SEOUL – South Korea's Samsung conglomerate won approval from U.S. regulators Friday for a lower-priced copy of the blockbuster rheumatoid-arthritis drug Remicade, clearing the way for Samsung to begin selling complex pharmaceuticals in the world's biggest drug market.
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The newly approved biosimilar would be the second copy of Johnson & Johnson's top-selling drug to hit the market, after Pfizer Inc. began selling its Remicade biosimilar Inflectra late last year. The approval is the first in the U.S. for Samsung, which has been trying to diversify beyond electronics.
Samsung said it wouldn't yet announce the price of its new drug, named Renflexis. Companies have priced the handful of biosimilars approved so far, including Inflectra, about 15% less than the list price of the original drug, though analysts expect prices will drop as more enter the market.
Renflexis may not go on sale until late this year, as companies have had to wait six months after approval to begin sales of biosimilars under a court's interpretation of the Affordable Care Act. The 2010 law created an abbreviated pathway for the Food and Drug Administration to approve biosimilars, which are copies of complex biologic drugs made from living cells. The U.S. Supreme Court is reviewing the sales delay and expected to issue a decision before July.
For Samsung, the approval of Renflexis comes on the same day the conglomerate's technology business began selling its premium Galaxy S8 smartphone.
The South Korean giant is already the world's biggest manufacturer of smartphones, televisions and memory chips, and has interests in shipbuilding, insurance, construction and fashion. But Samsung's growing presence in pharmaceuticals underscores the breadth of businesses that the country's biggest and best-known conglomerate is engaged in, even as it struggles through its most challenging corporate crisis in a generation.
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About six years ago, Samsung's third-generation leader Lee Jae-yong helped push the conglomerate into biologic drugs, betting that biologic drugs could drive growth for Samsung as the long-term outlook for smartphones became more uncertain.
One of the major pieces of that effort is Samsung Bioepis Co., which was founded five years ago. It is 29.4% owned by Samsung Electronics and 40.5% owned by Samsung's de facto holding company Samsung C&T Corp.
In five years, Mr. Lee has plowed about $1.3 billion into Samsung Bioepis, the conglomerate's biotech unit, to develop biosimilars.
Earlier this year, however, Mr. Lee was indicted on corruption charges tied to a political corruption scandal that has taken down South Korea's president. Mr. Lee, who is undergoing trial, has denied wrongdoing.
Mingi Hyun, a spokesman for Samsung Bioepis, said that the company "remains committed" to developing biosimilars, adding: "We will continue to advance one of the industry's strongest biosimilar pipelines."
Biosimilars were authorized in the U.S. as part of the Affordable Care Act as a way to lower the hefty sums paid on costly biotech drugs, among the most expensive drugs in the world, just as generics offer a lower-priced alternative to pills.
J&J said Monday that it hadn't seen yet seen much of an impact from Pfizer's biosimilar Remicade and expected patients would shift slowly to using the copies.
Many industry officials and analysts, nevertheless, expect biosimilar sales will grow in coming years, in no small part because they promise to help control spiraling health-care spending.
Samsung has struck a deal with Merck & Co. to sell Renflexis in the U.S. Renflexis had previously won regulatory approval in Europe, Australia and South Korea.
In January last year, Samsung became the first biosimilar maker to win regulatory approval in Europe for a copy of Pfizer's Enbrel.
Since then, it has racked up more than $100 million in sales of its Enbrel knockoff in Europe, Samsung Bioepis said Friday.
Remicade and Enbrel each generate about $9 billion in revenue a year, making them two of the five best-selling biologic drugs in the world.
Samsung Bioepis is 93.3% owned by Samsung BioLogics Co., which is a contract manufacturer of biologic drugs developed by companies such as Roche Holding AG and Bristol-Myers Squibb Co. Samsung BioLogics, in turn, is 75% owned by Samsung Electronics and Samsung C&T.
Just six years old, Samsung BioLogics is already one of the world's biggest contract biologic drugmakers by volume.
After a public listing last year, Samsung BioLogics' stock has climbed 30%, valuing the company at about $11 billion.
Samsung Bioepis was on track for an IPO on the Nasdaq Stock Market last year, but the offering was shelved amid market volatility. A spokesman said Friday that it is still "evaluating U.S. market conditions to determine the optimal timing" for the listing.
Write to Jonathan Cheng at Jonathan.Cheng @wsj.com and Jonathan D. Rockoff at Jonathan.Rockoff@wsj.com
(END) Dow Jones Newswires
April 21, 2017 17:18 ET (21:18 GMT)