They always say every cloud has a silver lining, but in today's cloud over Merck KGaA, the silver belongs to Novartis. It's big news that Merck has pulled the plug on cladribine, a.k.a. Movectro in the two markets where it has been approved by regulators. A supposed breakthrough treatment for multiple sclerosis, it would have competed with Novartis' brand-new oral MS drug Gilenya.
But now that Merck has opted to yank its applications for approval in the U.S. and Europe--and to withdraw the drug in Australia and Russia--the field for Novartis remains wide open. Approved since September, Gilenya has made inroads already in the MS market, even though it costs $40,000 per year. That's thanks in part to some clever marketing by Novartis, which offers co-pay assistance to qualifying patients who might otherwise be deterred by the price tag.
Novartis was trying to race ahead and grab share before Merck's rival could hit the market. Now, the Swiss drugmaker can take a deep breath. As Dow Jones notes, Gilenya's chances of dominating the $10 billion-plus MS business got a big boost with Merck's setback. Nomura analyst Amit Roy told the news service the product could peak at $3.5 billion--and that's the conservative estimate.