So we actually had two converging stories on Friday afternoon - the news that Sanofi-Aventis (NYSE:SNY) is going after Genzyme (GENZ), and the news that tiny Momenta Pharmaceuticals (NASDAQ:MNTA) finally got FDA approval for a biogeneric of Lovenox (enoxaparin). . .a big seller for Sanofi-Aventis.
I knew something was going on with those folks - I'm close enough in Cambridge that I could hear them whooping and popping champagne corks. They've got backing from Novartis (NYSE:NVS), who will actually be making the stuff using Momenta's techniques, but this was make-or-break news for them, and they've been waiting for quite a while to hear it. Meanwhile, Sanofi-Aventis has been hoping just as long that this day wouldn't come.
And they're not alone. A lot of companies have built their business model around the fact that it's very hard to produce biosimilars, so anything that chips away at that is a potential attack on their profits. Genzyme is very much one of those companies, and Shire is one of the companies hoping to move them into the new world.
Every biologic product is different, though, and some of them are going to be harder to break than others. But the financial incentives for doing so are there, and Friday's approval makes them more definite than ever. As a small-molecule guy, I'm not all that sad about this, although that may be an unworthy emotion. I think that some sort of exclusivity (which we now grant mostly through the patent system) is necessary for research companies to turn a profit. But that exclusivity shouldn't be perpetual, either. Everyone should have an incentive to look for the next new thing - hoofbeats, coming up from behind, should be the constant background sound.