Mylan may get the 'horns' from EpiPen competitors as pricing controversy burns hot

Mylan's EpiPen

Brouhahas over rising drug prices are often a flash in the pan, an explosive reaction followed by simmering unhappiness until the flame of outrage burns out. But some analysts think Mylan ($MYL) may not escape lasting impact. The way they see it, the FDA is under intense pressure to approve competing products--Teva’s for one--and other players like Impax Laboratories ($IPXL) are positioning themselves to snatch away market share.

“Is there any real damage from the media attention?” Bernstein analyst Ron Gal asked rhetorically in a note to investors recently. “The answer here is yes.”

Gal pointed out that Teva ($TEVA) is expected to resubmit its application for its EpiPen copy, which the FDA turned down in March because of what the agency said were "certain major deficiencies." But this time around, Gal says, “the review of this file may be accelerated and questions of 'what is close enough' may be viewed differently.”

Hayward, CA-based Impax last week waved its hands in the air to remind the market that it already has an approved epinephrine auto-injector.

“With all the recent news related to epinephrine auto-injection products, we are increasing our mission to inform patients, caregivers and the professional community regarding the availability of this epinephrine auto-injector product," said Fred Wilkinson, president and chief executive officer of Impax. "Our epinephrine auto-injector represents a proven, low-cost treatment for patients in the U.S. who require the use of epinephrine products."

Impax got the Adrenaclick product as part of its 2015 buyout of Tower Holdings. The only reason it has not pushed the product harder up to now is that its capacity to make more API and injector pens. But Impax has an expansion project under way and expects to improve capacity significantly once that comes on line next year, CEO Fred Wilkinson told analysts recently, according to a Seeking Alpha transcript of its earnings call last month. He said Tower's product had about 2.5% market share when it bought the biz but has been growing that steadily.

“As far as the new supply chain position … we think we can gain probably 5 times on our supply based on the fact that this will be a fully automated position and will be end-to-end capability of producing, the pens, the components and the active product,” Wilkinson said in the call.

Gal told his clients that Impax should also get a speedier approval of its expansion because of the pressure on the FDA to get consumers some cost relief.

In addition to Impax, the Los Angeles Times reports that inhaled insulin maker MannKind ($MNKD) says it will develop a product that will compete with EpiPen. 

Analysts following Mylan had believed it would be protected by its patient access program, which it just expanded in the face of the backlash, and brand loyalty from doctors. Sanofi ($SNY) found it a slog when it brought its EpiPen competition Auvi-Q to market in 2013. When Sanofi pulled its product from the market last year because it said its injectors might not be dosing correctly, it still had less than 15% of the market share.

But doctors may not be feeling very good about the EpiPen now that the price has made it such a drag on patients budgets, RBC Capital Markets analyst Randall Stanicky told investors in a note today. He said the firm did a survey of 51 doctors to gauge “factors physicians are considering when making a decision to prescribe EpiPen or an alternative (e.g., Adrenaclick).” One takeaway, he said, is that “physicians polled appear somewhat open to an alternative with less EpiPen brand loyalty than we expected”--which should help Impax in the market.

That is not to say that Mylan is going to easily give up the blockbuster sales it is seeing from key product EpiPen. Mylan will continue to push EpiPen and is now bringing out a generic which it will price at about $300, roughly half the cost of the EpiPen. Since Mylan already gives up about half the listed price of the EpiPen in rebates and giveaways, that cheaper product is not expected to hurt Mylan’s sales much.

Gal is still projecting $1.45 billion in EpiPen sales next year, although says he will adjust that if generics hit in Q3 2017. And he thinks that what Mylan did with its pricing is no more, or less, than many drugmakers whose price hikes have had more impact on the U.S. healthcare budget. 

"That said," Gal told investors, "payors decided to make an example of Mylan--you run with the bulls, don’t complain if you get the horns."

- here’s the Impax release 
- here’s the Seeking Alpha call transcript
- read the LA Times article

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