Healthy Skepticism Library item: 8922

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Publication type: news

Kennedy VB.
Lilly CEO: 2007 Zyprexa sales seen flat
MarketWatch 2007 Mar 14
http://www.marketwatch.com/news/story/lilly-ceo-zyprexa-2007-seen/story.aspx?guid=%7BF408D59C%2D9B62%2D4814%2D872E%2D6D94F8186E15%7D&siteid=yhoo&dist=yhoo

Full text:

Drugmaker upbeat about planned inhaled insulin product

BOSTON (MarketWatch) — Eli Lilly & Co. Chief Executive Officer Sidney Taurel said Wednesday that because of lingering safety concerns, sales of its blockbuster psychiatric drug Zyprexa in 2007 will largely be flat with 2006 sales.

In an interview with reporters, Taurel said that while Lilly doesn’t anticipate a notable decline in Zyprexa sales, it also doesn’t see any substantial growth on the horizon, at least for this year.

“The positioning of the drug is for our sales reps to help physicians identify those patients for whom the efficacy of the drug offsets the potential concern for side effects, and those are, in particular, the urgent patients,” said Taurel.

Taurel made his remarks during a meeting of the Boston College Chief Executive’s Club in Boston.
Used to treat schizophrenia and bi-polar disorder, Zyprexa has been linked with substantial weight gain in some patients and suspected of triggering diabetes in others.

“They (patients) can use it for awhile, and if they find out there’s too much weight gain, they can switch to something else,” Taurel continued. “I think the product has found its positioning that way and that’s why sales have stabilized.”

With 2006 sales of $4.4 billion, Zyprexa is Lilly’s top-selling drug. But sales of the drug, which has been on the U.S. market since 1996, had lagged in recent quarters amid safety concerns. While U.S. sales of Zyprexa rose 19% in the fourth quarter 2006, Lilly attributed this jump largely to higher prices.

Taurel noted that U.S. sales have now “stabilized” for Zyprexa. That said, 2006 sales of Zyprexa are still seen as being largely flat with those of 2006. Lilly has not given projections for the drug beyond 2007.

In addition to sluggish sales, Lilly is facing thousands of cases filed by former Zyprexa users. The company settled about 18,000 of those cases last year, resulting in a fourth-quarter accounting charge of about $500 million. In 2005, Lilly paid $700 million to settle about 10,500 claims. Around 1,200 cases remain outstanding, in addition to cases that have been brought by health insurers who reimbursed for the drug and various state authorities.

Taurel also commented on Lilly’s diabetes business, which has been a cornerstone of the company since it launched the world’s first commercial insulin product in 1923. Lilly has said it is pushing to regain its dominance in the diabetes market, despite heightened competition.

However, in January, Lilly also announced that it was abandoning construction of an insulin production plant in Virginia because it had overestimated market demand.

On Wednesday, Taurel said the plant’s demise does not mean that the company has stopped viewing insulin as a growth business.

“We see continued growth of the insulin market because there’s an epidemic of diabetes around the world, and we’ll continue to see growth of our insulin business at Lilly,” said Taurel.
“This being said, it’s not going to the same degree we expected three or four years ago. The reacceleration of our sales has taken longer than we expected three or four years ago, so we’ve ended up with too much capacity,” Taurel continued.

“It doesn’t mean we don’t think our sales will grow. We have a lot of capacity, and we have built-in capacity elsewhere to handle that increase,” Taurel added.

Taurel also said Lilly remains optimistic about its planned inhaled insulin product, despite Pfizer’s perceived difficulties in launching a similar product, called Exubera. Pfizer’s product was approved last year, while Lilly’s, which is being developed with Alkermes Inc., is in Phase III clinical testing.

“We’re very excited about inhaled insulin and our product with Alkermes,” said Taurel.

“We’re watching, very closely, what’s happening with our competitor Pfizer, which has launched Exubera, and so far they haven’t done very well. We’ll be learning a lot from their experience. By the time we get to market, we’ll know what to do and what not to do,” Taurel added.

Taurel also said that Lilly still feels its inhaled insulin device, which is much smaller than Pfizer’s, will give it an edge in the marketplace. He added that Lilly’s experience in marketing diabetes products is also an advantage, as Pfizer is a relative newcomer to the field.

When asked if the inhaled insulin market is big enough for two major players, Taurel said, “Oh yes, very much so, especially if you come with a better mousetrap.”

Val Brickates Kennedy is a reporter for MarketWatch in Boston.