Elite Pharmaceuticals Inc (ELTP)

[no2koolaid]

It is estimated that the increased cost for insurance companies to cover current abuse deterrent formulation technology would be less than the current costs to treat people who abuse those drugs, according to a study conducted by Wayne Winegarden of the George Mason University School of Economics that was published in Forbes. Based upon this information, more than six in 10 support this type of federally mandated abuse deterrent legislation. “It is critical that we distinguish between cost and value when it comes to abuse deterrent technologies,” explained Cohen. “The upfront cost of implementing abuse deterrent technologies is insignificant when compared to the long-term savings these technologies generate by deterring people who have not yet abused prescription drugs.”

This speaks to the heart of my post about pricing yesterday...

It remains there is the recognition that the means by which drug pricing should/will be determined is whether the medication actually works and how well. While Teva, Pfizer, Purdue, and Collegium may have forms of ADFs, the implication that they are not deterrent in as many ways as appears to be the case with Elite's tech means that Elite has the potential to be a standard against which success can be measured, as one of the key attributes of premium pricing is its potential for wider societal benefit via abuse deterrence. Therefore, the logic for the pricing of Elite’s ADFs will support a higher price point because their tech confers a level of product differentiation.

I would be remiss in not arguing the reality of the strategic nature of pricing as a means to extract value from product differentiation. By virtue of its patented tech, Elite can create customer value (whether the customer is the patient or the medical professional is another discussion) that is not effectively or easily copied or imitated cheaply by rivals. Moreover, because of the tipping point in the opioid pain med market being created by the advancement of ADFs, Elite's tech has the ability to build product brand awareness and, over time, loyalty. However, this is not a forever opportunity and it is why commercialization must be done with an eye on the global market. For that, Elite simply does not have the ability to fully leverage its product portfolio. And, for those who really think PuraPharm/Humanwell have the capacity simply because they are a Chinese corporation are mistaken. They do not currently have the structural capabilities needed for the scale I am talking about. If Elite gets FDA approval and full abuse deterrent labelling they are teed up for the kind of success that is only made possible by a bigger pharma firm. Could they license? Sure. But this is an example of where big pharma sees the big picture (they have run the numbers) and understands that once they buy Elite they can shed themselves of the entire Elite structure, reducing costs and turning the combination of pricing, commercial enterprise, and global reach into a revenue producing engine.