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Biotech / Medical : Sepracor-Looks very promising -- Ignore unavailable to you. Want to Upgrade?

To: Bob Swift who wrote (1318)	10/25/1998 12:00:00 PM
From: John Metcalf	Read Replies (1) \| Respond to of 10280

Bob, I think you meant that Merck has $5.2 B in earnings, the amount estimated by Value Line. 1998 revenues are estimated at $26B. Following your cue, I looked up some of the parameters for the pharmaceutical Big Leagues, using VL's estimates for 1998: AHP -- $15.1 B revs, $2.4B earnings. AMGN -- $2.5B revs, $.75B earnings BMY -- $18.3B revs, $3.6B earnings GLX -- $13.2B revs, $3B earnings JNJ -- $24B revs, $3.6B earnings LLY -- $9.6B revs, $2.1B earnings MRK -- $26B revs, $5.2B earnings PFE -- $14.1B revs, $2.6B earnings PNU -- $6.8B revs, $.81B earnings SGP -- $7.8B revs, $1.7B earnings SBH -- $13.7B revs, $1.6B earnings WLA -- $10.5B revs, $1.1B earnings Reaching any of these levels is a very long way to go for Sepracor, but the rewards would be huge. The cheapest of these companies are Amgen and Pharmacia, each about ten times SEPR's value. Pfizer and Merck are each worth sixty times more than Sepracor at current prices.

To: Bob Swift who wrote (1318)	10/25/1998 2:04:00 PM
From: Biomaven	Read Replies (1) \| Respond to of 10280

Bob, I think we have some delusions of grandeur here. SEPR is a very long way from being a big pharma. At best we can hope for a bigger and better version of AMGN - in other words a very comfortable and profitable large niche player. We have no idea yet of whether SEPR can build and manage a large sales force and develop their own new drugs. To compare a company with a very limited sales force, a narrow technological focus, and limited manufacturing and regulatory experience to a big pharma is just unrealistic. In terms of "going it alone" on some drugs I have several concerns. First, it means you have to wait until the patent expires, which cuts down the potential of the near-term pipeline considerably. Secondly, there is the issue of drugs that need to be broadly promoted. To try to market the improved Prozac by themselves, for example, is just crazy. Even a reasonable sized pharma like Searle is not trying to market their cox-2 inhibitor by themselves, and instead allied with PFE. Similarly, Forest Labs allied with WLA to market their new (and excellent) anti-depressant Celexa (citalopram). Finally, if you try to compete with someone like Lilly, it might provoke them into challenging your patent. Personally, I would much prefer them to strike a deal with the original franchise holder (even at a lower cut) than try to compete. Of course this is currently a poker game, and so you certainly have to be prepared to do a deal with someone else to make it clear you have other options. Peter