The conventional wisdom among biotech investors is that small drug companies cannot compete head to head with large pharmaceutical companies in marketing drugs. Big pharma has deep pockets, large sales forces, and a lot of experience in selling products. Those are significant competitive advantages.
In the coming quarters, we will see if conventional wisdom gets turned on its head. Santarus
In the prescription drug market that Zegerid has just entered, the big competitors are Nexium from AstraZeneca
So why do I like the plucky newcomer in what is a fiercely competitive market? Especially when you consider that Zegerid is essentially a slightly modified formulation of AstraZeneca's over-the-counter drug, Prilosec?
What I like about Santarus is that the company knows precisely what is necessary to make Zegerid a success. Between the time the drug was approved in June and now, Santarus has made all the right moves to pave the way for a successful drug launch. Perhaps most significantly, the company has hired an experienced sales force that will target the right physicians.
Just yesterday, Santarus bolstered its marketing efforts with the signing of a very beneficial partnership with Otsuka America Pharmaceutical. Between the two companies, there will be approximately 400 sales reps promoting Zegerid. That is the type of concentrated effort that is necessary when taking on the big boys of the pharmaceutical industry.
A key point to keep in mind is that Zegerid does not have to become a multibillion dollar drug like its competitors for Santarus to be successful. By capturing just a few percentage points of market share, the company would be able to provide real value to its shareholders. I'm confident it will be able to pull it off.
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Fool contributor Charly Travers owns shares of Santarus.