"Nuc" + Riba is viable treatment for developing world
Gilead is recruiting Egyptian GT 4 HCV patients for a Phase III trial that treats them with Sofo and Riba, not with Sofo and Led. It is known that 7.8% of 62 million Egyptians are infected with HCV and 90% of them are infected with GT 4. The number of HCV patients there is greater than the same in the US. Their selection of GT 4 and cheap Riba for Egypt indicates that they are serious about treating with and marketing Sofo in Egypt in future. How is that so? Gilead paid dearly for their “nuc”, and it’s their imperative to sell as much Sofo as they can before competition appears, even if that meant to undersell the competition (such as VX-135). They are also serious about selling Sofo in Japan; they set up a new Gilead branch office in Japan.
While Japanese HCV patients can afford to have their insurance companies pay 40K per treatment, Egyptians cannot have their government pay 40K. What is then Gilead's calculation underlying the Egyptian GT4 trial? Gilead might be planning to undercut the prices of other future drugs to capture a good portion of 20B world HCV market, not with their NS5A inhibitor, but with the low cost Riba. However, they cannot afford to lower the price much because they paid 11B for Sofo. It is Gilead’s dilemma, Vertex does not have with VX-135. The combo VX-135 + Riba is not as effective as VX-135 + Daclatasvir, but the combo can cure a lot of people in India, China, and Korea. If a price war develops in 2016-17, who will win?
Another point. An RBC analyst thinks that Bristol will not partner with Vertex for commercialization of VX-135 and Daclatasvir just because Bristol does already have a polymerase inhibitor. However, he is wrong. Bristol’s nuc is non-nucleoside inhibitor and it is not as effective as a nucleotide-analog inhibitor such as VX-135. Bristol will need VX-135.
Other macro concerns in line with your thesis are:
Chinese push towards nuclear = threat to United States Coal (large rail impact) and Middle East Oil.
North & South American push towards LNG = threat to Middle East Oil.
Israel / Turkey LNG = threat to Russian LNG and cheaper LNG to EU.
Other items on the horizon also include additive manufacturing, and both HENR and LENR.
I refer you to some recent research articles produced by NASA, GE, Boeing, and MIT that can be found on each of their web-sites respectively.
Bottom line is the manufacturing and supply chain structure of the world is in a dramatic technological change. I am not talking tomorrow. I am talking 10 years we look back and scratch our heads saying, "Wow!"
These are considerations to keep in mind when the assumption is that a government will be able to subsidize payments or an economic base exists for private insurance. The easier and far more probable thing to rely on, as you elude to, is to stick to the already insured markets of Japan, US, and EU for the high revenues. GT4 market revenues are going to be dismal.
I know some people working in India, and they are improving, but it is still going to be 20 years before they begin to take off in their opinion. I mean, there are still large areas where the delivery companies are using four-wheelers that are dropped off by trains because there are no roads. They don't have many ports. And the rail structure is still in its infancy. Egypt itself has the potential to be very poor off in as soon as five years. The point is that even with a low drug cost, the supply chain infrastructure doesn't exist to distribute the drugs on a mass scale economically. These areas are going to have to be addressed directly through host government sponsorship to be successful.
I am very excited about the Japanese market - specifically on account of the recent finds of rare earths on the sea floor.
They have to give a steep discount to sell Sofo to Egyptians. There are examples of such discounts for HIV and cancer drugs. The highly celebrated tyrosine kinase inhibitor, gleevec by Novartis, costs 70 K to treat leukemia in the West, but it is sold at 2500 dollars in India. In this case, the Indian Supreme court ruled against the patent extension, and allowed local manufacturer to produce a gleevec copy. To prevent such a near piracy, it is not unthinkable to discount Sofo to below 10 K per treatment.
The income per capita of Egyptians was 6600 last year, and they project a quarter million millionares in 2017(China had more than one million of millionares in 2011). Income disparity is enormous in these emerging countries. Even if only 1% of 4.35 million GT4 patients in Egypt were treated per year at the cost of 10K, annual revenue of 435 million would result. The income per capita for China is by now about 10 K, and there are 32 million hep c patients there. Urban populations are exploding and would be wealthier and more health conscious than an average. Market potential is enormous even if discount is applied. I am hoping that 135 is safe for the long term and go after these emerging markets.