stream of relatively simple compounds that treated many people and made significant profits after patenting the drugs and related manufacturing technologies. However, over time, it became harder for the firms to find new cures in time to replace those with expiring patents.
After analyzing the industry, he was certain that biosimilars would be the next big thing.
However, unlike chemical-based drugs, biologics are much more expensive and difficult to replicate. He said developing one biosimilar could cost up to $600 million to reach the approval stage, versus less than $5 million for a generic small-molecule medicine.
“I needed to work with researchers, investors and regulators. I had to prove the value of our project to everyone when few understood what biosimilars were,” he said. “It was very hard, but not impossible.”
During the process, there were times when he doubted his chances of success owing to the many hurdles he faced, but he never doubted the bright future of biosimilars.
“Fifteen years ago, it was obvious that the populations of almost all developed nations were aging quickly. They were expected to burden governments with healthcare costs. Meanwhile, many drug patents were expiring starting in 2012. Those facts indicated that huge opportunities would emerge for those who have prepared for the future,” Seo said. “Everyone knew about the changes, but no one took them (biosimilars) as a serious business idea.”
Biosimilars, which are about 30 percent cheaper than branded biologics, have a significant impact on drug prices. And there is no reason for any individual consumer or government to refuse biosimilars, which have been proved to be safe and effective everywhere in the world.
The U.S. FDA’s recent approval of Sandoz’s Zarxio as the first biosimilar is a notable event. The changing attitudes toward biosimilars in the United States mean greater opportunities for Celltrion, Seo said.
Not resting on his laurels
From his own successes, Seo has also learned why some firms remain mediocre for too long or eventually fail.
In fact, his success story could have been someone else’s, if only anyone took his business idea seriously 15 years ago. Seo said he is trying not to make the same mistake that other have made.
“Any company that is not preparing for the future is certainly on the path to failure,” he said. “Celltrion is no exception.”
Celltrion has been reinvesting its profits in building production facilities and developing new products – both biosimilars and its own drugs. An antibody capable of treating various influenza viruses is among the drugs on its development list.
Seo has also set his eyes on the cosmetics industry. Given Celltrion’s advanced R&D capabilities and know-how, he has little doubt about the company’s chances of success in that industry.
He said he has no “ultimate business goal,” but he does want to create something like a “Bio Valley” in Korea.
Rising from nothing
Seo is one of the few Korean billionaires who rose from nothing.
When he lost his job in 1999 as an executive officer at the now-defunct Daewoo Motors during the Asian financial crisis, he didn’t have much money, let alone in-depth knowledge about the pharmaceutical industry.
But he learned fast. “I was lucky. Because pharmaceutical companies have to work with regulators around the world, pretty much all the information about what they do is publicly available and therefore can be learned,” Seo said.
He said he didn’t need expertise in drugs in order to create and run a pharmaceutical company.
“You could get help from those who have such knowledge and skills. But as a CEO, you need to be an expert in management,” he said.
“Only a few members started something that initially appeared almost impossible. We want to be living proof that normal people like us can achieve something great with vision and hard work.”