Revenue growth for Vimizim
Vimizim contributed 26% to the top line of BioMarin Pharmaceutical (BMRN) in 2015. Meanwhile, the number of patients on Vimizim rose by 10% during 4Q15 over 3Q15. (For further details on Vimizim and its indications, please refer to “Vimizim: A Recent Addition to BioMarin’s Portfolio.”) Vimizim’s 2016 revenues are expected to lie in a range of ~$300 million–$330 million.
Capacity expansion will likely support the growing demand for Vimizim
Vimizim is manufactured in two facilities—one in Novato, California, and another in Shanbally, Ireland. The Shanbally plant was acquired in 2011. These two facilities together are sufficient to support the growing demand of Vimizim for the next five years.
The gross margin for Vimizim was 84% in 2015, down by 3% from 2014. The company has anticipated its gross margin to stay in that range in 2016 and doesn’t expect any margin fluctuation.
Pricing strategy for Vimizim
Considering the lower prevalence of Mucopolysaccharidosis IV A, the target population for the drug is smaller. In such cases, higher market share and premium pricing are BioMarin’s options for achieving and sustaining profitability.
The company prices such drugs at higher levels, at first, based on innovation and value offered to the patients. However, it doesn’t follow aggressive price increases thereafter, and price adjustments don’t exceed inflation in the US. Still, Vimizim is one of the costliest drugs in the US. Other companies that obtain such premium pricing policy are Alexion Pharmaceuticals (ALXN), Mallinckrodt (MNK), and Gilead Sciences (GILD). Alexion’s Soliris, Mallinckrodt’s Acthar, and Gilead’s Sovaldi are similarly costly drugs.
To avoid direct risk exposure in equities, investors can opt for the PowerShares Dynamic Biotechnology & Genome Portfolio (PBE), which has about 6.4% of its total holdings in BioMarin.
Now let’s read into Naglazyme’s recent and ongoing contributions to BioMarin.