J&J Approved, but Needs Help From a Friend

Johnson & Johnson (NYSE: JNJ) gained a Food and Drug Administration approval of Edurant, the first new HIV drug in three years. The last drug to gain approval stateside was Johnson & Johnson's own Intelence, which registered sales of just $243 million last year, its second full year on the market. Edurant has a good shot at getting out of the gate faster than that thanks to help from a friend.

Friday's approval allows Edurant to be used in combination with other pills, but it probably will get most of its sales as a single pill. Patients aren't keen about popping multiple pills a day if they don't have to.

The approval, however, paves the way for the single pill that combines Edurant with Gilead Sciences' (Nasdaq: GILD) already approved Truvada. The FDA is set to decide on the combo drug by Aug. 10.

Breaking into the HIV market is fairly difficult. Doctors tend to be creatures of habit, prescribing regimens they have experience with. Edurant was only shown to be as effective as Bristol-Myers Squibb's (NYSE: BMY) Sustiva, which isn't going to get doctors excited enough to explore the treatment by themselves.

But that won't stop Gilead's marketing machine. The HIV specialist sells Atripla, a combination of Sustiva and Truvada, but the Edurant and Truvada combination product offers Gilead better economies than Atripla. Gilead gets supplies of Edurant to make the combination product at a discount, unlike Sustiva, where it has to pay full price.

Once the Edurant-Truvada combination is approved, I expect Gilead will start promoting it heavily. I doubt it'll ever reach the $2.9 billion that Atripla brought in last year, but a billion-dollar product like Merck's (NYSE: MRK) Isentress probably isn't out of the question.

In an indication where drug cocktails are king, having friends in this business is the best way to get ahead.

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