Generic Sovaldi makers could pocket upwards of $600m says analyst

By Dan Stanton

- Last updated on GMT

Related tags Hepatitis c

Generic Sovaldi makers could pocket upwards of $600m says analyst
The market opportunity for each Indian drugmakers granted a license to manufacture Gilead’s hepatitis C drug Sovaldi could be worth over $600m, an analyst has calculated.

Last week, Gilead announced it would soon begin transferring technologies for the manufacture of Sovaldi (sofosbuvir) to seven generic drugmakers in order to supply a potential 100 million people living with the hepatitis C virus (HCV) in the 91 developing countries mapped out here​.

In the US, the twelve-week minimum course of Sovaldi – the first approved treatment for the hepatitis C virus (HCV) without the need for co-administration of interferon – costs a patient $84,000 (€65,000) which equates to around $1,000 per pill, but the out-licensing allows pricing to be set by the generic firms and will be significantly lower.

According to the website​, the price in Egypt of the generic Sovaldi comes to 2,200 Egyptian Pounds, or $300, just 1% of that in the US, and within 72 hours of the Government opening up registration for sufferers, 171,000 people had signed up for the treatment.

Such statistics have led Umer Raffat, a specialist in pharma equity research at the ISI Group, to calculate what such a licensing deal could be worth for Mylan and the other six drugmakers which were granted licenses (Cadila, Cipla, Hetero Labs, Ranbaxy, Sequent Scientific and Strides Arcolab).

Fun with Numbers

“The target market is very large,”​ he said in a note. “There are 100 million patients in these countries.  However, what we don't know is how many of these patients will actually be treated.”

Erring on the side of caution, he assumed maybe just 7% of the 100 million people would receive any treatment and only around two thirds of them would use the Sovaldi generic. Therefore the number of patients reached by the Indian drugmakers would be around 4.2 million.

With each drugmaker having an approximate 15% share and putting the price of a six month regime at $1,000 per cure (below the $1800 pricing in Egypt), the bottom-line, he said, is “the Hep C opportunity for Mylan [and the other suppliers] could be $600M+ on a cumulative basis (which will be spread over multiple years).”

Raffat pointed out Gilead would be entitled to a 7% royalty which, using the estimated patient numbers and prices above, would total almost $300m, has calculated, without the additional costs of making the drug and SG&A.

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