Sanofi SA (ADR) (NYSE:SNY) chief executive has warned that the U.S Supreme Court decision to trim the time it takes biosimilar drugs to hit markets could have a significant impact on the pharmaceutical industry. Currently, it takes about six months for copycat drugs to go on sale upon approval by the Food and Drug Administration.
The Supreme Court ruling is a big win for consumers who will now be able to enjoy affordable drugs without being held at ransom by giant pharmaceutical companies selling high end brand-names. However, the decision could also discourage development of new drugs, ultimately harming consumers. Olivier Brandicourt expects the decision to hurt revenues for most companies as consumers will likely switch their attention to affordable alternatives.
“It is something we had to be ready for […] it is part of the business model. As far as we are concerned, we have not yet had sufficient time to evaluate, in the frame of our strategic plan, the possible financial consequences, if they were to be any,” said Mr. Brandicourt
The executive was reacting to the Supreme Court decision that overturned a lower court decision that had barred Novartis AG (ADR) (NYSE:NVS) from selling its copycat of Amgen, Inc. (NASDAQ:AMGN)’s lead drug Neupogen. A point of concern to most pharmaceuticals is that the decision could set a bad precedence.
The fact that the decision allows biosimilars to hit the market before brand name developers can recoup a significant amount from their investments continues to evoke concerns.
Sanofi E-commerce Push
Separately, Sanofi has sealed a deal to sell its products in one of China’s largest e-commerce platform Netease Koala. The vitamin and supplement manufacturer plans to offer its Ostelin and Cenovis brands through the site as part of the deal.
Growing consumer demand in China has prompted the company to invest heavily on e-commerce in a bid to strengthen its sales channels. Plans are underway to invest up to $5 million on the installation of new dispensing and coating equipment as part of a $10 million investment drive.
Sanofi stock was down by 0.08% in Friday’s trading session to end the week at $47.73 a share.