Why Biogen's new Alzheimer's drug may become pharma's most lucrative product

Biogen's newly approved Alzheimer's drug aducanumab, branded under the name Aduhelm, carries an annual list price of $56,000, which CEO Michel Vounatsos told CNBC is "fair."

On June 7, the FDA approved aducanumab, marking the first approval the agency has granted to an Alzheimer's treatment since 2003. The drug is the first treatment approved by the FDA to slow cognitive decline from Alzheimer's, as the Alzheimer's drugs the FDA has previously cleared are aimed at alleviating symptoms rather than slowing the disease's progression.

Mr. Vounatsos told CNBC the aducanumab's price reflects "two decades of no innovation." He also said Biogen will not raise the price for the next four years.

More than 6 million Americans have Alzheimer’s and will be eligible for the treatment, which is administered monthly via intravenous infusion. 

Pharmaceutical industry experts predict aducanumab will become one of the best-selling pharmaceutical products in the world in the coming years, according to a June 8 report from The New York Times

Analysts from investment bank Cowen told the newspaper they expect 8 percent of Americans with mild Alzheimer’s to take the drug by 2025, which would mean a $7 billion revenue yield for Biogen. Brian Skorney, an analyst at investment bank Robert W. Baird & Co., told the newspaper he thinks Biogen's revenue yield for aducanumab will be $7.5 billion in 2025.

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