Why Searle Is Feeling No Pain
The mood at G.D. Searle & Co. is almost giddy. And why not? Even before the Monsanto Co. unit has officially kicked off its marketing campaign, its Celebrex arthritis treatment has become one of the fastest-selling new drugs in history. In its first two weeks, doctors wrote more than 56,000 prescriptions, making Celebrex the second-fastest starter in recent memory, ahead of cholesterol-lowering Lipitor but behind--you guessed it--Viagra.
Celebrex may never match Pfizer Inc.'s impotence pill for headlines or notoriety, but it could ultimately prove just as big a revenue generator. Says Richard U. DeSchutter, chairman and chief executive of Searle: "We think there's enormous potential to touch tens of millions of people in the U.S. and hundreds of million worldwide." In fact, if sales continue at the current pace, SG Cowen analyst Stephen M. Scala expects Celebrex sales to hit $550 million this year and $3 billion annually by 2002.
CHOICES. Still, there are plenty of hurdles to making those projections reality. Celebrex is the first of a new category of pain drugs, so-called Cox-2 inhibitors, to win approval. But Merck & Co. has its own Cox-2 product, Vioxx, which is expected to hit the market in four months. Meanwhile, although Searle's data showed great short-term safety benefits over current arthritis remedies--which can cause side effects such as stomach bleeding--it's unclear whether that edge will persist with long-term use. Also, health-maintenance organizations are resisting covering Celebrex until the long-term benefits are proven.
That's why Searle and marketing partner Pfizer are rushing to grab market share. On Feb. 22, hundreds of sales reps from the two companies will fan out to doctors' offices in what is likely to be the most intense marketing effort ever aimed at physicians. In the next six months, the companies expect to acquaint 150,000 doctors with the virtues of Celebrex. That's likely to be followed by a consumer ad blitz. HSBC Securities analyst Jack Lamberton figures the cost of the launch could hit $100 million for the year. "We are moving at warp speed," says J. Patrick Kelly, vice-president at Pfizer Pharmaceuticals Group.
What gives the new drugs such great potential? Cox-2 inhibitors, which get their name from the enzyme they block, are expected to provide the same relief as nonsteroidal anti-inflammatory drugs (NSAIDs) like ibuprofen or naproxen, but with far fewer intestinal side effects such as ulcers. But the Food & Drug Administration wasn't convinced by Searle's data showing Celebrex is safer than the NSAIDs over the long term, and it is requiring that the drug's label carry a version of the standard NSAID warning on stomach side effects until more data are available.
Industry pros figure that decision contributed to Searle's pricing. Celebrex will cost about $2.42 per day, less than analysts had expected. That also reflects pressure from managed-care operators that are trying to get control of soaring prescription drug costs. Searle and Pfizer consulted with HMOs, doctors, and patient groups, testing 700 different pricing models before settling on the current figure. Even so, HMOs including Aetna U.S. Healthcare, United Healthcare Corp. and Wellpoint Health Networks Inc. are trying to limit use of the drug for now through higher co-payments--$25 a month at United Healthcare--or by restricting it to people at risk for intestinal problems.
LOW RISK. Celebrex' price is competitive with some popular NSAIDs, but it is more costly than generic arthritis drugs that cost as little as 10 cents a day. And there is the risk that unexpected side effects could surface. Researchers at the University of Pennsylvania released a study in January raising questions about whether the Cox-2 drugs could cause blood clotting. A Searle spokesperson says Celebrex was tested in 10,000 patients, and no increased risk of cardiovascular events was seen.
Rivals are ready to pounce on any Celebrex weakness. SmithKline Beecham, maker of the popular prescription NSAID Relafen, will offer free trials of its product to patients who are unhappy with Celebrex. And analysts are betting that when Merck's Vioxx gets the FDA nod, its label will show better safety data than Celebrex. "Merck has a history of getting into new areas and just dominating," says Christopher J. Oehlmann, product manager at pharmaceutical consulting firm Decision Resources Inc. That's another reason Searle and Pfizer will be putting the Celebrex marketing machine into overdrive.