Roche’s trio of cancer blockbusters—Rituxan, Avastin and Herceptin—brought in $20 billion in sales last year, with one-fifth of that haul coming from lymphoma treatment Rituxan. They’re all now facing biosimilar threats expected to hit hard next year. Still, Roche Pharmaceuticals chief Daniel O’Day assured Wall Street analysts just last month the company will continue to grow "even in a worst-case scenario."

Investors are now much closer to learning just how serious that scenario will be. Late Wednesday, the FDA approved the first Rituxan biosimilar for the U.S. market, Truxima, which will be marketed by Celltrion and its partner Teva. The approval followed a unanimous thumbs-up last month from a panel of 16 independent advisers to the FDA.

Celltrion and Teva did not disclose a price or launch date for Truxima in announcing the approval, but Roche has been bracing for the biosimilar to hit the market in the U.S. in the first half of next year.

A preview of what Roche could face with a Rituxan biosimilar in the U.S. is now playing out in Europe. During the third quarter, European sales of the branded drug plummeted 49% to CHF 206 million ($207 million).

During the third-quarter earnings conference call with analysts, O’Day downplayed the notion that the U.S. would see a similar switchover rate to the biosimilar. Biosimilar pickup varies depending on the country, he noted, and the U.S. is "a highly heterogeneous" healthcare system, prone to variations in payer decisionmaking that could slow biosimilar adoption. That means the Rituxan erosion rate shouldn’t be as fast in the U.S. as in Europe, he added, "even with some potential additional activities with the administration in the U.S. government."

But that last point is important, given the ongoing noise about drug prices from President Donald Trump, newly ascendant Democrats in Congress, and members of the Trump administration. Encouraging generic and biosimilar competition to pricey branded drugs remains a government priority, as FDA Commissioner Scott Gottlieb, M.D., made clear in announcing Truxima’s approval.

"Our goal is to promote competition that can expand patient access to important medicines," Gottlieb said in a statement, adding that Truxima is the third biosimilar to gain FDA approval in the last month. The agency cleared Novartis’ Humira biosimilar on Oct. 30 and Coherus’ Neulasta copy on Nov. 2. "The growing pipeline of biosimilars is encouraging. We’re seeing more biosimilar drugs gain market share as this industry matures," Gottlieb said.

No doubt the Truxima approval will be a boost for Celltrion and Teva. The FDA initially rejected the drug, citing concerns about a manufacturing plant in South Korea. Celltrion refiled for approval in May. Celltrion is also gunning for FDA approval of a Herceptin biosimilar, which will be marketed by Teva in the U.S. under an agreement the two companies struck in 2017.

Meanwhile, Wall Street experts are still worrying that the biosimilar hit will be harder than Roche—and other companies facing significant patent cliffs—expect.

"We think [biosimilar] adoption will accelerate in … 2019 based on both the changing government policy and payers looking to effect change," said Bernstein analyst Ronny Gal in a note and video distributed to investors late last month.

He pointed to Herceptin in Europe as an example. Even though biosimilars from Celltrion, Samsung Bioepis and Amgen have only been on the market for about four months there, they’ve already taken 6% of the market, with pickup particularly high in the U.K. and Germany. "Given that those are the two largest markets in Europe, we expect them to drive adoption quite quickly as we go through the next couple of quarters," Gal warned.

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