It's good to be in specialty drugs these days.
According to Medco's
Novartis
The case has broad implications for biotech drug makers. Until now, companies selling biologics have not had to worry about the kind of generic competition that typically erodes sales of branded medications at the end of their patent life. Six product areas -- insulin, human growth factor, epoetin, colony stimulating factors, interferon alpha, and interferon beta -- with $20.2 billion in global sales, are immediately vulnerable to competition from biogenerics, according to Datamonitor.
Notably, though, the approval process for biogenerics will undoubtedly be much more rigorous and expensive than that for small-molecule generics. But guess which company is well positioned to exploit these barriers to entry? Novartis, of course. The company already has oodles of regulatory experience from its large-branded pharmaceutical business, considerable financial resources, and the necessary manufacturing infrastructure.
Given the drive to contain drug costs, Novartis looks very well positioned, especially when -- not if -- biogenerics become a reality. With a broad stable of branded and generic medicines, the company may have a unique advantage in locking in large deals with major drug buyers. Recent developments suggest Novartis' strategy may be close to paying off.
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Fool contributor Brian Gorman is a freelance writer in Chicago. He does not own shares of any companies mentioned in this article.