Replies to post #187379 on Biotech Values

[zipjet]

From Morgan Stanley report on GILD today. I already posted this on Twitter but thought I would try to copy it here - mostly for its comments about MRK being "rational," clearly implying that ABBV was not with its price cuts.

They were more candid with me and said that ABBV "shot themselves in the foot".

;-)

ij

[jq1234]

>> Long-term durability with price - With a rational Merck, what Gilead may have done is just accelerate the lowering of price from a 3 year endeavor to a 4-6 month endeavor.


Great rationalization from analysts on why they didn't see this type of sharp price cutting coming, oh, it was because someone else was not rational, not because they couldn't see HCV market dynamics clearly. I'll save this report, show how stupid their assumptions are a few years down the road, just like those famous CS reports at the end of 2013 on how high HCV drug prices would be in the future!

[DewDiligence]

GILD—[from Morgan Stanley]: …the fear is that the 46% gross-to-net just represents a starting point of additional downside instead of the end of the road for downside. We believe it actually represents a reasonable base where further decline may be limited.

However, the 46% figure is a blended average of GILD’s 2015 US HCV sales of Harvoni and Sovaldi. The average discount is almost certainly larger on Harvoni than it is on Sovaldi.