The news yesterday that Pfizer was partnering up with India's Biocon to produce a new generation of biosimilar insulins seemed to remind the market how close some big companies are to seeing cheaper versions of the biologics on the market. Not only did Biocon shares race up, shares of Novo Nordisk raced down.
Piper Jaffray senior analyst Sam Fazeli doesn't see the $350 million Pfizer/Biocon tie-up as an imminent threat, noting that any biosimilar competition in the market is still a few years away. But with Novo's stock price at a premium, it wasn't hard to see why it would take a hit.
"They are taking a hit because they are the most expensive pharma company in the world," Fazeli tells Reuters. "In order to have that kind of valuation, you need to have a business that is bullet-proof."
But while Novo went down, Biocon went up--11 percent, to an all-time high. Biocon is getting $200 million upfront and up to $150 million in milestones from Pfizer. Pfizer's David Simmons told reporters that the deal was a "first step" down a path to future benefits. The partnership also underscores just how expensive the whole biosimilar market will be. At these prices, only the biggest players can afford to take the field.