Replies to post #76317 on Biotech Values

[ghmm]

I was wondering the same didn't know if David meant that they could increase total revenue via a lower price point or promote more humanitarian use. I thought companies did a fair amount of research to make sure of reimbursement and optimize total revenue. I've wondered if BMRN priced Kuvan too high wondering if it would have increased penetration enough to help the bottom line (for all of about 5 seconds :-) ).

[AlpineBV_Miller]

Out of curiosity why do you see them as idiots for their pricing?

Short-term thinking. Pricing the drugs as high as they did was not an economic choice based on any bottom-up cost+margin scenario. That's fine, of course, lots of consumer items are priced to what the market can bear and not in relation to what the cost and margins needs to be.

In this case we're screwing with people's health, in particular cancer patient's health. By pricing towards the $100K a year level they guarantee public backlash and foster an environment precisely like what we will be getting -- comparative approvals using price as one metric.

Until they made those pricing decisions, I never heard oncologists talk about deciding on what drug to prescribe based upon the price. Now they will use an "unsanctioned" drug first for nearly all patients only because they hope the cheaper drug will work before they have to use the really expensive one. This isn't as prevalent in academic centers where most of us in this biz get our information from, but it is rampant in community and smaller oncology practices.

Yes, they got bought for big dollars. The IMCL purchase was particularly stupid because the only way the numbers work is if you assume there will be no change in US policy towards pricing and reimbursement. I hope they have a 3-4 year payoff ROI on that deal, because that's about all the runway I think they'll have.

Genentech is much more than just Avastin, of course, you're buying the culture, operations, and pipeline expertise. I personally think Roche will screw that up, but the price cna be justified based upon their R&D engine alone.