Sandoz, the world’s largest maker of biosimilars and generics, is deepening its pipeline with a deal worth up to $322 million to license as many as 10 biosimilars from China’s Shanghai Henlius Biotech.

Henlius develops and manufactures; Sandoz commercialises globally, excluding China. Near-term payments for the initial assets total up to $100.5 million, with the remainder tied to milestones.

What a biosimilar is, and why it is harder than a generic

A generic small-molecule drug is chemically identical to the original — the same molecule, made by anyone once the patent expires, demonstrated equivalent through relatively simple testing.

Biologics are different. They are large, complex proteins produced by living cells, and their precise structure depends on the cell line, the culture conditions and the purification process. No manufacturer can produce an identical copy, only a highly similar one — hence biosimilar.

Demonstrating similarity requires extensive analytical characterisation and usually clinical trials, so a biosimilar costs tens or hundreds of millions to develop rather than the modest sums a generic requires. That is why biosimilar competition is thinner than generic competition and why price reductions are smaller.

The portfolio

The initial assets reference several blockbuster biologics: a cetuximab biosimilar (referencing Erbitux, used in colorectal cancer, about $1.7 billion in 2025 global sales), an evolocumab biosimilar (referencing Amgen’s cholesterol-lowering Repatha), a belimumab biosimilar (referencing GSK’s lupus drug Benlysta), and a recombinant human hyaluronidase in technical development to enable subcutaneous delivery.

The deal expands Sandoz’s biosimilar pipeline from 39 to potentially 46 assets.

The hyaluronidase is the interesting item

It is the one component that is not a copy of anything, and it addresses a specific commercial problem.

Many biologics are given intravenously because the volumes required are too large to inject under the skin, which disperses poorly. Recombinant hyaluronidase temporarily breaks down a component of the tissue matrix, allowing much larger volumes to be absorbed — converting an infusion into an injection.

That matters because originator companies have used subcutaneous reformulation to defend products facing biosimilar competition: patients moved to a more convenient subcutaneous version are harder to switch back to an intravenous biosimilar. A biosimilar developer with its own hyaluronidase can follow them.

The patent cliff driving this

The industry faces “one of the largest ongoing patent cliffs in its history,” with the share of global drug sales under patent protection projected to fall from about 12% in 2022 to 4% by 2030.

That is the entire strategic context. An enormous cohort of biologics approved from the late 1990s onward is losing exclusivity within a compressed window, and each expiry opens a market to whoever has a biosimilar ready.

“Ready” is the operative word. Biosimilar development takes years, so capturing an opportunity in 2030 requires starting now — which is what buying pipeline achieves.

Why license from a Chinese manufacturer

The structure — Henlius develops and manufactures, Sandoz commercialises ex-China — reflects complementary strengths.

Chinese biotechs have built substantial biologics manufacturing capability at costs Western competitors struggle to match, which matters disproportionately in biosimilars, where the product is undifferentiated and competition is on price.

What they generally lack is global commercial infrastructure. Selling biosimilars means navigating reimbursement, tendering and hospital formularies country by country — exactly what Sandoz has and a Chinese manufacturer would take years to build.

The economics of the deal

Up to $322 million for as many as 10 assets is modest by pharmaceutical standards, and $100.5 million near-term for the initial group is a fraction of what developing them would cost.

That reflects the nature of biosimilars: the reference product’s efficacy is established, so the risk is manufacturing, regulatory and commercial rather than scientific. Milestone-weighted structures suit assets where the question is execution rather than whether the drug works.

Why biosimilar savings have disappointed

Biosimilars were expected to do for biologics what generics did for small molecules, and the results have been more modest — which shapes how deals like this should be assessed.

Generic entry typically collapses prices by 80% or more, because many manufacturers enter cheaply and compete purely on price. Biosimilar entry has usually produced discounts of a much smaller order, because development costs restrict how many competitors appear and because the market works differently.

Prescribing is the main friction. Pharmacists can substitute a generic automatically; biosimilar substitution rules vary and frequently require the prescriber to specify the biosimilar, which means each switch involves a clinical decision rather than a dispensing default.

Originator companies have also defended aggressively through patent thickets, rebate structures tying formulary position to volume, and reformulation. The consequence is that biosimilar profitability depends on getting to market early with a manufacturing cost advantage — which is precisely what a low-cost manufacturing partner and a large pipeline are for.

“Expanding access to life-enhancing medicines for patients around the world lies at the heart of everything we do,” said Sandoz CEO Richard Saynor. Business news, not investment advice.