Mylan ($MYL) may have just caught a big break. Sanofi ($SNY) pulled the main competitor for EpiPen--Auvi-Q--from the market, a turn of events that should keep Mylan dominating the epinephrine injection field.
Sanofi announced the move last week, initiating a recall of nearly half a million injectors from the U.S. and Canada based on suspicion that Auvi-Q pens--dubbed Allerject in Canada--might be delivering inaccurate doses. And "if the recall is not proven erroneous, it is very hard to see Auvi-Q returning to the market, as it will need to be redesigned and face uphill battle to recapture patient trust after the recall," Bernstein analyst Ronny Gal wrote in a note to clients on Monday.
Auvi-Q has been playing catch-up to EpiPen since it hit the market back in 2013. The device issues automated voice instructions to help users with injections, one feature that had allergists "quite positive" about the product, Businessweek reporter Cynthia Koons said in a September interview.
But the French drugmaker's marketers were still "probably having to take their cues from Mylan," she said. The generics giant has made Epipen "a mainstay" in schools, and it has lately ramped up its partnership with Disney ($DIS) to help get the word out.
Now, Mylan has the opportunity to build on its 85% market share; as CEO Heather Bresch confirmed late Thursday on the company's Q3 conference call, Mylan has "sufficient supply of product to meet any anticipated demand" from Auvi-Q users.
"We're confident that the widespread familiarity with EpiPen established over more than 25 years coupled with our robust training resources will provide access and support for those impacted by the recall," she told investors.
Mylan figures that about 28 million people are at risk of anaphylaxis, and half of those have been diagnosed--but only 10% are carrying epinephrine pens, Bresch said during the call. That gives EpiPen "room for substantial upside," she said; analysts say the epinephrine pen market is now worth about $1.3 billion, with substantial growth predicted over the next several years.
Meanwhile, Mylan got more good news on the Epipen front last week from Teva ($TEVA), which said it won't be in a position to win approval for its generic until the second half of next year. Mylan "should now be expected to capture ~95% of the epinephrine injection market," Gal wrote--and that dominant position would offer additional power to up its price on the drug, which rose by 222% between 2007 and 2014.
- read more on Auvi-Q from FiercePharmaManufacturing
- see Mylan's earnings call transcript
Special Report: 10 big brands keep pumping out big bucks, with a little help from price hikes - EpiPen -- Mylan