Schering Plough and Merck have now both retraced about half of their loses from a week ago when Vytorin and Zetia were condemned publically at the ACC meeting.
So far prescriptions haven’t dropped off a cliff, just continued to fall as they had been since January. The 7 day rolling average of the scripts shows a change of -33.2% for new prescriptions for vytorin and 30.1% for zetia. The total prescriptions are down 22.2% and 19.4% respectively( also the 7 day rolling average for vytorin and zetia. The total prescriptions are the new scripts plus the refills and tend to change more slowly than the new script numbers.) Crestor numbers, as I predicted, have looked much better- up 11% for news, and 6.9% for total scripts. Obviously these numbers are pretty bad for Merck and Schering and pretty good for AZN but why aren’t these numbers even more dramatic. The reason, as I see it, has a lot to do with the practice of medicine these days. First, about 15-20% of prescriptions for lipid drugs are written by cardiologists- as a group we are generally better informed about the recent trials and more likely to react quickly to news like the ENHANCE data. Among this population, use of zetia and vytorin has fallen fast and far. The other 80% of scripts come from primary care physician of all stripes. These doctors, manage a wide variety of medical issues and often are unable to keep up with the lastest advances in subspecialties. Unfortunately, they get a fair amount of their information directly from the drug companies. Generally though, changes in the standard of care filter down to many of these doctors- through counter-detailing , and new guidelines, new pharmacy benefit guidelines, discussions with cardiologists etc. This can take a while however. None of the PBMs have downgraded Vytorin or Zetia yet, but they certainly will. No new guidelines have been released, and this will be happening over the next few months. Pfizer and AZN have increased their counter-detailing, and will certainly continue to do so. I expect the new and total scripts to continue to trend down for the next several months. Deutsche Bank released a survey today suggesting that some primaries are starting to get the message.
So, I think both of these stocks still represent attractive shorting opportunities. I shorted some Merck this evening- it is up 2% on the back of one of Cramer’s rants. Merck also is expecting news from the FDA regarding another lipid drug called Cordaptive. It is a combination of simvastatin, niacin and a new compound which blocks flushing- which is the big problem with using niacin in general. I looked at some of the data regarding this compound at the ACC. It is very promising, but I don’t think there is nearly enough long term data regarding the safety of this new agent for the FDA to feel comfortable approving this combination. This upcoming FDA rejection should also provide downward pressure on Merck’s stock. As I have stated in the past, Merck has a well diversified portfolio of drugs and vaccines, and I will be looking buy the stock in the mid 30s.
Astra Zeneca has had a nice bump from the above news, but I believe that for them too this story will continue to evolve over a few months. I still believe that the current price of their stock represents a buying opportunity.
Comments
Thanks Again
April 15, 2008
Look forward to your post!!!
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Ellis Taylor
April 15, 2008
Take a look @ the front page of today's Times. Patiens on very expensive meds are in for shock. Ins. comps. are retreating from the Tier system & co-pays of $15, $30 etc.....and resorting to a %. So a patient on Remicade, SGP, who is used to paying a co-pay may now have to cough up several hundred $ a month. Ins. comps. putting burden onto the pts. Article names Humira and Remicade.........
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pharmaking
April 15, 2008
Here are the daily numbers for Friday
Vytorin new yoy -32.4%, 7 day average 34%, market share of news 7.5% (lowest market share yet)
Total yoy daily -20.8%, 7 day average -23.2%
Zetia:
yoy new daily:-31.4%, 7 day -32.8% Daily market share 4.3%
total yoy daily:-19.2%, 7 day average -22.4%
Crestor:
Daily share 10%. 7 day yoy new +9.3%
Total 7 day yoy, +4.2%
So more of same. Continued downward trend in market share for both Zetia and Vytorin.
My AZN trade has suddenly become profitable for reasons unrelated. They have made a deal with ranbaxy to not launch a generic of nexium until 2014 in exchange for becoming the authorized generic at that time( sounds a little like the plavix deal-lets home it works better than that deal).
@Ellis Taylor- That was a very interesting article. This Tier 4 thing if it becomes widespread will really only effect companies selling very expensive drugs. Companies like DNA, actelion,and biogen are going to have a hard time continuing to sell their drugs at current prices.
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pharmaking
April 16, 2008
I listened to the very interesting bestcashcow weekly radio show this morning. Well worth a listen. In it, one of the directors of this sight asked a question about the fraction of profits for merck and sgp that Zetia and Vytorin represented- and whether the sell off is justified.
The answer to his question are difficult to give exactly. Analysts estimate that for SGP the number was roughly 60% of profits and for MRK roughly 15-20%.
But I think the overall effect is much larger than those numbers would predict. Vytorin and Zetia sales were generally modeled to grow at roughly 15-20% a year and then the companies were expected to release another compound which is a combination of zetia and lipitor( when lipitor goes generic.) So the loss of these franchises will effect both earning and earnings growth.
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pharmaking
April 17, 2008
The daily numbers from Sunday are in. Small numbers, so the numbers may not be as meaningful as on a weekday.
Vytorin new daily -48.8%, 7 day rolling -35.6%, market share 8%
total daily -24.8%, 7 day rolling -20.4%
Zetia new daily -41.3%,7 day rolling -34.2%, market share 4.9%
total daily -20.6%, 7 day rolling -24.7%
Crestor new market share 10.4%
Hopefully we will start to see numbers like this on weekdays.
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Anonymous
April 18, 2008
Tuesday's numbers were posted today
Vytorin new daily -38.9 7 day rolling -35.5 market share 7.5%
Total daily -30.9%, 7 day rolling -24.5%
Zetia new daily -35.5% 7 day rolling -32.6% market share 4.4%
total daily -29.8% seven day rolling -22.9%
Crestor's market share was down a little at 9.4%
With numbers like this it wont be long till crestor outsells vytoring and zetia combined.
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pharmaking
April 18, 2008
Here are the numbers from Tuesady 4/15
Vytorin new daily yoy -38.9% 7 day moving average -35.5% market share 7.5%
total daily yoy -30.9 7 day -24.5%
Zetia new daily yoy -35.5 7 day moving average-32.6%, market share 4.4%
total daily yoy -29.8%, 7 day 22.9%
Crestor market share was down a little at 9.5%.
Seems that vytorin and zetia scripts are continuing to fall as I predicted.
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dough
May 06, 2008
anyone got the latest vytorin and zetia scritps
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doug
May 15, 2008
how come know one here posts vytorin scripts when they are moving back up, whats the matter the short not looking so good now????????????
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