Here's some follow up on the announced Amgen and Watson biosimilars deal yesterday where the analysts weigh in on their impressions of the deal.
Said Bernstein Research analyst Ronny Gal, “we tend to think there is not enough money in biosimilars to justify the host of branded companies marching into the field (Pfizer, Merck, Lilly, Biogen and now Amgen), especially as their entry provides a self-fulfilling prophecy for product commoditization.”
Moreover, Amgen may find itself in a tortured position trying to explain to physicians why they should choose certain brand-name meds over future biosimilar rivals, while at the same time taking the opposite tack to co-promote any biosimilar that is developed and marketed as part of the collaboration with Watson. He uses an example of a Roche and Genentech drug, since these are the key targets for the deal, to illustrate his point.
“This feels a lot like branded company participation in generics in the ’80’s, which ended with mass exit from the field. It will require some serious mental gymnastics to explain to an oncologist why Avastin can be replicated while Aranesp cannot. Further, the argument will be used against Amgen well before its biosimilar products come to market.”
Valid points to raise with regard to the marketng challenges in this deal. One also neds to remember that some of the traditional powers in generics, e.g. Teva, Sandoz, Hospira, will also be trying to sell into this space. That's pretty heady competition in a market segment with acknowledged lower profit margins. It's hard to see that some big competitors won't be chased from the field of battle.
Posted by Bruce Lehr Dec 20th 2011.