TECHNOLOGY TRADER: For Biotech, Here Come the Clones by Bill Alpert
Summary: On Wednesday a bipartisan group introduced a bill in Congress that would have the FDA give approval to generic biologic drugs, something traditional drugs have already had for 20 years. The lack of competition allows biotech companies to charge hefty prices for their treatments, to the pleasure of shareholders but not patients. Biotech's biggest customer is the government's Medicare program, which spent $3 billion on just three anemia drugs from Amgen Inc. (NASDAQ:AMGN) in F2005, causing one analyst to remark "Amgen is obviously the big target here." Amgen counters that reproducing biological products is complex, and should be heavily tested. Backers of the bill include General Motors Corp. (NYSE:GM) (it has the #1 private medical bill in the U.S.), health insurer Aetna Inc. (NYSE:AET), generic giant Teva Pharmaceutical Industries (NYSE:TEVA) and pharmacy benefit manager Express Scripts Inc. (NASDAQ:ESRX). Some bio-drugs are easier to reproduce, such as: human insulin made by Novo Nordisk (NYSE:NVO) [the company has thus moved into modifieds that improve treatments], Amgen's two red blood cell boosters, and enzymes that treat metabolic disorders made by Genzyme Corp. (GENZ). On the harder to copy side: Monoclonal antibodies made by Genentech Inc. (DNA), interferons sold by Biogen (NASDAQ:BIIB), and Amgen's anemia drugs. Other companies who have shown an interest in the bill: Novartis AG (NYSE:NVS), Pfizer Inc. (NYSE:PFE), Barr Pharmaceuticals Inc. (BRL), and Medco Health Solutions Inc. (NYSE:MHS).