NORDIC LIFE SCIENCE DAYS
Insight: How Novartis built a ‘money-filled moat’ to market Kymriah
In August last year, Novartis’ Kymriah (tisagenlecleucel) became the first gene modified cell therapy to receive US Food and Drug Administration for the treatment of certain paediatric and young adult patients with a form of acute lymphoblastic leukaemia.
Yescarta (axicabtagene ciloleucel), made by Gilead Sciences, followed two months later, receiving marketing authorisation to treat adult patients with relapsed or refractory large B-cell lymphoma.
While both chimeric antigen receptor (CAR) T-cell therapies launched around the same time, Craig Wylie, partner of management consultancy Arthur D. Little, said they achieved differing levels of success.
Whereas Kymriah was “successful beyond [Novartis’] expectations”, Gilead’s Yescarta was “much less successful on launch than expected”, Wylie told delegates at Nordic Life Science Days in Stockholm last month.
The obvious difference between the two? Novartis’ ‘money-filled moat’, said Wylie: “Novartis promised patients that if the drug did not work, the patient did not pay. For that to work in the US, Novartis had to pay the hospital to deliver the product, so that the hospital would not be out of pocket if the treatment didn’t work.”
As per the payment scheme, Novartis makes the product, sells it, and waits 100 days to get 80% of the revenue – at an 80% success rate. The remaining 20% never comes, which was “impossibly expensive” for Gilead, said Wylie.
“Novartis used the scale of the company to build a money-filled moat around their product, to defend it from competition and provide themselves with the capability to do a market launch that nobody else could do,” he said – an example of how precision medicine is changing the industry.
“You think you’re a drug company, but now you’re an insurance company,” he added.
