Biotech Values

[DewDiligence]

MNTA – Opinions on whether SNY will launch an authorized generic are all over the map. For instance, in #msg-34006751, ‘Biopharm investor’ (who is probably more knowledgeable about the US generic-drug industry than anyone who posts on this board) argues that SNY will almost certainly launch an AG unless SNY believes that NVS is unable to supply enough product to meet demand. On the other hand, in #msg-33857504, zipjet presents a cogent argument for why AG ought not to launch an AG if there is only one generic competitor.

Moreover, in #msg-38905020, mcbio points out that an AG launch would undermine SNY’s ability to conduct a fear-based, anti-generic marketing campaign to induce prescribers to check the “no substitutions” box on their Lovenox prescriptions. By undermining such a marketing strategy, SNY would all but eliminate any reason for patients and hospital formularies to pay a premium for branded Lovenox.

Another approach SNY could take—the approach I think is most likely—is to defer making a decision on whether to launch an AG until SNY can see the lay of the land. If NVS/MNTA launches its generic at a modest price discount to branded Lovenox, SNY might opt to retain a minority share of the market at the full branded price rather than compete for market share by discounting the branded price. This, of course, is the best-case scenario for MNTA.

SNY’s willingness to settle for a minority market share clearly depends on how large a minority share we are talking about; e.g. SNY might be overjoyed to retain, say, 40% of the market at the full branded price but unwilling to settle for only 20% of the market at the full branded price. Thus, if SNY found that its market share after NVS/MNTA’s generic launch had stabilized at around 40%, SNY would presumably not be motivated to launch an AG. On the other hand, if SNY found that its market share had dropped to 20% (or were in danger of so doing), SNY would presumably launch an AG or cut the price of branded Lovenox to regain market share. What is unclear to me is where the dividing line is between the two cases described above, and this adds an additional element of uncertainty to the analysis.