This is a partial transcript from Your World with Neil Cavuto, July 18, 2002, that was edited for clarity. Click here for complete access to all of Neil Cavuto's CEO interviews.

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NEIL CAVUTO, HOST: Drug developer Biogen is skin deep in competition for the second quarter. The Massachusetts company says that earnings fell 40 percent as increased competition hurt sales of its flagship MS drug Avonex. How does the company plan to move ahead?

Let's ask Jim Mullen. Jim, of course, the chairman and CEO of Biogen. He joins us from Massachusetts. I always do this for repetition, but I disclose here all the time that I have multiple sclerosis. I take Jim's drug Avonex. Jim, good to have you.

JIM MULLEN, CHAIRMAN & CEO, BIOGEN: Good evening, Neil. How are you?

CAVUTO: Good. Not so you. What happened this quarter?

MULLEN: Well, we pre-announced these earnings about a month ago. And what's happened is the overall MS market slowed down the growth somewhat, you know, we obviously recalled that coming into the year and it's grown probably five percent less than we thought. And a new competitor, and we've talked about that already a couple of times this year. And, you know, that's caused some of the wholesalers to change their inventory levels and that pulled the earnings for this quarter.

CAVUTO: There is some...

MULLEN: The solution is — sorry, go ahead.

CAVUTO: But, actually, the confusion is over this company that came out of nowhere, Serono, out of Italy, with this drug Rebif which also treats different types of MS, but it still raised questions as to whether you would be the lone ranger in this market. Do you worry now that they are going to start stealing share from you?

MULLEN: Well, I wouldn't say they came out of nowhere. We have been competing with these guys in every other market in the world for the last four or five years.


CAVUTO: I'm talking about the fact that they quickly got approval for Rebif, I guess, largely on this belief that it is effective.

MULLEN: Oh, you know, there has never been an argument that it was effective. This was an orphan drug issue. And are we worried that they're going to take share? Well, a new competitor is going to take share. The question is how well are we going to do defending it, and can we continue to grow the market. Our demand has been growing modestly here in the U.S. It's growing nicely in Europe. And, you know, I think we are going to do fine. But, honestly, I think it's take one more quarter for everybody to really see how the competition shakes up.

CAVUTO: Have there been any discussion back and forth between you guys just joining up?

MULLEN: Discussions of joining up, I mean, that would probably go back 10 years, when all these things were under development. But...

CAVUTO: Right. Too late now, you're saying?

MULLEN: Well, it is an FDC issue. Now, clearly, it would be too late.

CAVUTO: OK. So, your sense of where this market goes. Obviously you have drugs for other diseases, but this Avonex is your flagship product. This comes at a time when the government is trying to reign in drug cost, prescription drug costs. Are you worried?

MULLEN: Well, of course, that debate in the U.S. is a tough debate. Everybody is under the microscope. You know, the other side of that coin is we've got the most modern drugs here in the U.S. and they are coming to the market faster here than anywhere else in the world. And, you know, that is the cost of the innovation, I'm afraid.

But I think the industry overall could do a better job. For us, the solution is we have got to have the new products. And the new products, you know, we have done a pretty good job in the last couple of years putting together the pipeline, and the new products are on the horizon.

CAVUTO: All right. Self-serving though this might sound, Jim, I mean, we talk about MS and treatments to deal with its progression, but still no cure. In your gut, is there a timeframe where you can see this thing cured?

MULLEN: Well, in a timeframe, the next five or 10 years, I'm afraid I cannot see it cured. I can see a number of new improvements, of which we are working on several, to treat the disease and slow down the progression of the disease and hopefully catch it earlier. But, frankly, there is not a very good understanding of what the cause of the disease is. It is clearly somewhat genetic, and there's clearly an environmental trigger. Whether that's viral or something else, nobody has ever figured that out.

CAVUTO: But when you look at future quarters, how is it looking?

MULLEN: Well, I think that over the next 12, 18 months, we — it will be choppy on earnings. We are going to be building a sales force in dermatology to launch Amevive here in the U.S. and Europe.

We may, hopefully, we will have it towards the tailend of that, be building a gastroenterology for the launch of another product. That's going to put pressure on the earnings line, although the top line will start to grow nicely. And it is the right strategy. We just got to get the new products out there.

You know, we are coming off a great base. We are at the bottom of our product cycle, if you will, but we still have a 20 percent after tax earnings profile.

CAVUTO: Jim, thank you very much. Good seeing you again.

MULLEN: Thanks again, Neil.

CAVUTO: Jim Mullen is the chairman and CEO of Biogen.

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