Replies to post #101428 on Biotech Values

[tinkershaw]

Given that since this generic market is so different from practically any other that we are in somewhat new territory here. This said, under any scenario, if MNTA remains the sole generic they will make hundreds of millions per year gross income. Whether they get 80%, 50%, or 30% market share.

If Teva is approved, this market will almost certainly revert to the more typical model as Sanofi will not want to fight two companies in a price war, and will instead profit maximize, unless the 3 players can "signal" each other into each reaching profit maximizing market share points. In such case, the generics will almost certainly hold greater than 50% marketshare.

So we can fuss over it all we want, but that is the certain outcome in the sole generic, and the very likely outcome in the 2 generic outcome.

At the current share price, any of these outcomes are good for MNTA, with the former being a multi-bagger pre-copaxone.

Tinker

[mauser96]

Perhaps some insight can be gained by looking at other duopolies in the past. Coke-Pepsi, GM- Ford come to mind , I'm sure there are several others. In none of the cases I'm aware of was there cut throat competition based only on price. The involved companies wound up with an unspoken arrangement and split the market. I don't know why it should be a lot different with drugs, but probably some detective work can be done there.
Large companies with high overhead accustomed to selling high margin products in general are ill equipped to fight it out in a commodity market. They would be better off using the cash to find new high margin products or buying out companies likely to have one.Wherever possible , commodity markets are avoided by astute managers.