Mylan's 'aggressive' generic Advair discount isn't as big as it looks: analysts

If Mylan’s aggressive pricing for its generic Advair product sounds familiar, that’s because it is.

The knockoffs giant set the list price for Wixela Inhub, its copy of GlaxoSmithKline’s respiratory blockbuster, at a 70% discount to the brand. And it’s a move reminiscent of the company’s July decision to majorly slash the list price on its version of Teva multiple sclerosis star Copaxone, Leerink Partners analyst Ami Fadia wrote Tuesday.

"This is another product (besides generic Copaxone) for which Mylan has taken the approach of coming in with a low list price, and we don't know yet if this will have benefits beyond optics," Fadia wrote.

Mylan raised more than a couple eyebrows last summer when it sunk its Copaxone sticker to $1,900 per month from $5,000 per month. Bernstein analyst Ronny Gal, for one, went so far as to write to clients that the change made "no commercial sense."

Fadia expects to see generic Advair "make inroads into the market more successfully" than Copaxone and other specialty drugs have, she said. But after serious pre-generic discounting from GlaxoSmithKline, the room under the curve for generic Advair is "very, very limited," David Redfern, GSK’s chief strategy officer, has said. And Evercore ISI’s Umer Raffat has pointed out that the British drugmaker could already have many contracts locked in for the year. 

"I've heard feedback from payors that GSK has worked very hard to lock in >80% of Part D plans using B4G (brand for generic) contracts for 2019 at least.  Part D represents ~40% of market," he wrote recently. He has pegged sales for the year at $250 million, while Fadia predicts Wixela can rack up more than $200 million 2019 sales.

Meanwhile, the latest pricing move from Mylan likely isn’t as dramatic as it seems, analysts noted. The 70% discount "might seem like a lot, but this is from list price, and we assume that the discount GSK is offering is high," Wells Fargo’s David Maris wrote in his own note to clients. Fadia agreed, guessing that Mylan’s price represents just a 20% discount to Advair’s net realized price—and adding that further Mylan discounts will likely bring Wixela’s net price down to about 40% below the net price she estimates for Advair.

All in all, "we believe this would be an appropriately aggressive pricing approach to pick up share," she said.

Mylan’s executives, for their part, are certainly hoping so. But for now, at least, Wixela’s green light has gotten a key overhang out of the way for investors, Evercore ISI’s Raffat wrote after its late January approval.

The OK "really allows the Street to focus on the true long-term drivers: biosimilar Neulasta, Herceptin and Lantus," he said.

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