What Makes Biogen Idec One of America's Best Companies

With a market cap of $34 billion, it's hard to call Biogen Idec (NASDAQ: BIIB  ) a mere biotech. The merger of Biogen and Idec a decade ago created a solid drugmaker that has grown revenue steadily over the last few years.

The company sells three drugs to treat multiple sclerosis. Avonex is an older drug, but it works pretty well and doctors continue to prescribe it in large numbers; sales topped $700 million in the third quarter of 2012. Biogen developed a newer medication, Tysabri, with Elan (UNKNOWN: ELN.DL2  ) , and also sells Fampyra -- which helps multiple sclerosis patients walk better -- outside the U.S. for Acorda Therapeutics (NASDAQ: ACOR  )

In addition to its multiple sclerosis franchise, Biogen Idec also helped develop Rituxan in combination with Roche, which helps markets the drug. Rituxan is used to treat lymphomas and is also approved to treat rheumatoid arthritis. While those two diseases would seem to be unrelated, they both involve the immune system: Lymphomas stem from uncontrolled growth of immune cells while rheumatoid arthritis comes from inflammation as the immune system overreacts. Rituxan treats both by inhibiting the immune system.

The case for Biogen
The company makes drugs that extend people's lives. It's got purpose, you can't argue with that.

Of course, that's true of all drugmakers. Where Biogen seems to stand out is in its treatment of patients, explicitly the swiftness and seriousness that it took when side effects for Tysabri were discovered. The drug inhibits the immune system, which can allow the usually harmless JC virus to attack the brain causing a potentially deadly disease called progressive multifocal leukoencephalopathy, or PML.

Biogen and Elan pulled Tysabri off the market, figured out which patients were more susceptible to developing PML, and developed a diagnostic so doctors could detect the JC virus. Most drugs that are pulled off the market don't make it back, let alone go on to become a blockbuster.

Biogen's stock has risen 140% over the last five years, handily beating the Nasdaq's 28%. The increase in revenue -- growth of 13.7% per year over the last five years -- has a lot to do with that, but so does the development of its pipeline of new drugs. Biogen has an oral multiple sclerosis drug, BG-12, under review by the Food and Drug Administration and a hemophilia program that's produced solid phase 3 data.

Employees seem satisfied, with 85% of employees saying they would recommend the company to a friend, according to a survey by Glassdoor. Most reviews by employees cite excellent benefits as a reason for liking the company.

Risks to consider
Developing medicines is admirable for sure, but we shouldn't forget that Biogen is first and foremost a for-profit company. Biogen certainly hasn't.

Since introducing Avonex in 1996, the company has jacked up the price. In 2009 alone, the company raised the price of the medication three times. According to some accounts, the price has quadrupled over the last few years.

This is a touchy subject because the company can't completely satisfy the needs of customers and shareholders. They're polar opposites. Shareholders want as much profit as possible; patients would take the drug for free if they could get it.

While the price increases are substantial, it doesn't look like Biogen is price gouging. The company doesn't have a monopoly on treating multiple sclerosis patients, so it's just charging what the market can bare. Prices of other multiple sclerosis drugs have also increased substantially.

Most patients didn't feel the effects of the price increase directly because their insurance or government program -- Medicare or Medicaid -- picked up the cost. The price increase did, however, increase the insurance premiums for everyone.

For those without insurance, Biogen offers assistance programs. In 2011, the company claims to have contributed $284 million in financial support through our free drug program, copay assistance and charitable donations. 

Click here to read about the rest of The 25 Best Companies in America.


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