July 19, 2002
RESEARCH TRIANGLE PARK
Sales of Avonex, a multiple sclerosis drug made almost exclusively in Research Triangle Park, are facing a competitive mauling that some industry watchers believe could lead to the acquisition of the drug's owner and manufacturer, Cambridge, Mass.-based Biogen.
Avonex's market share has been under attack since March, when Rebif, a challenger made by Swiss pharmaceutical company Serono, arrived in the United States. Until then, Avonex enjoyed sales growth of 20 percent to 28 percent over year-earlier quarters. For the three months ending June 30, however, Biogen's Avonex sales increased by only 3 percent over the second quarter 2001.
Making matters worse for Biogen, New York-based pharmaceutical giant Pfizer on July 12 weighed in on the competition, throwing the muscle of its formidable, 8,000-member sales force behind Rebif.
"It means big problems for Biogen," says Robert LeBoyer, an analyst with New Jersey-based New Vernon Associates.
At the very least, LeBoyer expects Pfizer's involvement to flatline
Biogen's sales growth. Avonex is Biogen's only product on the market, and
the drug made up 93 percent of the company's annual sales last year. But
if Avonex sales decline and Biogen's stock drops much lower than $32 per
share, LeBoyer and other analysts believe that Biogen's future as an independent
company could be at risk.
That's especially true for the facilities that Biogen operates in RTP. They would be seen by potential suitors as valuable assets during a time when demand outstrips capacity to manufacture drugs and new plants are expensive and time-consuming to build, LeBoyer adds.
Following the second quarter earnings report July 18, Biogen's stock began trading at about $34.63 a share.
Biogen spokesman Tim Hunt insists Avonex won't be a pushover.
The multiple sclerosis market in the U.S. is dominated by 5,000 highly specialized neurologists, who write about 88 percent of the prescriptions, Hunt says. That small number of physicians makes mass marketing difficult. As a result, the size of the sales force is less important than the quality of the product, he adds.
"We've been in the market since 1996, and we're in weekly communication with 5,000 doctors," Hunt says. "We're considered the treatment of choice."
Serono had been trying to crack Avonex's U.S. monopoly with its Rebif drug for years. Following a carefully designed study that pitted the two drugs head to head, the U.S. Food and Drug Administration in March approved Rebif for sale in America.
The two drugs target the same patient population, says Franklin Berger, an analyst with New York-based JP Morgan who tracks Serono. About 250,000 to 300,000 Ameri-cans, the largest segment of multiple sclerosis patients, fit the two FDA-approved prescription labels.
Rebif sales are projected to reach $59 million this year and $139 million in 2003, Berger says. Before Pfizer signed on, Rebif had been expected to become a blockbuster drug in 2006 with more than $1 billion in sales worldwide. Now, that projection is considered low, and Berger believes Rebif will make blockbuster status sooner.
During its first four months on the U.S. market, Rebif has carved out
a 6.7 percent share of the new prescription market and a 3.7 percent share
of the overall multiple sclerosis prescription market, writes Thierry Verrecchia,
an analyst with French research firm Oddopinatton that tracks Serono. Ivo
Staijen, an analyst with Zurich-based Sarasin who also tracks Serono, believes
the cooperation with Pfizer will help Rebif garner a 25 percent U.S. market
share by 2005.
Copyright 2002 American City Business Journals Inc.