France's Biosimilar Substitution May Lead to Erosion of Amgen

The worst headwind for any pharmaceutic company is patent expiration. After the patent cliff comes an onslaught competition from generics and biosimilars that eats into sales. France just became the first European nation that allow pharmacists to substitute prescribed brand biological medicines for biosimilar medicine. The substitution can be made can only be made when initiating treatment and the substitute biosimilar is in the same drug class as the original prescription drug. Deutsche Bank believes this new policy spells trouble for Amgen

and some of their product line. Neutropenia, Anemia, and Enbrel. Analyst Robyn Kamauskas notes, "For the Neutropenia/Anemia/Enbrel franchise, we model 17%/37% &3% erosion, respectively, by 2018." However, Deutsche Bank notes that Amgen will not go down without a fight, offsetting the erosion through their own line of biosimilar products including biosimilars for Humira, Avastin, and Herceptin. AMGN closed previously at $123.85 and opened Monday at 124.84.