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| Merck's Adam Schechter |
Industry watchers have been speculating for months on what pricing strategy Merck ($MRK) will use with its forthcoming hepatitis C combo. After all, it will enter a market already divided by the Gilead Sciences-AbbVie battle. And while Merck's president of global human health, Adam Schechter, wouldn't reveal much on the Q3 earnings call, he did say Merck doesn't intend to follow in AbbVie's ($ABBV) footsteps.
As Evercore ISI analyst Mark Schoenebaum pointed out on the call, AbbVie once claimed it wouldn't use price to grab share from Gilead's ($GILD) Harvoni when it hit the market with Viekira Pak. But then AbbVie negotiated an exclusive deal with PBM Express Scripts, touching off an all-out pricing war and discounting its med by 50%.
That's not in the cards for Merck, Schechter assured listeners. "When you have what's perceived to be an inferior profile in the marketplace, as I think AbbVie's product was, you may have a different strategy when you have a product that you think is competitive in the marketplace," he said. "And we believe that we have a competitive profile to be able to be successful in the marketplace."
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| Merck R&D head Roger Perlmutter |
To ensure that competitiveness, Merck has been talking up its therapy's strengths in particular hep C niches. As R&D chief Roger Perlmutter told Bloomberg over the summer, patients with "substantial renal insufficiency"--and those on dialysis--can take the drug, and "there aren't any other drugs you can use in that population."
Merck also may home in on patients with genotype 4--a subtype that accounts for only 1% to 2% of U.S. cases. While Gilead's Sovaldi is an option in that patient pool, it needs to be taken with a side-effect heavy companion.
Targeting those unmet hep C needs may be Merck's best bet, one game theory expert predicted earlier this year. If Merck can find a way to "commit to being small," it'll keep Gilead and AbbVie from coming after it, Yale Professor Barry Nalebuff told Bernstein analyst Geoffrey Porges.
And Merck has other things going for it, too, Schechter reminded investors on the call. The New Jersey drugmaker knows "this market, and we know the players, and we know the managed care organizations very, very well," he said, thanks to Merck's history with interferon and Victrelis.
"We intend to be serious about coming into this market strong, and we think there's a real opportunity for us."
- read the call transcript
Special Reports: Top 15 pharma companies by 2014 revenue - Merck - AbbVie - Gilead | Biopharma posts a chart-topping 41 new drug approvals in 2014 - Harvoni - Viekira Pak