Major countries, including the U.S. and Europe, are accelerating the easing of biosimilar regulations, creating expanding opportunities for K-Bio. Furthermore, as the U.S. pushes for increased insurance company responsibilities and higher patient out-of-pocket costs, demand for competitively priced biosimilars is expected to surge.
Industry sources reported on Thursday that the U.S. Food and Drug Administration (FDA) recently announced plans to significantly streamline clinical trial and biosimilar approval processes through its fiscal year 2027 budget proposal.
The FDA aims to expedite entry for certain early clinical trials when safety is demonstrated through preclinical data and new alternative testing methods. Additionally, comparative clinical trials will generally not be required for biosimilars.
This trend is gaining momentum globally. The European Medicines Agency is pursuing measures to waive comparative clinical trials when analytical and pharmacokinetic data are sufficient. Similarly, South Korea’s Ministry of Food and Drug Safety has initiated preliminary reviews to relax requirements for Phase 3 comparative efficacy clinical trials.
Major regulatory bodies are simplifying clinical trials due to the accumulated confidence in biosimilars. As early clinical and preclinical stages shift to countries with lower regulatory hurdles like China and Australia, nations are racing to attract clinical trials by easing regulations.
Consequently, the U.S. plans to establish a faster pathway for Phase 1 clinical trials, reducing early-stage development burdens and promoting domestic clinical activity. This approach is expected to decrease redundant preclinical data requirements, potentially reducing animal testing.
Historically, biosimilar development has been a high-cost endeavor, requiring large-scale clinical trials costing hundreds of billions of KRW (hundreds of millions of USD) and taking 7-8 years. However, if regulatory easing becomes a reality, development costs could plummet by 70-90%, with timelines shortened by several years. This shift would enable companies to develop more products simultaneously with the same capital.
These changes present significant opportunities for domestic companies. Firms like Celltrion and Samsung Bioepis, with multiple biosimilar pipelines, can expand their development scale as clinical burdens decrease. This acceleration in development speed and earlier market entry timing is expected to be highly beneficial.
Increased Supply Due to Regulatory Easing and Rising Price Pressures From Changes in Insurance Policies
Demand-side changes are also aligning with these shifts. The U.S. Centers for Medicare & Medicaid Services (CMS) plans to increase insurer burdens and raise patient out-of-pocket costs through its 2027 Medicare Advantage payment policy, while also enhancing healthcare utilization management. This structure is likely to reduce the use of high-cost original medications and encourage the selection of lower-priced alternative drugs.
Analysts predict that the simultaneous increase in supply due to regulatory easing and price pressures from insurance policy changes will likely reshape the market around biosimilars.
However, regulatory easing also brings the challenge of intensified competition. Lower entry barriers may lead to increased market participation by global pharmaceutical and biotech companies, potentially resulting in heightened price competition. Given that price competition is a key factor in the biosimilar market, revenue growth may not directly translate into improved profitability.
An industry insider commented that the reduction in clinical costs will enable companies to expand their pipelines, creating greater opportunities for domestic biosimilar firms.
