Biotech Values

[zipjet]

$GILD

Thanks Rocky,

Of course, the payers are hoping for that kind of price war. I actual think that it is unlikely. So net-net, my range from would be $50,000-$62,000 for ABBV with a midpoint of $56,000, or a 20% discount from the 8 week cost from GILD.

I appreciate the effort to target absolute prices - something I have refused to do. GILD, as first to market, will do that for us.

Far more interesting and important is the delta of the competition and their ultimate success in garnering market share.

Your ABBV discount of 20% is precisely where I would put it. 20% is the demarcation for the first round competition. Any discount much greater and it would be futile as it would invoke a pricing response by GILD - less and it would fail to maximize revenue for ABBV.

The second round will be determined by how much market share ABBV/MRK garner with the selected discount. Great success would generate some response by GILD.

Ultimately, the iterations will hone in on an equilibrium in pricing that maximizes total revenue for the drug companies.

What none of the analysts seem to do is recognize this and the consequence that after equilibrium is reached the companies will do annual price increases that tweak and maintain the equilibrium.

ij