The price war between various drug manufactures is up in Norway. Prices of drugs are being undercut in the country, and Merck & Co., Inc. (NYSE:MRK) is caught up in the middle.
It all started with Orion Oyi started slashing the local price of a copycat drug of Merck’s arthritis medicine Remicade by 69%. The move resulted in Orion capturing half the market by March.
Hospira Inc., another drug company that sells a copycat version of Remicade, has also been irked at the discount given by Orion. Hospira has stated that the discount given by Orion is too big to sustain.
Merck has urged doctors to think about not switching to the discounted drugs. However, the discount is lucrative enough to sway physicians. According to Steinar Madsen, medical director at the Norwegian Medicines Agency the discount is so high and the prices of Orion’s drugs so low that everyone is switching. Remicade is being substituted by Orion’s discounted drugs.
The price wars in Norway may signal a larger price war all across Europe and U.S. The drug has lost its patent protection in Europe but still has patent protection till September 2018 in U.S.
Biosimilars may threaten the sales of drugs made by companies like Johnson & Johnson and Roche Holding AG. Celltrion of Incheon is also working on duplicate versions of Roche’s best-selling Hecreptin and Rituxan medicines that have a combined annual sale of $13.9 billion. Orion sells Celltrion’sRemsima in Scandinavia and Estonia
According to Orion, Hospira’s competition in Finland was the reason for its massive discount. Hospira had won the contracts to supply drugs to all public hospitals in Finland in 2014.
According to Orion’s senior VP LiisaHurme, the competition in the region is intense. It made the move to give a massive discount as a strategy to cope with the competition.
According to Hospira, the prices offered by Orion is extraordinarily low, and they would be difficult to sustain.