Max Nisen is a Bloomberg Gadfly columnist covering biotech, pharma and health care. He previously wrote about management and corporate strategy for Quartz and Business Insider.

Biogen Inc.'s third-quarter revenue, profit, and sales of a closely watched new medicine all exceeded analyst expectations. But all is not as rosy as the company's earnings press release Tuesday morning would make it seem. 

The market for multiple sclerosis drugs -- the source of the vast majority of Biogen's sales -- is heading for a competitive tipping point that the company will have a difficult time weathering.

Biogen Boost
The successful launch of Spinraza has helped spur Biogen shares, but the medicine can't do it all
Source: Bloomberg

Biogen grew more dependent on its MS franchise after it spun off its hemophilia drugs into a new company earlier this year. The speedy launch of rare-disease drug Spinraza, which hit $271 million in sales in its fourth quarter on the market, is adding much-needed diversification. But it may not be sufficient. 

Lion's Share
A new drug is easing some pressure, but Biogen's MS franchise is still its core
Source: Bloomberg

At some point, Biogen's MS franchise is going to shift from stagnation to outright decline. An increasingly competitive market all but demands it.

It may be starting already. Two of the company's most important MS medicines, Tysabri and Tecfidera, missed analyst sales expectations in the third quarter. 

Roche Holding AG's rival drug Ocrevus is launching at light speed. Biogen gets royalties from Roche -- $65 million in the latest quarter -- because it once owned a chunk of that drug. But royalties likely won't make up for market-share losses and downward pressure on prices. 

The FDA could approve Celgene Corp.'s rival drug ozanimod next year, which would siphon more sales from Biogen. Mylan NV's cheaper copy of Teva Pharmaceutical Industries Ltd.'s Copaxone is just now hitting the market, which will add to overall pricing pressure and begin impacting Biogen as soon as next quarter.

Both Sides Now
Competition from new drugs and a now-cheaper older drug are set to heap pressure on Biogen's MS medicines
Source: Bloomberg

In spite of this, analysts expect Biogen's MS revenue to hold up fairly well for another few years. That seems overly optimistic. Biogen is going to lose market share. And it will no longer be able to rely extensively on price hikes for MS drugs. In fact, it will have to offer larger discounts to convince insurers to keep covering its medicine.  

The franchises Biogen needs to take up the slack have risks. Spinraza is looking good, but it may not be able to sustain its growth trajectory, and Avexis Inc. is working on a competing medicine. 

The company's biggest pipeline bet is in Alzheimer's disease. A success with lead drug aducanumab or another candidate would wipe out MS worries, and then some. But Alzheimer's drugs have a daunting failure rate

Biogen has a growing biosimilars business, but that space is becoming increasingly crowded, and competitors will drive down prices

Hazy Future
Biogen will need other programs to step up big time if its MS medicines decline more rapidly than analysts expect
Source: Bloomberg

It will take more than one Spinraza-style win to overcome Biogen's coming MS woes. But the company has made only tiny deals in pursuit of new drug candidates. It's spent a grand total of $616 million on M&A and investments over the past four years, according to Bloomberg data. And it doesn't currently have a non-Alzheimer's medicine in a Phase 3 trial.

It's past time for Biogen to acknowledge the depth of its predicament and get more aggressive. 

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

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Max Nisen in New York at

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Mark Gongloff at