Stockwatch: Pricing Delusions Of Blockbuster Proportions
Sales expectations for the products of companies like Acadia, BTG, Keryx and probably Sarepta remain too high, despite the bursting of the last biotech bubble. Aggressive price increases have traditionally been one way to inch closer to those expectations but that door has closed.
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News in the life sciences sector over the holiday period was peppered with clinical and regulatory failures at Acadia, Anthera, Opko and Cempra, and a drug pricing controversy from Biogen. Following underperformance in 2016 and with that sort of run-up, 2017 already looks likely to be another lost one.
Something strange is happening in the stock market. What ended up as the best week of the year for the broad S&P 500 index was a down-week and month to date for the NASDAQ Biotechnology Index (NBI). This is not supposed to happen since the biotech sector is higher beta, meaning that if the broad equity index finishes the week up, the NBI should finish the week up more.
Conventional wisdom from the first biosimilar launches was that the European market that was far tougher on innovator products than was the US. More recent data suggest that things may play out differently in the long run.