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Celgene’s Strong Geographical Market Strategy

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Updated

Strategy specifics

As we’ve already discussed in this series, Celgene Corporation (CELG) is focused on the MM (multiple myeloma) cancer drug market. While MM is a rare disease afflicting only 750,000 people globally, the company has managed to register healthy profits due to its strong presence around the world.

The above graph shows the distribution Celgene’s major drug revenues across the US and the rest of world. As you can see, Revlimid, Abraxane, and Pomalyst play big hands in markets outside the US.

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Revlimid

Until recently, Revlimid was only used as a second-line treatment for MM. But in February 2015, the drug was approved in the US as a first-line treatment for newly diagnosed MM patients. With the drug earning about $5 billion in 2014, this expanded indication is further expected to boost Revlimid’s revenues. Despite tough competitors such as Amgen’s (AMGN) Kyprolis, Novartis’s (NVS) Farydak, and Takeda Pharmaceutical Company’s and Johnson & Johnson’s (JNJ) Velcade, Celgene expects that by 2017, Revlimid will reach revenues of about $7 billion.

To increase its geographic reach, then, Celgene has also launched Revlimid in the German market—a move that has already shown a rapid increase in the company’s market share. After the finalization of reimbursement-related discussions, by 1Q16 Revlimid is expected to enter the remaining four of the Big 5 European markets—France, Italy, Spain, and the UK. Additionally, not only has Celgene finalized Revlimid’s reimbursement process in Russia, but it also plans to launch the drug in Brazil and Mexico. The company expects to gain approval in Japan for Revlimid in newly diagnosed MM patients by the end of 2015.

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Pomalyst

Pomalyst, which has been approved as a third-line treatment for MM patients, has witnessed a strong uptake in US and Canada markets. Japan and Australia have also approved the drug. Discussions about drug reimbursements are still underway in Italy, while the drug is expected to enter Finland, Ireland, and the Netherlands by 3Q15. This wide geographic reach should help Pomalyst achieve Celgene’s 2017 revenue target of $1.5 million for the drug.

Abraxane

Abraxane is a drug approved for NSCLC (non-small cell lung cancer) as well as for pancreatic cancer. Since the FDA (Food and Drug Administration) approved the drug to treat patients with pancreatic cancer, Abraxane has witnessed an overall growth in world demand. Celgene has already launched Abraxane in Spain and Italy, and reimbursement-related discussions continue in France and Portugal. The drug has been approved in Germany and Austria for NSCLC.

Investors can get exposure to Celgene’s strong geographical market strategy while avoiding unique company risks by investing in the iShares NASDAQ Biotechnology ETF (IBB). Celgene makes up 8.66% of IBB’s total holdings.

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