Biogen drops on rival approval
Maker of the top-selling multiple sclerosis drug faces new competition in U.S.
March 8, 2002: 2:04 p.m. ET
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NEW YORK (CNN/Money) - Shares of Biogen tumbled Friday after a rival drugmaker said the U.S. Food and Drug Administration approved its competing multiple sclerosis drug, breaking the monopoly of Biogen's Avonex treatment.
Biogen (BGEN: Research, Estimates) stock fell as much as 10 percent in early trading on Nasdaq, making it one of the biggest percentage losers.
In turn, the news of Serono's new drug, Rebif, boosted the drug stock in Europe, and its U.S.-listed American depositary receipts (ADRs) also moved sharply higher.
"It is a good marketing tool that the FDA has approved it, so I am quite sure they will make some inroads in the U.S. That is for sure," said Eric Bernhardt, who manages Clariden Bank's health-care and biotech funds, both of which hold Serono shares.
Biogen said it is reviewing its 2003 earnings estimates after Serono SA won the regulatory approval.
Biogen CEO James Mullen told analysts on a conference call he was not prepared to pin down a revised earnings figure, saying it would depend on how much the company would have to boost its marketing budget to compete with Rebif.
"Today's decision advances Rebif's U.S. entry by one year, but Biogen already competes successfully against Serono in other parts of the world, and we certainly are well prepared to compete in the United States," Mullen said.
Biogen in November said it expected earnings per share to grow by about 20 percent in 2003 and revenue to grow by 14 percent to 18 percent. Mullen said revenue likely will come in toward the lower end of that estimate at about $2.1 billion. Originally the company had expected to do better than that.
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Mullen said Biogen plans to increase its marketing budget for Avonex but declined to say by how much. To some extent that will be determined by the kind of marketing campaign launched by Serono for Rebif, he said. Serono plans to launch its drug in the U.S. in the next few days.
Biogen claims nearly 60 percent of the U.S. market for multiple sclerosis treatments. U.S. sales of Avonex were about $711 million in 2001. The company in November said it expected sales of Avonex to grow between 15 percent and 18 percent in 2002. That estimate was based on Rebif not entering the market until 2003.
Analysts estimate that sales of Rebif could be between $20 million and $80 million in the U.S. Avonex had U.S. sales of around $711 million last year.
Serono says it is aiming to take 25 percent of the U.S. market.
Multiple sclerosis is a chronic inflammatory condition of the central nervous system and affects around 350,000 people in the United States. The relapsing form of the disease is the most common type. 
-- from staff and wire reports
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