Price pressure, new rivals force Bayer's MS move

Last week, Bayer said it would shut down production of a key drug in California, a move that would claim some 540 jobs by 2013. This week, the company is confirming that production will go to Boehringer Ingelheim in a move designed to control costs as competitive pressures for its Betaferon multiple sclerosis treatment ratchet up.

Of course, Boehringer is also a German company, the biggest pharma outfit in that country next to Bayer. It has already been turning out Betaferon supplies for the European market, and it won FDA approval recently to supply the U.S. market, too, Reuters reports. Boehringer has the capacity to make large enough quantities of the $1.71 billion drug, Bayer says. "It is important for us that we can offer the product from a single source," a Bayer spokeswoman told the news service.

As the San Francisco Business Journal points out, Bayer is blaming the switch on cost and competition. Government payers around the world are tightening the screws on drug prices, while the multiple sclerosis market is undergoing a major shift with the advent of new oral meds including Novartis' MS pill Gilenya. But it's also a real estate deal: Bayer's lease on the Emeryville, CA, facility expires in 2013, reverting to Novartis.

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