Replies to post #131076 on Biotech Values

[marthambles]

Given the continuing duopoly, and the mutual understanding that a third competitor will likely not resurface for some time, is there a way for the parties to unscramble the egg, i.e. raise prices in a coordinated yet non-collusive manner?

[DewDiligence]

Chronology of Lovenox Pricing Maneuvers—Sep 2011 to Present

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 (or claims to have thought) that Amphastar launched, although NVS says that that no product from Amphastar was ever seen in the commercial market.

5. (Purportedly) in response to Amphastar’s pseudo-launch, SNY launched an AG, which was priced at a discount to branded Lovenox and aimed at the retail segment.

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

7. In late November, following the failure by Amphastar to have the preliminary injunction lifted, SNY “un-launched” the AG, signaling the desire to maintain duopoly pricing.

8. If there are no new developments, pricing in the US Lovenox market should now be stable with the dollar share of the combined hospital and retail segments split roughly evenly between SNY and NVS.