Grifols Wins Early FDA OK For SCIg Xembify, Setting Stage For Margin Growth
Executive Summary
Analysts said Grifols is poised for profit margin growth after the US FDA approved its first 20% subcutaneous immunoglobulin, Xembify, for treating primary immunodeficiencies.
Grifols SA said on 4 July that the US Food and Drug Administration approved Xembify, its first 20% self-injectable immunoglobulin to treat primary immunodeficiencies, and that the Spain-based group aims to launch the product in the US during the fourth quarter while working to get additional approvals in Canada, Europe and other global markets.
The FDA OK came earlier than had been expected, reflecting Ximbify's high tolerability, which bodes well for a more competitiveness and pricing, analysts said after the news was announced.
“The FDA approval of Grifols' first 20% subcutaneous immunoglobulin product should be the first step towards Grifols driving above market growth and delivering on margin expansion over the midterm.” –Morgan Stanley
Immunoglobulins are proteins made by plasma cells to neutralize pathogens, such as bacteria and viruses and are mainly used to treat primary and secondary immunodeficiencies, as well as rare neurological conditions, such as chronic inflammatory demyelinating polyneuropathy (CIDP).
Grifols is currently a market leader in the production and marketing of immunoglobulins, with 30.3% market share in the US, according to the Barcelona-based group.
Competitors in the space include CSL Behring’s Hizentra (immune globulin subcutaneous) for primary immunodeficiencies, and Takeda Pharmaceuticals International GMBH’s three immunoglobulins for rare immunological and neurological diseases, Cuvitru, GammaGard and Hyqyvia, which it acquired by buying Shire PLC.
Grifols said Xembify’s approval by the FDA means the group will allocate an increasing part of its production to supply the needs of the that market.
Immunoglobulin use has been growing at a steady pace in major markets. From 2015 to 2017, immunoglobulin volumes grew at around 10% for primary and secondary immunodeficiencies and CIDP, the company said.
In 2018, sales from subcutaneous immunoglobulin (SCIg) treatments for primary immunodeficiency diseases, or the PID SCIg market, totalled $1.8bn, according to Morgan Stanley. And that amount is expected to grow at a compound annual growth rate (CAGR) of more than 17% over the midterm, with Grifols benefiting strongly from the trend, Morgan Stanley predicted in a reaction note 5 July.
“The FDA approval of Grifols' first 20% subcutaneous immunoglobulin product should be the first step towards Grifols driving above market growth and delivering on margin expansion over the midterm,” Morgan Stanley said.
“Xembify is expected to benefit from Grifols [intravenous immunoglobulin] Gamunex brand name and high tolerability … We see the opportunity for Grifols to be sizeable as they convert both existing Grifols patients and gain share from CSL Behring and Takeda,” Morgan Stanley added.
Grifols have not yet disclosed pricing for Xembify.
But analysts at Morgan Stanley said “20% SCIg products should come with better pricing on a per-liter basis, which is attractive in terms of plasma economics and will support margin expansion.”
They added, “While we currently forecast margins expanding primarily because of maturing collection centers and operational leverage, uptake of their SCIg product could accelerate margin expansion …We estimate the margin could be more than 20% higher on a per patient basis.”