Momenta Pharmaceuticals Inc. has discovered that reining in the cost of health care can be hugely profitable.
The company’s generic version of the anti-blood-clotting drug Lovenox - priced about 30 percent cheaper than the brand-name drug made by French pharmaceutical giant Sanofi SA - helped boost Momenta’s revenues by 142 percent to $283 million last year, while profits zoomed 383 percent to $180 million.
Those numbers were impressive enough to vault 11-year-old Momenta to the top spot on this year’s Globe 100 list of the state’s best-performing public companies - after it didn’t even make it in 2011.
Generic Lovenox, which the Food and Drug Administration approved in the summer of 2010, already has generated nearly $1.5 billion in sales - the drug industry’s first “generic blockbuster,’’ according to biotechnology analysts.
Now Momenta is awaiting approval to sell a second generic: a version of the multiple sclerosis treatment Copaxone, made by Israel’s Teva Pharmaceutical Industries Ltd. Like generic Lovenox, the MS drug promises to reduce costs for patients and the health care system.
Momenta has been expanding so fast that it outgrew its 675 West Kendall St. headquarters, and moved some employees a few blocks away. So far this year, the workforce has grown from 180 to 230, and Momenta expects to add another 40 to 45 employees by the end of 2012 as it prepares to bring new drugs to the market.
“We’ve been hiring like crazy,’’ said Momenta chief executive Craig A. Wheeler, who hosts groups of employees at “bagels with the CEO’’ sessions every other week. “A lot of what we talk about as we grow is, how do we preserve who we are?’’
Within the next two years, Wheeler hopes to consolidate Momenta’s operations in larger quarters in Cambridge, which he calls “the center of the ecosystem.’’
Momenta’s secret sauce: proprietary analytics, developed by professor Ram Sasisekharan and associates at the Massachusetts Institute of Technology, that are used to help researchers understand the structure of drugs. While the company’s original plan had been to develop new products, executives recognized that the technology could enable them to more quickly get low-cost generics on the market. They could then use the revenue from generics to fund research into new drugs.
Even before its 2001 founding, the story of Momenta perfectly showcased the Massachusetts biomedical start-up ecosystem at work. The company was born in Massachusetts Institute of Technology labs, where scientists developed a breakthrough process for understanding the structure of complex sugars. It was funded by a high-powered investor group led by Waltham’s Polaris Venture Partners. And it tapped into the star power of Boston’s world-famous medical institutions to assemble its scientific advisory board.
Since Wheeler was recruited six years ago to build Momenta’s drug pipeline, the story has entered a second chapter that illustrates another staple of the area’s entrepreneurial culture: business model innovation.
Wheeler, a Leominster native and chemical engineer who spent 12 years at Boston Consulting Group’s health care practice, has adapted Momenta’s strategy to capitalize on changes in the market - notably by grabbling a foothold in the growing generic drug market.
Along the way, Momenta began a generics collaboration with medical products maker Baxter International to work on a half-dozen programs in the emerging market for generic versions of protein-based biotech drugs known as biosimilars, or follow-on biologics. Momenta’s technology, which enables it to win government approval faster by creating “substitutable’’ drugs earlier in the development process, could prove a competitive advantage in that market.
“Momenta has a lot of options now,’’ said biotech analyst Joseph P. Schwartz, managing director for Boston health care investment bank Leerink Swann. “They’re positioning themselves on the complex end of the spectrum, and that tends to be biologics. That’s where the (profit) margins are most attractive, because there are fewer players and less discounting.’’
Momenta’s collaborations with Baxter on biosimilars, and with the Sandoz division of drug giant Novartis AG on traditional generics, will enable it to share the costs and the risks of bringing new generics to market. Wheeler, for his part, sees the company pursuing a pipeline that eventually will include new branded-drug compounds as well as generics.
“We’ve bought ourselves the ability to build a fully integrated research engine,’’ he said.