Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Biotech / Medical : Biotech Valuation -- Ignore unavailable to you. Want to Upgrade?

To: NeuroInvestment who wrote (23488)	4/18/2007 3:25:10 PM
From: Biomaven	Read Replies (2) \| Respond to of 52153

Harry, I think you have to look at this from two quite different perspectives: 1) What is the cost/benefit to society to having multiple approved compounds in a class? 2) What is the impact on the drug development process of only approving the first few compounds in a class unless later versions are proven superior? For 1) the obvious benefit is sometimes the follow-on drugs are simply better. Lipitor is clearly a better drug than Mevacor, the first statin, just as ranitidine was a better drug than cimetidine, the first H2 blocker. The other societal advantage is that having multiple entrants in a class does give the managed care providers some pricing leverage via tiering and formularies. Perhaps offsetting this is that having multiple entrants in a class forces more to be spent on sales and marketing. You are also to some extent looking at things in hindsight. When the follow-on atypicals were being developed, I doubt the developers knew exactly how their drugs would compare with existing drugs from a safety/efficacy viewpoint. All the existing drugs had lots of room for improvement from both efficacy and SE perspectives, but I don't know if it could have been predicted in advance that the new candidates would not in fact significantly improve on existing drugs. The second issue though is the one that people don't discuss. By making the process "first or second across the line takes all" you would be placing a premium on quick approval rather than a better drug. You would essentially be making drug development riskier for everyone involved, both because it becomes more of a race and so it is better to cut corners in Phase II and because of the move towards a "winner takes all" reward pattern. Many "me-too" drugs actually started development before the first-in-class was approved. Pharma would be much quicker to drop any program where they are behind in the race (even if their drug was potentially better), and so overall drug development would be slowed. I do agree with you for some drugs that have been developed purely as patent-extension devices (Nexium being the prime example). Nexium unfortunately has gamed the system well, partly because managed care stupidly pushed for OTC Prilosec but also because the original Prilosec label used too low a dose and so AZN were able to demonstrate "improved efficacy" although all they were really doing was increasing the dose. Peter