BioMarin’s Naglazyme Sales Dipped by 31.3% Last Year

In 2015, Naglazyme contribution toward BioMarin Pharmaceutical’s (BMRN) total revenue was ~$303 million, down 31.3% YoY (year-over-year). Foreign exchange headwinds along with uneven ordering from Latin America dragged the drug’s revenues lower. Notably, this drug has had the largest foreign currency fluctuation risk.

Meanwhile, patients on Naglazyme therapy grew by 8.7% in 2015. As the volume of patients continues to rise, there will likely be stable growth in revenues from the drug. (For detailed information on Naglazyme, please refer to “Naglazyme: One of the Costliest Drugs in the United States.”)

Naglazyme is manufactured in a plant in Novato, California. Although it’s the only manufacturing facility for the drug, BioMarin believes to have sufficient capacity to meet demand for the drug for next five years. The contract manufacturers vial and package the drug. Gross margin for the drug was ~87% in 2015, higher than the Vimizim’s 84%. BioMarin expects similar gross margin levels in future.

Naglazyme is one of the costliest drugs in the US that does not face any competition in the enzyme replacement therapy segment. BioMarin increases the price for the drug in line with the inflation rates and doesn’t follow an aggressive annual price increase strategy.

By contrast, Valeant Pharmaceuticals International (VRX) has followed irrational annual price increases for its drugs, and as a result, the company is being investigated for 212% and 525% price increases for Nitropress and Isuprel, respectively, since their acquisitions. Other companies that use premium pricing strategies for their drugs include Alexion Pharmaceuticals (ALXN) and Amgen (AMGN).

Still, direct investment in a company’s stock can still be risky because multiple events can cause volatility in stock price. To avoid such risks, you can invest in options such as the First Trust NYSE Arca Biotechnology Index Fund (FBT), which has about 3.9% of its total holdings in BioMarin.

Continue to the next part for a look at roles of Kuvan and Pegvaliase in BioMarin’s business.