Bristol-Myers Squibb Gets European Approval For HCV Drug Daklinza
Bristol-Myers Squibb (NYSE:BMY) has received European approval for its Hepatitis C drug Daklinza (daclatasvir). [1] The drug is effective across several genotypes of diseases and has shown cure rates of up to 100% when used in combination with Gilead Sciences’ blockbuster drug Sovaldi. Although Gilead Sciences did not partner officially with Bristol-Myers Squibb in clinical trials and instead wishes to use its own combinational therapy, the encouraging data of Daklinza-Sovaldi therapy could influence healthcare providers to go for this combination. At this point, it is not clear whether insurers will create obstacles in the path of reimbursing this combination. If that doesn’t happen, Bristol-Myers Squibb could add significant incremental revenues by targeting roughly 9 million HCV patients in Europe. Most of these patients are infected with genotype-1 of the disease, but that isn’t an issue as Daklinza works across multiple genotypes. The pricing is likely to be high considering that the drug helps in reducing treatment window and potentially mitigates patients’ risk of developing liver complications. Liver transplants resulting from these complications can be extremely expensive.
Our price estimate for Bristol-Myers Squibb stands at $36, implying a discount of more than 25% to the market.
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Europe is just one piece of a large pie that big pharmaceutical firms race towards. The overall opportunity is big, as close to 150 million people suffer from Hepatitis C globally. [2] The worldwide market for Hepatitis C treatment could reach $20 billion by 2020 and Gilead Sciences could capture around 80% of this market according to Deutsche Bank, unless viable alternatives emerge. [2] Gilead Sciences is currently the market leader in Hepatits C treatment, and is on its way to make a fortune selling its breakthrough drug Sovaldi. The drug’s sales for 2014 may amount to anywhere between $7 billion to $12 billion, according to ISI Group. [3] The high magnitude and wide range of estimates point towards Sovaldi’s tremendous potential. This also means that Bristol-Myers Squibb’s drug has the potential of rejuvenating the company’s growth, assuming that it finds notable adoption among patients and healthcare providers. Overall, targeting Hepatitis C market is a good move for Bristol-Myers Squibb. This is one of the key growth areas for big pharmaceutical companies apart from immunology and oncology.
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- European Commission Approves Bristol-Myers Squibb’s Daklinza (daclatasvir) Across Multiple Genotypes for the Treatment of Chronic Hepatitis C Infection, Bristol-Myers Squibb Press Release, Aug 27 2014 [↩]
- Gilead leads rivals in race to cure hepatitis C, SFGate, Mar 2 2014 [↩] [↩]
- Politicians add fuel to the firestorm over Gilead’s hep C drug pricing, FiercePharma, Mar 24 2014 [↩]