Hospira, Inc. (HSP), Johnson & Johnson (JNJ), Merck & Co., Inc. (MRK): Will This Biotech Approval Start a $100 Billion Trend?

Questions remain
What are some of the questions facing the biosimilar industry? For starters, can the Food and Drug Administration in the United States respond to the industry’s pleas for a clear path forward for biosimilar development? Earlier this summer, eight companies submitted comments seeking clarification on the FDA draft guidance for meetings between the agency and biosimilar developers. It is by no means a nail in the coffin and biosimilars will surely be approved in the United States once patents expire, but for now companies and investors are focused on the European market.

Additionally, how much cheaper will biosimilars be compared to innovator biologics? Development and manufacturing of biosimilars is much more expensive than that of generic small molecule drugs. Will that eat away at any cost advantages? If so, by how much? Furthermore, since no two biologic medicines are exactly identical, will doctors be hesitant to prescribe biosimilars over drugs with long safety records such as Remicade?

The biosimilar industry will experience growing pains as would any other high-growth, high-impact industry. I am still sold on the opportunity presented to investors who keep up with regulatory and development updates. In fact, it could become a hidden gem for biotech investors, since I rarely see analysts describe the potential impacts of biosimilar programs to Novartis AG (ADR) (NYSE:NVS), Hospira, Inc. (NYSE:HSP), and Amgen, Inc. (NASDAQ:AMGN). Increasing revenue, additional cash flow, and improved market share could await. What’s not to like?

The article Will This Biotech Approval Start a $100 Billion Trend? originally appeared on Fool.com.

Fool contributor Maxx Chatsko has no position in any stocks mentioned. Check out his personal portfolio, his CAPS page, or follow him on Twitter @BlacknGoldFool to keep up with his writing on energy, bioprocessing, and biotechnology.The Motley Fool recommends and owns shares of Johnson & Johnson.

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