Biotech Values

[Rocky3]

I don't think we've ever had a situation like this before - roughly comparable drugs for a huge market competing on a mixture of price and other characteristics. It's inherently unstable I think, and will grow even more so with more entrants.

I think that this is the reason that the market is valuing the current players so low. With the "known" status quo, GILD and ENTA (and probably ABBV) are dramatically undervalued. But the huge uncertainty as to timing and effectiveness of future players makes the overall future market unknowable.

I am not so worried about future inferior drugs, since I think that the FDA will not allow a truly inferior drug. But a "similar" or superior drug does pose the issues that you raise. I think that this issue is the major reason that it is in ABBV's (and GILD's) best interest to get as many sales as soon as possible to maximize the number treated with its drug even if it means cutting the current price.

Since I'm not a believer yet in the "limited capacity" theory (the current NRx numbers are approaching an 300K annual rate with significant delays in approvals and without the VA, prisons, etc.), I see a much steeper curve than the one shown in the ACHN slide - both on the upside and on the downside. The '15 and '16 WW numbers should be huge. I'm pretty sure that the '19 and '20 numbers should be much lower, especially if there are additional players in '17 and '18.