Novartis (NYS: NVS) received some nice news recently for one of its products. The U.K.'s National Institute for Health and Clinical Excellence, commonly referred to as NICE, announced its recommendation for Lucentis in treating diabetic macular edema.
What it means
The news represents a 180-degree turn for NICE. The organization initially refused to recommend Lucentis for DME. However, Novartis offered new clinical data -- and lower price levels -- that led to the reversal.
Novartis originally charged $1,200 per injection. Lucentis injections are given monthly. With more than 50,000 people in the U.K. suffering from DME, that price point would equate to a potential market of more than $720 million.
However, the reduced price that Novartis will charge in the U.K. remains confidential. The market size will be lower than the $720 million figure, but it should still result in significant added revenue for the drug.
The NICE decision represents one battle won in a much bigger war. Lucentis also is used in the treatment of wet age-related macular disease and competes against several formidable rivals.
Roche's Genentech division first developed Lucentis and still holds U.S. rights to the drug. The company's Avastin sells at much lower prices than Lucentis and is being prescribed by some doctors for wet AMD despite being off-label.
Macugen represents another threat. The drug, sold by Valeant (NYS: VRX) in the U.S. and by Pfizer (NYS: PFE) elsewhere, was the first anti-vascular endothelial growth factor (VEGF) inhibitor approved to treat wet AMD.
Regeneron (NAS: REGN) also appears to be coming on strong with its Eylea drug. The company gained FDA approval for use of the drug in treating wet AMD in November 2011. A European Commission advisory panel recommended approval for Eylea in September.
Although Eylea is gaining ground, Lucentis could receive a helping hand from Ophthotech. The company's phase 2b trial with its drug Fostiva combined with Lucentis showed impressive results.
However, some analysts speculate that Roche and Regeneron will embark on a bidding war to secure rights to Fostiva. If either of those scenarios plays out, Novartis could find itself largely on the sidelines with Lucentis in the wet AMD market.
The ultimate winner in the DME and wet AMD market wars remains to be crowned. It is entirely possible that there could be multiple winners.
The outcome of these wars probably won't move Novartis too much one way or the other. The company's size limits the overall impact of one product. The same is true for Roche. Regeneron, on the other hand, stands to win big or lose badly depending on how things shake out.
Novartis can take comfort in the NICE approval for now. Too many unknowns exist, though, for us to know just how nicely the Lucentis story will end.
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