There Go the Biotechs as Generic Approval Rocks Amgen

By Ben Levisohn

Biotech stocks like Gilead Sciences (GILD) and Amgen (AMGN) have been a great place to be for investors. Now, the approval of the first biosimilar in the U.S. is raising concerns that biotech profits will decline–and causing their stocks to tumble. Citigroup’s Andrew Baum and team explain why:

Bloomberg News

Approval of Sandoz’s Zarxio, with full extrapolation across indications and lack of interchangeability, is entirely in line with our expectations. Zarxio is a biosimilar of Amgen’s Neupogen and the first to be approved under new 351(K) biosimilar pathway. Zarxio is a test case in many ways as FDA approval and subsequent launch should help clear ambiguities around BPCIA-prescribed procedures (for eg. ‘patent dance’) as well as industry’s willingness to expedite commercial timelines for biosimilars through legal challenges (for eg. IPR/PGRs) and at risk launches. While only a modest commercial opportunity, we anticipate Sandoz will attempt to launch Zarxio at risk on or after April 10th pending outcome of Amgen’s motion for a preliminary injunction. Sandoz comments suggests a launch closer to parity but extensive use of rebates, co-pays and other incentives to facilitate switching. Novartis (NVS) and Pfizer (PFE) (with Hospira (HSP)/Celltrion) are likely largest net beneficiaries from biosimilars.

Shares of Gilead have fallen .4% to $101.96 at 12:28 p.m. today, while Amgen has dropped 2.6% to $155.46. The iShares NASDAQ Biotechnology ETF (IBB) has fallen 1.5% to $342.43.

Link:

There Go the Biotechs as Generic Approval Rocks Amgen

See which stocks are being affected by Social Media