How Will Celgene Grow Otezla’s Revenues in 2016?



Strong US market dynamics

Celgene (CELG) expects Otezla to attain blockbuster therapy status by earning about $1 billion in revenues for 2016. In 2015, the drug managed to earn revenues of about $471.7 million. That’s the highest earned by any immunology and inflammation (or I&I) drug in the first full year of launch.

The above graph shows that in the first year of its launch, Otezla managed to capture about 20.7% of the psoriasis market in the United States. That’s more than Amgen’s (AMGN) Enbrel. Otezla has also proved to be strong competition for other psoriasis drugs such as AbbVie’s (ABBV) Humira and Johnson & Johnson’s (JNJ) Stelara through its subsidiary Janssen Biotech.

Currently, Otezla is leading all other psoriasis and psoriatic arthritis therapies in the US market in the new to brand prescriptions (or Nbrx) share, which is currently 40%. Nbrx helps identify the percentage of patients who are completely new to a particular drug.

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Geographic expansion

On January 16, 2015, Celgene received approval from the European Commission (or EC) for marketing Otezla for the treatment of psoriasis and psoriatic arthritis. The company has launched the drug in Germany, Switzerland, Austria, Scotland, and certain Scandinavian countries. Since Otezla is expected to be launched in major markets such as Spain, Italy, France, and the United Kingdom in 2016, there’s a substantial possibility for strong future revenue growth for the drug in Europe.

Compared to US and Canadian markets, there has been lower penetration of biologic drugs in European markets. Celgene thus expects to capitalize on this trend and benefit from lower biologic competition for Otezla in Europe. Celgene also plans to capture the oral I&I therapy market in Germany where there’s substantial use of fumaric acid ester drugs.

The demographics of psoriasis and psoriatic arthritis patients in Europe are similar to those in North America. Celgene expects to benefit from the launch of Otezla in the underpenetrated Japanese market, which it plans to implement in 2017.

If Otezla’s international launches prove successful, it will boost the share price of the iShares Russell 1000 ETF (IWB). Celgene makes up about 0.4% of IWB’s total portfolio holdings.

In the next article, we’ll take a closer look at how Celgene is planning to increase access to and expand the Otezla label.


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