What happened

Shares of the immunology juggernaut AbbVie (ABBV 1.88%) were down by 4% on sky-high volume as of 11 a.m. ET Thursday. That's equivalent to a $7 billion drop in market capitalization. 

What's spooking investors this morning? The big loss came after Coherus Biosciences announced a partnership with billionaire Mark Cuban's pharmaceuticals start-up -- known as the Mark Cuban Cost Plus Drug Company -- to sell a biosimilar (a generic biologic) version of AbbVie's flagship anti-inflammatory medication, Humira, at an 85% discount.

Coherus' biosimilar will be branded as Yusimry. The small-cap pharma company plans on launching the low-priced Humira knock-off in July, according to the press release.

So what

This news is also negatively impacting Amgen's (AMGN 0.57%) stock today. The biotech pioneer's shares fell by as much as 4% in the early portion of Thursday's trading session immediately following this announcement. Amgen's shares are likely sinking in response to this development for two interrelated reasons.

First up, the biotech launched the first U.S. Humira biosimilar, known as Amjevita, earlier this year. Wall Street was expecting big things from this drug. However, this bull thesis may no longer hold water, given that Coherus also drastically undercut Amjevita on price. 

Secondly, the availability of a relatively cheap version of Humira could negatively impact Amgen's top-selling anti-inflammatory offering, Enbrel. The key reason is that Humira and Enbrel belong to the same class of drugs known as tumor necrosis factor (TNF) blockers. 

Moreover, there are strong signs that Amjevita is already dimming Enbrel's earnings power due to its lower cost. So an even cheaper TNF blocker isn't great news for Amgen. Highlighting this point, Enbrel accounted for approximately 15.6% of the drugmaker's total sales in 2022. This drug is also one of the key components behind Amgen's above-average free-cash-flow generation over the last several years.

Now what

Are AbbVie or Amgen a strong buy on this latest dip? That's a tough call.

Prescribers have generally shown a preference for maintaining patients on branded biologics when possible. But a big part of this trend has been due to the relatively minor differences in price between branded biologics and their biosimilar rivals. However, this bold move by Coherus and Mark Cuban's pharmacy start-up may prove to be a game changer in terms of off-patent biologic drug pricing. As a result, it might be best to wait until more data is available before buying shares in either of these blue chip biotech stocks.