There's a good way and a bad way for biotech companies to deliver revenue growth.

The good way is to convince doctors to prescribe a drug more frequently, thereby increasing the volume of drug sold.

The bad way is to raise the price of a drug to offset declines in the volume, or amount, of drug sold.

It should be obvious why volume-based revenue growth is preferred over growth driven by price increases. The former means user demand for a drug and its market share are increasing. The latter says the opposite. Demand is weakening, leaving only price increases to make up the difference.

Getting called out for raising drug prices isn't the kind of attention biotech companies need or want in these politically charged times.

This week's earnings announcements from Celgene (CELG) - Get Report and Biogen (BIIB) - Get Report provided a contrast between volume- and price-driven revenue growth.

Celgene net product sales rose 28% to $2.97 billion in the third quarter, driven by a 25% increase in volume. Price increases accounted for only 5% of the revenue growth.

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Biogen product sales rose 6% to $2.54 billion in the third quarter. Tecfidera, Biogen's top-selling multiple sclerosis pill, makes up 41% of total product sales. In the third quarter, Tecfidera sales grew 10% to $1.03 billion.

Biogen didn't offer a chart breaking down sales growth by volume and price. Here's why, in the company's 10-Q:

For the three and nine months ended September 30, 2016, compared to the same periods in 2015, the increase in U.S. TECFIDERA revenues was primarily due to price increases, partially offset by higher discounts and allowances.


Adam Feuerstein writes regularly for TheStreet. In keeping with company editorial policy, he doesn't own or short individual stocks, although he owns stock in TheStreet. He also doesn't invest in hedge funds or other private investment partnerships. Feuerstein appreciates your feedback; click here to send him an email.