A Bare-Knuckle Battle over Cholesterol Drugs
For the drug industry, cholesterol-lowering medicines known as statins have become a veritable license to print money. Sold under brand names such as Lipitor and Zocor, they last year accounted for $12.5 billion in sales in the U.S. alone, making them Big Pharma's hottest U.S. sellers. It's no surprise then that drugmakers splashed out $1.4 billion in 2002 to pitch the drugs, according to consulting firm IMS Health (RX ) Inc., flooding doctors' offices and consumer media with statin promotions.
If doctors and consumers felt a little overwhelmed by last year's marketing blitz, they should brace for a lot more. On July 9, a Food & Drug Administration panel recommended approval of Crestor, a new statin from AstraZeneca (AZN ) PLC. If the FDA goes along with the recommendation, as it usually does, Crestor could be on sale by the end of the summer. That will set off a three-way competition among Pfizer (PFE ) Inc.'s Lipitor and Merck (MRK ) & Co.'s Zocor, which together account for 80% of the statin market, and Crestor. "It will be a bare-knuckle marketing battle," warns Lloyd S. Kurtz, an analyst at investment firm Harris Bretall Sullivan & Smith, which owns stakes in Pfizer and Merck. "There's a lot of money on the table."
AstraZeneca's entry will certainly complicate matters for its rivals. The London-based drugmaker is expected to push the notion that Crestor lowers so-called bad cholesterol more than Lipitor at comparable doses. And analysts expect Crestor to be priced at a discount to both Lipitor -- the market leader -- and Zocor, the No. 2 statin drug.
But Pfizer and Merck are likely to counter with claims that their pills may be safer. Statins block the production of cholesterol in the liver, triggering the liver to then suck up LDL cholesterol, or bad cholesterol, in the bloodstream. Concerns about health risks from statins grew after the 2001 withdrawal of Baycol, Bayer (BAY )'s cholesterol-cutting drug, due to a potentially deadly muscle-related side effect. While Crestor doesn't appear to pose a similar risk at recommended doses, AstraZeneca's rivals may be able to convince doctors they're better off sticking with statins that have a longer safety record. In addition, the FDA panel recommended monitoring patients on Crestor's highest dose after data showed some test subjects had protein in their urine, a possible indicator of kidney damage. Dr. John Pears, AstraZeneca's global medical director for Crestor, says the company believes the drug does no such harm, but analysts expect Pfizer in particular to sow doubts with doctors on that point.
Such question marks could make doctors and insurance companies alike cautious about Crestor. "I'm going to want to know what happens in real-life [use] of this product before I endorse it," says Robert C. Seidman, chief pharmacy officer at WellPoint Health Networks (WLP ) Inc., a major health insurer.
Of course, if Pfizer and Merck overdo their challenge, it could backfire. Surprisingly, sales growth in the statin market has slowed in recent years. This comes despite new data showing the benefits of statins on patients with diabetes and high blood pressure and hints that it might even help ward off cancer and Alzheimer's disease. U.S. prescriptions are expected to be up just 8% this year, vs. 18% in 2000, says securities firm SG Cowen Securities Corp. Doctors and analysts say the publicity surrounding the withdrawal of Baycol, which came after the FDA received reports of 31 deaths in the U.S. linked to the drug, have hampered growth for the entire class.
Yet no player in this category can afford to lose market share. In 2006, Merck will lose patent protection on Zocor, which generated $5.6 billion in sales last year. Merck is readying a pill with longer patent protection that combines Zocor with the new cholesterol-lowering agent Zetia from Schering-Plough (SGP ) Corp. Both Merck and Schering, which will split profits from the sales of that combo drug, desperately need the hybrid pill to be a hit.
At the same time, AstraZeneca faces market erosion of its big-selling stomach drug Prilosec due to generic competition and needs Crestor to offset that decline. Pfizer is relying on Lipitor to help deliver the strong top-line growth that Wall Street expects. All reasons the statin battle surely will drive up heart rates in the executive suites of some of the biggest drugmakers for years to come.
By Amy Barrett in Philadelphia, with John Carey in Bethesda, Md.