Hooked On The Cash From Cholesterol

Statins are massive moneyspinners. But can Big Pharma sidestep expiring patents?

There's no overstating the importance of cholesterol-lowering drugs to the pharmaceutical industry. They bring in $20 billion a year in sales, the single biggest market in the $492 billion global prescription-drug business. Sales are growing at a healthy 15% clip. And with the government releasing new recommendations on July 12 encouraging doctors to drop targets for LDL -- or so-called bad cholesterol -- even lower for patients at high risk for heart attacks, sales are likely to shoot ahead even faster.

But it won't all be Easy Street for drugmakers. The battle for share in the lucrative market is about to intensify. Merck & Co. (MRK ) and Schering-Plough Corp. (SGP ) are joining forces to win Food & Drug Administration approval for their new entrant, Vytorin, and analysts expect them to get the O.K. in late July.

The two drug giants plan to put big bucks behind an increasingly popular maneuver for drug companies struggling to extend aging franchises: combining two existing drugs into one pill. Vytorin is a blend of Merck's Zocor, one of the popular treatments known as statins, and another cholesterol-lowering product the two drug giants already co-market, Zetia. The two-drug combo, the companies say, will offer the most potent cholesterol-lowering therapy yet. And if Merck can switch a lot of Zocor patients to the new pill, which will be under patent protection through the middle of 2015, it will lessen the impact of generic Zocor competition in the U.S., which should hit in 2006.

THE WAR ON RIVALS' DRUGS

It may be a smart strategy, but Merck and Schering-Plough face formidable competition from Pfizer Inc. (PFE ), which dominates the market with its $10 billion Lipitor, and AstraZeneca PLC (AZN ), which is struggling to establish its own statin, Crestor. Merck and Schering-Plough are betting that the unique mechanism of Vytorin will make it a hit. Statins such as Lipitor and Zocor cut cholesterol by blocking production of bad cholesterol in the liver. The Zocor component of Vytorin works in that same fashion. But the pill also contains Zetia, which prevents absorption of cholesterol in the intestine. Hitting both the production and absorption of cholesterol yields a greater reduction in LDL than even the market leader Lipitor, says Dr. Rick Veltri, group vice-president for worldwide clinical development at Schering-Plough Research Institute, making Vytorin a sort of superstatin.

Rivals dispute that Vytorin has an edge over their offerings. Greg Duncan, vice-president for U.S. product marketing at Pfizer, points out that while Lipitor has trials showing that it saves lives, the Vytorin combination does not yet have such data. He also notes that the pairing of Zocor and Zetia doesn't have the proven safety record that Lipitor does. "There is no reason [for physicians] to be messing around with new competitors," says Duncan.

Certainly, Merck and Schering-Plough have a lot riding on Vytorin. Schering-Plough is expected to post a loss this year and barely break even next year as key franchises slide in the face of mounting competition, including over-the-counter versions of its allergy medicine Claritin. And Merck could swoon when its $5 billion Zocor loses U.S. patent protection.

Of course looming patent expirations are just what's vexing other drugmakers, too. Market giant Lipitor could face generic rivals as early as 2011. Pfizer hopes to avert disaster when that happens by developing a drug combining Lipitor with a compound that raises HDL, or good cholesterol. If that product wins approval and Pfizer can switch large numbers of patients to the new combo, the sting from Lipitor generics will be lessened.

It's all about preserving profitable businesses. And, given the paucity of truly new drugs in their pipelines, pharmaceutical companies have little choice but to try every trick there is.

By Amy Barrett in Philadelphia

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