Forbes Reporters: How A $440,000 Drug Is Turning Alexion Into Biotech’s New Innovation Powerhouse
February 16, 2015
The pharmaceutical business is not kind to entrepreneurs. It takes more than a decade and hundreds of millions of dollars in venture capital to get from cool idea to marketed drug, which is why the founders of Amgen, Genentech and Gilead were gone by the time those companies became big successes.
But nestled near a pastoral local farm 40 minutes outside of New Haven, Conn., amid ears of corn and rows of beets, is the exception to that rule. There, an unassuming, self-deprecating doctor named Leonard Bell still serves as chief executive of Alexion Pharmaceuticals, the company he founded after he quit his medical professorship at Yale 20 years ago.
His salvation: Soliris, launched in 2007 to treat a rare cause of anemia. In 2012 that drug will do more than $1.1 billion in revenue, with Wall Street expecting that figure to double again over the next three years. Its current net margin: 22%. Alexion shares are up 600% since the drug’s approval–outperforming tech darlings such as Apple and Salesforce.com over the same period. The company sports a market capitalization of $20 billion, and Bell’s stake is worth $179 million. These kinds of statistics underscore why little-known Alexion hit No. 2 in FORBES’ annual ranking of the most innovative companies.
They also point to a paradox in the health care system. Alexion, with 1,100 employees, is a multinational pharmaceutical company with offices in more than 30 countries–but only a few thousand patients the whole world over. Soliris is a blockbuster–and Alexion a juggernaut–because of the drug’s astronomical price: $440,000 per patient per year (though it is sometimes given away for free, in hardship cases). Yet the drug is so effective that private insurers and national health agencies, even sticklers like the United Kingdomand Australia, are willing to pay.
“We focus on patients with absolutely devastating disorders that are also either lethal or life-threatening,” says Bell. “They’re also very, very rare, so they get no attention from anybody. They’re left with no hope, and we only go forward not with treatments that will make it a little bit better but with treatments that will transform their lives. At the end of the day, everyone accepts that is high-level innovation.”
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