Replies to post #129578 on Biotech Values

[zipjet]

If SNY could take 75 percent of the market they would have launched an AG last year instead of splitting he market with NVS

Not IMO.

I think in the short run SNY could approach 75% since the pharmacy market will be fast responding to price competition.

The difficulty is that would force Sandoz to cut prices and go after the institutional market aggressively. Price competition would erode the entire market.

So the question is where is the equilibrium and profit maximization for both parties with the AG out. My guess is SNY can take 60% to 2/3's of the market under these conditions with little additional price erosion.

ij

[iwfal]

If SNY could take 75 percent of the market they would have launched an AG last year instead of splitting he market with NVS

Powerful point. If you take someone's reporting of FTC study of avg price drop upon entry of AG into market of only about 5 pct then you'd expect Sanofi to enter the market anytime they thought they could get a total of greater than about 57% market share. So they would have entered the market long ago if they had expectations of driving mL to under 43% of total market.


Note that I did not game the answer to match the WAG I gave earlier. I just did straight math of Sanofi expected profit given 5% reduction in price, associated decrease in GM, and market share.