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Generics Giants Like Teva and Mylan May Now Join the Buy-and-Raise Craze

Three weeks after Turing Pharmaceuticals CEO Martin Shkreli jacked up the price of niche toxoplasmosis drug Daraprim 55-fold after acquiring it from Impax Laboratories Inc. (NASDAQ: IPXL) many in the biotech world are saying that the public outcry will deaden the appetite for such buy-and-raises in the future. But that may not be the case.

In August, Shkreli bought the rights to Daraprim, a little-known drug that treats toxoplasmosis, a fungal infection that is usually asymptomatic but can become serious in patients with weakened immune systems. One month later, Shkreli jacked up the price of Daraprim from $13.50 to $750 a pill, daring any potential competitor to undercut him. The reason Shkreli and other buy-and-raisers can get away with something like this is that there are so few Daraprim prescriptions filled annually that the costs of manufacturing a generic version outweigh the potential revenues.

The question is, if Shkreli can do it, why couldn’t Impax do the same when they owned it? The answer only seems to be one of personality. The 32-year-old, baby-faced Shkreli already has shown himself to be over-the-top in his business practices, having been fired as CEO of Retrophin Inc. (NASDAQ:...


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