Abbott Labs (NYSE:ABT) may have to brace itself for further competition in rheumatoid arthritis market as Roche has claimed that its drug Actemra produced better efficacy results than Abbott’s blockbuster drug Humira for the treatment of monotherapy patients.  If proved true, this will add to the growing list of worries for Abbott as other competitor Pfizer (NYSE:PFE) is also getting ready with its oral drug tofacitinib to grab the autoimmune market share, currently dominated by Humira.
Abbott, however, has contented that the results could be biased as the study used the maximum dose of Actemra vis-a-vis minimum dose of Humira, allowed for monotherapy treatment. Roche will present the results of the study in annual conference of European League Against Rheumatism (EULAR) on June 8, which should shed more light on the development.
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Post these results, Roche is expecting more doctors to prescribe Actemra to about 30% of monotherapy rheumatoid arthritis patients.  But, one will have to cautiously watch if these favorable results could threaten Abbott’s bastion in the autoimmune market as it may be difficult to change a physician’s prescription habits for biologics. If Actemra is able to grab the substantial market share from Humira, it could mean a significant downside for the company value as Humira accounts for nearly 20% of Abbott’s value, according to our estimates.
Abbott is trying to overcome the competition through expanding Humira’s base to new indications such as ulcerative colitis. Further, to take on new oral pills including Pfizer’s tofacitinib, the company entered into a deal with Galapagos to develop and commercialize an oral JAK1 inhibitor in Phase II development.
Humira, however, will lose its U. S. patent protection at the end of 2016. This will allow generic manufacturers to introduce cheaper addition of Humira, thus leading to a decline in Humira’s market share as well as margins.
Our price estimate for Abbott Labs stands at $66, implying a premium of about 5% to the current market price.Notes:
- Roche says arthritis drug beats top rival in trial, Reuters, June 6 2012 [↩] [↩]