As Mylan's (MYL) struggles with pricing and public scrutiny continue over its Epi-Pen marketing, a small competitor is slowly stealing market share.
Impax Laboratories (IPXL) ,which makes a generic version of Adrenaclick, another type of injector that is no longer in the market in branded form, has been able to grow its market share by about 5% in 2016 alone.
The $1.33 billion Hayward, Calif.-based drug company acquired the rights to a generic version of Adrenaclick, an epinephrine autoinjector used to treat anaphylaxis and severe allergies, in 2015.
The market performance of Impax's injector has been better than expected, according to company vice president of investor relations, Mark Donohue.
Donohue said Impax entered 2016 with a 4% market share, with a goal of increasing its market share by 1% each quarter. Impax has taken 9% of market share as of November, which Donohue credits to a seasonal spike and the media attention on Mylan's pricing practices.
"A generic is a preferred choice," Donohue said by phone. "With pricing, each patient could pay as low as zero dollars."
According to GoodRX, which provides data on prescription medication, patients to whom insurers pass on the total cost of drugs, or who opt not to have insurance (and instead pay a fine) could see prices at around $455 per two pack. This is compared to the $600 price tag for Mylan's EpiPen two-pack that patients saw earlier this year.
Adrenaclick generic users, though, can get coupons and financial aid that would drop the price to less than $200 per two pack. Meanwhile, Mylan has begun offering coupons for $300 off two-packs, which drags prices down to about $300 for uninsured patients or those with high deductibles.
As a result of lower prices, more patients are asking to be prescribed the Adrenaclick generic. But why weren't patients asking for the drug before?
Part of the reason Impax's Adrenaclick generic isn't as commonly used is a regulation put in place by the FDA for inclusion in its Orange Book, which lists approved drugs and their therapeutic equivalents. Impax's treatment isn't formally an FDA generic equivalent for EpiPen even though the drug being delivered, epinephrine, is the same. The injecting mechanism is different, however.
The Adrenaclick generic is only approved as an equivalent to Mylan's EpiPen in 21 states, which means that in 39 states, patients have to ask for the drug by name if they want to be prescribed it. In the 21 states that the generic is approved as an equivalent, doctors or pharmacists can substitute a generic Adrenaclick for EpiPen without the patient asking.
Some doctors only know of EpiPen as a treatment for anaphylaxis and allergies. Since some doctors don't know about it, they don't know to make the substitution, or to make patients aware of their options.
Donohue noted that the company is trying to lobby for reform surrounding the Orange Book-approved drugs.
"The company has an application pending at FDA to get its autoinjector AP-rated with EpiPen, but it has said little about timing or the specifics of the application, other than it has good dialogue with the FDA," analyst Louise Chen of Guggenheim Securities wrote in a note. "Since Impax's product is already approved (and [bioequivalent] rated with EpiPen), we think the hurdle and path to approval could be easier than for other generic companies."
Chen has a buy rating on Impax and a price target of $22.10. The shares were trading at $18.25 in morning trading Monday. The shares are way down from the $50.68 peak reached on April 10, 2015. The shares began their downward trend after some lackluster earnings and investor concern that Impax paid too much when it shelled out $586 million for a bucket of generic drug products from Teva (TEVA) in order to help that company win Federal Trade Commission approval for its megadeal earlier this year to acquire Allergan's (AGN) generics business.
The slow traction for Impax's injector is rooted in concern that since the generic looks different from an EpiPen, less of the population will be knowledgeable how to use the product. Patients are also concerned that the drug isn't as popular, and thus may not be as effective, which is by and large untrue.
"I would certainly emphasize that this is a FDA approved product," Sherron Kell, vice president of corporate drug safety and medical affairs at Impax said by phone. "It's gone through the approval process and been shown to be effective and safe for use."
She added that in a usability survey, 91% of patients who had never done so before were able to successfully simulate the use of an Adrenaclick generic.
Another factor that could get in the way of a company's success is the slow manufacturing process it uses.
Donohue noted that the company puts the autoinjector together manually. Since there are about twenty pieces, the process takes a bit of time. Further complicating manufacture of the device is the fact that its cartridge comes from a third party company, which can slow the process even more.
"We have invested in more manufacturing lines, we started doing that at the end of last year," Donohue said by phone. "We have stayed up with demand."
That being said, Donohue noted that the company isn't actively seeking new customers through marketing in schools like Mylan has done. He said the company doesn't have the manufacturing capacity to do that yet.
"Capacity constraints have been a limiting factor for expanding share, and management has voiced its plans to increase production, but hasn't guided to its expectations of timing or how much more product it could supply," Guggenheim Securities analyst Louise Chen wrote in a note.
Donohue said the company is looking at manufacturing alternatives, but doesn't expect them to come until late 2017 or early 2018.