Replies to post #102834 on Biotech Values

[wallstarb]

It sounds like Sanofi is matching price or atleast making the generic alternative unactrive at it's current price point - atleast for larger HMO's and hospital groups. It will be interesting to see how much sales is actually affected from this. Possible revised gross sales lower atleast due to the pricing issue.

[dewophile]

I'm beginning to think that the sales are Sanofi's to lose

actually i think it is just the opposite- sales are generic to lose unless SNY cuts deals - after all why would anyone pay 15% more for the same product. i'm sure sny was proactive and will maintain exclusivity with some GPOs and PBMs for the outpt setting, but lose others (e.g. zip's hospital network is generic and MEDCO is generic to give you example of a GPO and PBM, repectively, that went generic). seems to me the market will be carved up in such a way that nearly 100% inhospital/network sales will go with either generic or branded depending on contracted pricing, and at the end of the day it will be divided fairly evenly in terms of market share once equilibrium is reached (i.e. sandoz increases capacity and completes negotiations with GPO/PBMs)

that said end user sales at the outset may be less than the 35-40% expected until sandoz does complete these negotiations (zip- after listening to the presentation i am still unclear if 35% end user penetration achieved or 35% shipped to wholesellers)

[zipjet]

I'm beginning to think that the sales are Sanofi's to lose. In other words, it looks like the hospital groups would prefer to stay with the original Lovenox as long as the 'price is right'.

That is logical.

IF the choice is use a product (L) that I have used before and know or another product (mL) and the price is the SAME - I would stay with my old standard.

But the interplay gets more complicated.

The incumbent will have to match price on part of the market or see their share* drop well below 50% share. If the incumbent matches price on too much of the market, the innovator will cut again, etc, etc. That is a no-win game. This is why some equilibrium point must and will be achieved. It is why leaving a production constraint in place could help signal where that equilibrium will be reached.

If would be very interesting to me to read the contracts that are being signed. I doubt very much that the buyers are really locked up so that they cannot switch.

zip


* L likely would keep some sales even at premium pricing. 5%? 10%? 20%? I do not know how much but that range seems a fair guess.