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Biovail to reduce 505(b)(2) development

Biovail joined the increasing list of pharma companies that are downsizing or eliminating their 505(b)(2) development programs.  As reported in the Wall Street Journal* Biovail CEO William Wells, in a conference call announcing a  change in company focus,  said “Focusing on the development of products that primarily provide convenience and compliance benefits is not a winning long-term strategy. To be successful, our focus had to change.”

We have maintained that 505(b)(2) is not a sustainable strategy for large companies.  The very nature of the development process requires that a company be lean and execute quickly and confidently.  The larger the company becomes, the less likely 505(b)(2) programs can be successful.  Moreover, the larger the capitalization, the greater the ROI needs to be;  505(b)(2) projects seldom are block busters (yet, Biovail got where they are through Wellbutrin XL).  Similarly, a pharma company that doesn’t outsource cannot support both a (b)(1) and (b)(2) program because they compete for the same, usually scarce, resource.

We view this as good news for our clients and prospective clients – Biovail’s exit will open up more opportunities for the smaller companies.

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