Regeneron Pricing Spineometer: 3 of 5 Vertebrae

Regeneron, a biotechnology company, had a mixed FY 2024. Revenue rose 8.3% to $14.2 billion, while operating profit fell 3.6% to $4.0 billion over the last year.

A review of Regeneron’s 4 February 2025 earnings call and associated annual report provided insight regarding the importance of pricing on performance.

FACTS FROM EARNINGS CALL AND ANNUAL REPORT

Leonard Schleifer, Co-Chairman and CEO, declined to comment regarding price changes. Marion McCourt, EVP-Commercial, clarified, “We don’t comment on pricing strategy, but I certainly will complement our very talented market access and pricing team.”

VALUE-BASED PRICING FRAMEWORK IMPLIED PRICING REQUIREMENTS

Of the 12,000 employees at Regeneron, industry benchmarks would suggest 30 to 150 professionals would manage pricing decisions daily. Based on the complexity of their business, we would recommend the pricing team towards the lower end of this industry benchmark, in the range of 30 to 60.

1. Regeneron spent $4.0 billion on research and development, or 28% of revenue. This is a very significant R&D effort. Furthermore, industry benchmarks indicate 15-year R&D efforts on new formularies with a high failure rate. With large, long-term, risky investments in R&D, two key areas require pricing. Early phase, Economic Value to the Customer (EVC) studies are required to estimate the price and volume associated with a new offering. Late phase, EVC studies should be renewed along with potential primary market research in the form of Conjoint Analysis or other, less accurate methodologies.
2. Regeneron is a global company with primary activities in the United States, Europe, and Japan. Each country has different commercial practices and presents a different competitive environment. Best practices would suggest collocating pricing expertise in significant regions and markets to manage the variation in industry dynamics.
3. Regeneron’s performance is at risk of impairment related to the end of patent exclusivity. This too must be managed. Generics and biosimilars can enter different countries at different times, and hence, this is an ongoing challenge.
4. Regeneron’s primary customers are wholesalers and specialty distributors, with both McKesson and Besse Medical contributing greater than 10% of revenue. Large customers will require lengthy negotiations, creating an opportunity for inappropriate settlement prices. Price variance management and other forms of AI applied to pricing to provide price guardrails to commercial officers would support greater price discipline.
5. A little more than half of Regeneron’s revenue is derived from five key offerings. Their largest revenue-generating offering, ELYEA HD and EYLEA, are reported to have a lower average selling price in 2024 compared to 2023. Concentration on a few products reduces pricing complexity but increases the importance of maintaining price discipline and ensuring price setting is aligned with the value delivered.
6. The balance of Regeneron’s revenue is derived from collaboration agreements with other pharmaceutical companies, largely for sales outside of the United States.
7. Regeneron faces a risk of government price control, both national and state. Addressing this commercial concern requires a significant lobbying effort accompanied by clear demonstrations of the monetary value, that is, the clinical value of their offerings.
8. Other issues to raise regarding price management at Regeneron are somewhat supportive of a small, but highly empowered, pricing capability. Although Regeneron does acquire intellectual property at times, it constitutes a small portion of its overall revenue. Many of Regeron’s offerings face limited direct competition, enabling a stronger price capture and easier price management. Economic recessions, logistics, business model changes, and many other factors that present major challenges in different industries should be quite manageable for Regeneron.

OBSERVED PRICING CAPABILITY

Research into the investment by Regeneron in pricing yielded encouraging results.

1. The pricing team size appears to be within the lower end of industry standards.
2. Team roles included leads, managers, several directors, and a vice president.
3. Responsibilities included pricing, market access, government pricing, contracting, and strategic planning.
4. Pricing experts are mainly located in the United States.

Given the importance and capability of pricing at Regeneron as indicated in financial reports, management statements, and our pricing team research, and given their performance, we have come to the following conclusion as of September 2025.

Regeneron Pricing Spineometer: 3 out of 5 Vertebrae. An investment in pricing capability has been undertaken at Regeneron, yet many gaps appear.

REGN (Regeneron Pharmaceuticals, Inc.) was largely unchanged at 665 the day prior to their earnings call to 662 one week later. FY 2024 revenue of $14.2 billion with a 28% operating margin and P/E ratio near 14.

For FY 2024, a 1% improvement in price would yield a 3.6% improvement in operating profits, holding all else constant at Regeneron. Conservatively holding the price/earnings ratio constant, a 1% pricing windfall would lift the market capitalization by $2.2 billion.