As has been previously discussed on this board, the supply contracts between a drug vendor and a group purchasing organization (GPO) are not binding with respect to exclusivity; rather, they are simply price guarantees for specified products during a specified period. If NVS offers a GPO a better price on Lovenox than SNY does, the GPO can switch; similarly, if SNY offers a GPO a better price than NVS, a GPO can switch back.
The net result (consistent with “pure” duopoly theory) is that each company will end up with roughly half of the market in terms of dollar sales.
Caution: SNY is telling investors it has a US Lovenox market share of approximately 67%, but this is not SNY’s share of Lovenox dollar sales; rather, it’s a contrived metric based on the total milligrams of volume shipped in which SNY is counting a 300mg vial as though it were the same as 7.5 40mg prefilled syringes. SNY evidently has a larger share of the large-volume SKU’s (the 300mg vial and the syringes with 60-150mg) than it does of the overall Lovenox market, which is why SNY prefers to use this contrived metric.
“The efficient-market hypothesis may be
the foremost piece of B.S. ever promulgated
in any area of human knowledge!”
