SOCIETÀ ITALIANA DI DIRITTO ED ECONOMIA
Velizar Kirilov (European University Institute)
Abstract
The upcoming biopharmaceutical patent cliff will set the stage for a large-scale market entry
with biosimilars over the next decade. Unlike generic producers, their developers may be
incentivized to compete beyond the realm of price. The technological and commercial
peculiarities of biosimilars suggest that they can be a source of innovation stemming from
advances in drug delivery and manufacturing processes. These improvements fit the definition
of incremental innovation, although they may produce isolated disruptive effects. Competitive
pressure from biosimilars further induces bio-originator producers to respond by subsequent
cycles of innovation. From a firm-centric perspective, the freedom to operate in biosimilar
R&D is a key condition enabling their manufacturers to potentially expand business models
into the originator segment of the industry. All these innovation-related benefits may be
foregone if competition agencies are not well-equipped to dismantle anticompetitive strategies
eliminating the prospect of a successful biosimilar entry. Considering the lack of strong
antitrust precedents, this article proposes the concept of ‘potential competition in existing
markets’ as the appropriate analytical framework for assessing the impact of business conduct
on biosimilar innovation. It is capable of effectively protecting dynamic competition, while
seamlessly meeting both ex-post and ex-ante enforcement standards in EU competition law.