Replies to post #83520 on Biotech Values

[rkrw]

You're assuming no one else will ever be able to launch a generic lovenox. What makes you think Teva is the type of company to give up? If Sanofi is going to lose a massive market share, why wouldn't they launch an AG?

As far as your model we discussed it before, i think your market share and profit margin are too high and we disagreed. Obviously as a sole generic this would be very lucrative, but i think nearly a billion in free cash flow per year for it is optimistic.

Any guesses on what's mnta's next generic project? I'm thinking something like Enbrel.

[exwannabe]

RE: MNTA and generic Lovenox pricing

If MNTA's product becomes the only approved generic I would tend to think they might price it a little higher than DDs estimate, intentionally leaving some market share on the table. The logic is that by allowing the branded drug to maintain a more respectable market share they would "force" Sanofi-Aventis to NOT launch an authorized generic.

Start with DD like numbers, that they could grab 80% share at 75% price point. This leaves the market at $1.5B/y for generic and $0.5B/y for branded. SA could launch an AG version and hope to gain .75B back (and only somewhat cannibalize the branded product). [I assume when there are just 2 generics they are intelligent enough to just split the share and not start a price war. I also assume there is some general floor below which the branded drug share doesn't drop].

Now what if the generic is priced a little higher so that they are only taking 60% of the market? Now the numbers are $1.1 (or so) for the generic and $1.0 for branded. At these numbers SA will not launch an AG as they will immediately cannibalize the highly profitable branded sales.

I obviously have no idea what the actual price sensitivity curves look like, but the concept seams valid. Take a little less of the pie, but avoid the competition from an AG.