Novartis announces new multiple sclerosis drug, and promises to undercut… itself?
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Novartis announces new multiple sclerosis drug, and promises to undercut… itself?

Swiss pharma giant Novartis has announced a new treatment for multiple sclerosis (MS). The pill, Mayzent, will be introduced next week, and – in a surprising move – will undercut Novartis’s older MS treatment on price. Mayzent will cost about $88,500 annually, roughly 7.4% less than Gilenya, which has been on the market for almost ten years. Although surprising, this move isn’t unusual – fellow drugs giant Roche Holding did the same thing with a new MS medicine in 2017. What gives?

Novartis’s share price has appreciated by 12% year to date

29 03 novartis

Source: Yahoo Finance

There are a couple of factors that might play into Novartis’s decision to undercut itself. One clear reason is the lifecycle of drugs. MS is a lifelong condition, and when a patient finds a treatment that works for them, they tend to stick with it – that makes it harder for new drugs to gain traction. Additionally, while it has some differences to Roche’s previously mentioned MS treatment, Ocrevus, it will still be in competition with it. Add to that political pressure (President Trump has been a vocal critic of Big Pharma’s drug pricing), and the decision makes more sense. Stephen Schneider, an analyst with Vontobel, said: “you don’t want to stick out, price-wise, within the MS space.”

Paul Hudson, Novartis’s head of pharmaceutical business, said that the price had been kept low intentionally. By way of explanation, he added: “Think about the patients, think about what they’re struggling with, and don’t be concerned about price. The first year is about building access and building education.”

Disclosure

Dominion holds Novartis in its Global Trends Managed Fund.


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