I posted this awhile back. Only one person on the board understood or commented. Probably a waste of time, but here it is again.
Ah yes, the BOB’s (Buy Out Boys) are at it again, opining how BP can save their timely, well deserved fortunes from this, “who the hell do they think they are”, pipsqueak company.
BP paradigm: Many drugs, one disease.
Amarin paradigm; One drug, many diseases.
People who work in manufacturing will understand the enormous significance of this.
Economy of scale is a key ingredient for competitive edge. Taken to the extreme, the cost to produce a product will approach the cost of the raw material as production quantity increases. Every time a new product is launched, it is front loaded with the nonrecurring cost for research, design, development, certification/qualification, and manufacturing lines, etc. Those costs have to be recovered on future sales margins. Those margins, in addition, have to cover profits to the owners and perhaps advanced development for the next generation product as well.
As you can see, all Amarin has to pay for in terms of recurring cost are trials for new diseases! Then, the more Vascepa produced to treat more diseases, the less expensive it becomes due to economies of scale. Moreover, all the nonrecurring cost to expand production is paid by their suppliers.
A master stroke if I ever saw one!
Chronic disease is the self propagating golden goose of Pharma. The drugs are expensive. The disease is never cured. The drugs cause dangerous side effects that must be treated with more drugs, also expensive and with their own side effects. Patients’ lives are extended so they can continue buying the drugs longer. What a deal!
My belief is that BP would focus on the RI cohort and bury Vascepa for other indications. Why would they threaten their existing expensive drugs with a cheaper alternative? No corporation is in business for the betterment of mankind, including Amarin. Amarin can make the maximum amount of money treating as many diseases as possible with Vascepa. Best part is that it doesn’t threaten the statin business at the moment.
The idea that big is always better belies the facts. Big makes a bigger splat when it collapses. SpaceX is outdoing Boeing and Lockheed in the commercial rocket business. Any hapless BA or LM employee unfortunate enough to suggest landing boosters after launch would have been laughed out of the room and sent to sit with the interns.
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