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Biotech / Medical : Kos Pharmaceuticals, Inc (KOSP)
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To: James Silverman who wrote (1)8/9/1997 5:51:00 PM
From: Tom D   of 118
 
Kos may have a blockbuter in Niaspan.

I am a practicing internist, and biotech consultant. Cost-effective management of hyperlipidemias is a tough problem for us clinicians. You may already be aware of the trend towards physician capitation for pharmacy costs which has begun on the coasts. (Primary care physicians get $15 to $20 per member per month for all pharmacy costs. If their prescriptions exceed this, they pay the excess out of their own pockets.)

I practice in the midwest, where pharamcy capitation has not yet taken hold. But the regional medical director for a large HMO recently told me that the pharmacy costs were exceeding the inpatient costs in his HMO. He now meets with each of us individually every six months to review our recent prescribing history. I think that the large drug companies are going to have disappointing sales growth in the next year or two because of this. But the truly "cost effective" drugs will do even better.

Do you know what the total (generic plus brand name) sales were for gemfibrozil (Lopid) in 1996?

Above and beyond the replacement of gemfibrozil, I can imagine a scenario in which Niaspan takes market share away from the statins because of increased pricing pressure on MD's.

In any event, IMHO, the sales of niaspan may be sluggish for the first six months because it takes that long for the HMO's to add most new drugs onto their restricted formularies. I expect the stock to nadir after its disappointing sales are reported after Q4 '97 and to soar thereafter.

What is your assessment, at this point?

TDD
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