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Questcor Pharmaceuticals, Inc. (QCOR) Message Board

  • billydbaseball billydbaseball Jan 2, 2011 1:52 PM Flag

    Shorts Point Of View

    You all may have seen this but thought I would post it for those who have not.

    Seems to me this poster is trying to drive home the point that generics will eat into QCOR's profits. With the trend towards reducing healthcare costs, it is something to think about. Generic companies are always filing patant suits and with ACTHAR doing so well, I would not be surprised to see them begin to pop up.

    Bailey feels that QCOR's version of the drug will stand as a new formulation, thus fending off generics.

    Any thoughts?

    SortNewest  |  Oldest  |  Most Replied Expand all replies
    • thx for MDR and everyone's input.

      fwiw, generic companies still need to INVEST A LOT of money in R&D and manufacturing in order to develop the right formulation and also get FDA approval. their mgmt team will need to prioritize their limited resources and figure out which drugs to go pursue. therefore, they will go after the $2-5B+ drugs first, or drugs that are easy to produce chemically...NOT the kind that requires a proprietary formula that involve pigs, LOL.

      imho, given QCOR's current annual revs sub $200M, i doubt that ANY generic company senior mgmt is out there predicting that QCOR MIGHT BE $1B+ and that the company should spend LOTS OF MONEY pursuing the generic version of Acthar. That kind of thinking, believing that a branded drug might BECOME a $1B+ thinking, would be VERY impressive. However, that type of thinking just don't exist at generic shops - those guys are going for EASY HOMERUNS...going after the ALREADY BIG DONKEYS!!!

      p.s. besides, if that mgmt team thought QCOR's annual sales could grow 6-fold in a few yrs, the generic company would be better off BUYING QCOR's entire company rather than trying to duplicate it(if it were a large generic company and had the cash). or the brilliant mgr who figured it out could try to get a job at QCOR and/or buy QCOR stock for himself and probably make more money than trying to convince its CEO that they should make a generic for a sub-$200M rev branded drug.

    • The article came out in September when the stock was at 10 pps and since then we are up 50%. I hope the readers did not take his message to short the stock on the approval to heart as they would have been squeezed very hard.

      I have had several conversations with management on the topic of generics and they assure me that the chances are about as good as winning the mega millions lotto that it can be duplicated.

      I do agree with the article from the standpoint of the IS approval not adding significant revenue to the company and all it really did was give us the 7 years with what will soon be the least significant revenue stream of all active indications. M/S has already catapulted ahead of I/S in sales and N/S will blow by like it was standing still once they unleash the sales force in total on this indication.

      Are we going to need to lower the cost of Acthar in the future?
      Most definately. The volume for diabetes is potentially so large we could not get the support of the insurance community unless we dropped the prices. We will need to find the sweet spot which will get us maximum revenue and a high percentage of insurance provider approval. We have a few years ahead of us under the current op margin levels before we need to go down that road. When we do I can assure you that the price points will be strategic in order to sustain growth, maximize revenue potential, and achieve a high percentage of insurance provider approvals.

      The Acthar drug can not be replicated into a generic and only two employees in the company have this information and one is not the CEO. If they both become incapacitated the formula can be released to the CEO through a legal firm ( trust ). The drug is basically in a black box and the company understands that importance of keeping this information under tight controls.

      I do understand that generics are a part of reducing costs in the healthcare industry, but Acthar saves lives and saves kindneys from going into complete failure. A kidney transplant costs $300,000-350,000 and Acthar can prevent the failure in N/S patients for $100,000. A costly drug no doubt, but the alternatives can cost insurance companies 3 times as much in this example without the drug.

      We will have another 2 years of premium pricing and as sales increase we will slowly modify pricing to maintain continued year over year growth. This is a sound strategy to keep the insurance community on the hook while making dampening the revenue potential form anyone trying to penentrate the markets we are participating in long term.

      We will need to take prudent measures to continually monitor all forms of competition that could erode our market share and pricing of the drug, but at this time we have nothing even close to being a potential competitor that can achieve the patient results on all indications we are looking to treat.

      Qcor should have a nice month of January with the conference and earnings. I also think the year will be the best ever in terms of revenue generation and exciting new annoucements of which indications we go after next.

      Full Disclosure: Owner of QCOR common and staying in for the long haul or until the business plan changes or critcal managment positions are vacated.

      • 1 Reply to mdr0418
      • Thanks mdr. As per usual your post is inightful and well worth the read.

        One question regarding NS. I agree that using Acthar is well worth the expense when compared to kidney transplants but my question is this. Does the transplant actually become, for lack of a better phrase, "worth" the expense if a patient has to stay on Acthar for a many years?

        Also do you think QCOR will be able to compete with the likes of Tysabri and Copaxone in the MS field?
        Again, thanks for your input on this board.

    • My thoughts are these;

      1. The point about generics has been discussed over and over again. The company recognizes the possibility, but it claims that to duplicate this drug genericly will be very difficult; they see it as a low probability, and they have explained why on many occasions. While they are obviously biased, I have heard no counter arguments in 3 years.

      2. I wonder why the author of the article hasn't manned up and told us how much money he has lost when he followed his own advice and shorted QSC upon FDA approval. In my case I went even longer, and I am smiling all the way to the bank.

      3. I have followed QSC closely for many years; their public pronouncements have always been right on target; fair, honest, and most of all right.

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