Eli Lillyof (Lee -0.32%) The biosimilar drug known as Rezvoglar has been approved by the U.S. Food and Drug Administration (FDA) for Sanofiof (SNY -0.25%) Lantus long-acting insulin. This follows the FDA’s approval of his Rezvoglar as a biosimilar last December.
Why FDA Makes Rezvoglar Second Interchangeable Biosimilar After Sanofi’s Lantus Beatrice‘ (VTRS) Semguri? And how much will this increase Eli Lilly’s sales? Let’s dive in to answer these questions.
Effective, Safe and Cheap Alternative
Diabetes is a chronic medical condition that occurs when the pancreas fails to produce insulin. According to the International Diabetes Foundation, this is a hormone that moves glucose or sugar from the food someone eats out of the bloodstream into cells to make energy.
Symptoms of diabetes include fatigue, excessive thirst, frequent urination, and blurred vision. If diabetes is not properly managed through a healthy lifestyle and regular adherence to medication, it can lead to devastating complications such as lower extremity amputation, kidney failure, and heart disease.
Arguably, the greatest impediment to good health outcomes for people with diabetes is related to the cost of taking prescribed medications. Approximately 16% to 19% of diabetics take less than their prescribed dose of medication for financial reasons. This is where biosimilar drugs have the potential to deliver better outcomes for the healthcare system by preventing devastating health complications. % to 30% cheaper.
To be approved by the FDA, a biosimilar candidate must demonstrate in clinical trials that it is essentially the same as the branded drug in many respects. A drug should be as safe and effective as a branded product.Rezvoglar has also been found to be as potent and safe as Lantus in treating diabetes.
This is why the FDA finally not only approved this drug as a biosimilar, but allowed it to be marketed as an interchangeable biosimilar. This allows clear replacement of biosimilars without intervention by the healthcare provider who prescribed the reference product.
Image Source: Getty Images.
Sales increase will be gradual
Rezvoglar is a safe and effective biosimilar. But how much sales will this bring to Eli Lilly?
Sanofi’s Lantus is on pace to generate approximately $900 million in U.S. revenue in 2022. He’s the only other biosimilar on the market from Viatris, and I’m guessing Rezvoglar could also get his 25% of sales from Lantus. Adjusting for Lantus’ 25% discount, Eli Lilly’s annual sales equate to approximately $170 million.
That doesn’t add significantly to Eli Lilly’s earnings, which analysts expect in 2022 to total $28.6 billion. This is why analysts are predicting his 18.5% annual earnings growth from Eli Lilly over the next five years. That’s almost three times his 6.9% average for the pharmaceutical industry.
Quality always comes at a price
Eli Lilly is a thriving business. Naturally, quality comes at a high cost. The stock’s expected price/earnings ratio (P/E) is 44, more than three times the pharmaceutical industry average of 12.6. But Eli Lilly’s fanatical fundamentals definitely justify this premium rating. That’s why I believe it’s a decent long-term buy for investors looking for solid capital appreciation.
