Replies to post #131069 on Biotech Values

[DewDiligence]

Re: Lovenox pricing

I just reread the transcripts from NVS’ 3Q11 CC and MNTA’s 3Q11 CC; from what was said—and from the 3Q11 sales numbers themselves—I think we can lay out a chronology of what occurred with respect to Lovenox pricing during September and October:

1. In response to Amphastar’s FDA approval on Sep 19, SNY preemptively lowered the price of branded Lovenox in the hospital segment.

2. NVS lowered its own price in the hospital segment in response to SNY’s price cut.

3. The effect of #2 showed up in NVS’ 3Q11 Lovenox sales.

4. In very late September or early October, SNY thought Amphastar launched, although NVS claims that no product from Amphastar (or WPI) was ever seen.

5. In response to Amphastar’s launch/pseudo-launch, SNY launched an AG, which was priced at a discount to branded Lovenox.

6. The launch of SNY’s AG may have caused NVS to drop its price in the retail segment, but this occurred too late to show up in the 3Q11 numbers.

As noted in my previous post, there is no evidence I’m aware of that SNY lowered the price of branded Lovenox since launching the AG. Indeed, the point of having an AG in the first place is to avoid cutting the price of the branded product unduly, so it would be illogical for SNY to make further price cuts on branded Lovenox unless forced to do so by aggressive cost-cutting from NVS in the hospital segment.

All told, I think it’s reasonable to infer that the post-injunction pricing in the US Lovenox market has stabilized, but we won’t know for sure until the 4Q11 reports are issued in January.