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Competition Rising for Baxalta

The newly independent firm still has a narrow moat, however.

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 Baxalta (BXLT), previously the specialty drug-focused arm of Baxter (BAX), now stands as an independent company, and we think cost advantages and intangible assets related to its hemophilia and plasma businesses warrant a narrow economic moat rating. Baxalta's hematology and immunology franchises have mixed prospects, with increasing competition for flagship hemophilia product Advate but an improving competitive position for its plasma-derived therapies.

Advate (and older, smaller product Recombinate) represent approximately 40% of Baxalta's revenue, and competition is rising. Advate's prophylaxis label and conversion of patients previously on plasma-derived products have allowed it to achieve strong growth. However, Biogen (BIIB) launched long-acting product Eloctate in the United States in 2014, which can support a three- to five-day dosing schedule (Advate can be given every three days), Novo Nordisk (NVO) is launching a me-too Advate in 2015, and Bayer (BAYRY) and Novo could both launch long-acting products in the next few years.

Karen Andersen does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.

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