This is a 2018 article on success even in a hypercompetitive market. What are your thoughts?...

This is a 2018 article on success even in a hypercompetitive market. What are your thoughts? https://www.investors.com/news/technology/why-these-2-biotechs-could-outperform-amid-hyper-competition/

Expert Solution

Ans: The phrase coined above 'success even in a hypercompetitive market' seems not aligned with the contents of the article shared. It is true that the stocks Alexion Pharmaceuticals (ALXN) and Vertex Pharmaceuticals(VRTX) have been able to outperform their competitors. But the reason lies mainly on the ability of these companies to utilise their competitive advantage, and their dependence on 'volume growth rather than positive price contribution':

1. Vertex has been able to monopolize the cystic fibrosis category with drugs 'Kalydeco' and 'Orkambi', while its competitor, Galapagos (GLPG), is at a time disadvantage due to presence of strong barriers to entry in this segment

2. Alexion enjoyed 20% revenue growth over the past two years for a drug 'Soliris' for its ability to treat blood disorders. However, this increase in revenue was due to volume increases with little price contribution. This means that the product is priced as similar to its competitors, but has been able to differentiate itself for its ability to treat blood disorders, a situation as similar to monopolistic competition.

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Rahul Sunny answered 1 year ago

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