Biotech Values

[zipjet]

But even if removing the overhang means a doubling of the EPS multiple you only break even if the AG chops the EPS in half. This is my concern.

This brings us back to profit maximization.

How will SNY price the AG, assuming aL is blocked?

SNY was apparently content not to disturb the market split until aL was approved. IF they want that to continue they could withdraw the AG, price it at or above mL, or provide little of it to the distribution channels. If they decide to undercut mL pricing, they will degrade the whole market and risk mL responding with their own cut further degrading the whole. The only way that SNY comes out ahead is if they can take AND maintain a higher market share than they would have without the AG launch and sufficiently greater to make up for the competitive price degeneration caused by the additional competition. In the short run this seems easily doable to me. But in a longer term I doubt that they can sustain the additional market share in the face of more aggressive competition from MNTA/Sandoz.

So the determining factor may be how long SNY thinks that the MNTA patents will prevail in keeping aL and tL off the market. If I were making the call, and I thought the patents could keep the other generics off the market for some years, I would back off on the AG. But if I judged that the other generics would come on the market within a year, I would go for market share now.

ij