Here's a WLA article in Fortune. The article focuses more on Lipitor than Rezulin, but it shows what one or two big sellers can do for a big boy. I expect Targretin's diabetes sales to do even more for LGND:
October 13, 1997
The Pills That Saved Warner-Lambert
Led by the anticholesterol drug Lipitor, the
company's shares have doubled in a year.
Brian O'Reilly
Plus:
Warner-Lambert Stock Price Chart in Acrobat PDF Format
It's a bit like watching the fattest kid in high school waddle up to the
starting line and dash off a four-minute mile, leaving all the big jocks
gasping for breath. Warner-Lambert Co., once invariably described
as the also-ran of the pharmaceuticals industry, and more famous for
its Listerine, bubble gum, and Schick razors, is now the hottest
drugmaker around. Its stock price is moving at a blistering pace too:
double what it was a year ago, and more than four times higher than
in 1994.
What is propelling Warner so quickly is the same stuff that may let
sedentary, cheeseburger-loving you jog a mile or two without
dropping: a surprisingly successful new drug called Lipitor that lowers
dangerous forms of cholesterol faster, better, and more predictably
than older products from drugmaking powerhouses Merck,
Bristol-Myers Squibb, and Novartis. Until recently, pudgy New
Jersey-based Warner was ranked a lowly 22 in worldwide
pharmaceuticals sales.
Almost nobody thought Lipitor
would do so well. While the
cholesterol market is big ($3.2
billion U.S., $6 billion to $7 billion
worldwide) it is already crowded
with three other players. Since its
introduction last February, Lipitor is
on track to rake in $600 million in
U.S. sales this year. That would
make it one of the fastest-growing
new drugs in the history of the
pharmaceuticals industry. On top of
that, Warner also rolled out a
successful new diabetes compound,
Rezulin, expected to kick in another
$250 million this year. Both are
likely to become billion-dollar-per-year blockbuster medicines in a
few years. Not bad for a $7.2 billion company that sold just $2.5
billion worth of pharmaceuticals last year. Says Warner-Lambert
chief executive Melvin R. Goodes on the "bet the company" decision
to develop the drugs: "If it hadn't worked, we would unquestionably
have been a takeover candidate."
Things weren't always so dicey. Back in the 1950s, Warner's
pharmaceuticals unit, Parke-Davis, was the biggest drug company in
the U.S. But by the early 1990s, Parke-Davis had become a minor
player, with its only major product, an early-generation cholesterol
pill, about to go off patent. It also suffered an embarrassing black eye
from the Food and Drug Administration, which cited it for
manufacturing irregularities in 1993 and ordered a recall of eight
drugs that cost Warner $130 million in lost sales.
Meanwhile, out of the public eye,
Warner scientists were racing to
capitalize on new discoveries
scientists had made on how the
body produces cholesterol. In 1991,
after nine years of tinkering, they
tried their promising compound on a
handful of volunteers. They were
stunned to find that Lipitor cut
cholesterol levels by an average of
58%, considerably better than the
20% to 40% reductions achieved by Merck's Zocor and Bristol's
Pravachol. Researchers Roger Newton and Donald Black implored
superiors to keep funding more studies. It wasn't an easy sell. Black
says several officers at Warner-Lambert were already using
anticholesterol drugs from Merck and Bristol and were happy with
the results: "We were selling into a satisfied market."
But Warner's marketers figured they held a powerful trump card.
Fewer than a third of the eight million Americans on
cholesterol-lowering drugs were getting the results they really
needed. The problem? With other drugs, doctors often had to do a
lot of tinkering with dosages before patients reached the proper
cholesterol level. That meant repeated visits and numerous blood
tests, which too many docs and patients didn't bother with. With
Lipitor, however, nearly 75% of patients hit their targets the first time.
Why does it work so well? Lipitor is a lot like Zocor, Pravachol, and
the other so-called statin-type cholesterol reducers. All five
statin-class drugs work by interfering with an enzyme that the liver
uses to make cholesterol. But somehow the basic ingredient in
Lipitor, atorvastatin, stays active in the liver longer than its
competitors.
At first, Warner imagined it might get a mere 5% of the big
cholesterol market, still enough to justify continued modest R&D. But
as the virtues of Lipitor became apparent, the company decided to
jump in with both feet. "We sold off our toothbrush business and
generic drug business to concentrate better on pharmaceuticals," says
Goodes. To speed the drug's approval by the FDA, the company
cleverly identified a few rare coronary problems that weren't being
treated by any other drug and showed that Lipitor was effective
against them. (It used the same approach with Rezulin, the diabetes
drug.) It worked. Instead of being labeled as "me too" drugs by
regulators and lingering at the FDA for eons, both got put on the fast
track. Their rapid approval almost gave Warner-Lambert executives
heart attacks. Both were okayed within six weeks of each other
around the beginning of this year. "We didn't have the resources to
market two potentially billion-dollar drugs at the same time," says
Lynn Alexy, a former star on Notre Dame's women's basketball
team and now a marketing vice president.
Wisely, Warner put the right to help market Lipitor up for bid to
other drugmakers. Pfizer, one of the world's biggest, jumped at the
chance. Pfizer was already a big player in cardiovascular drugs,
including powerful medicines for hypertension. Pfizer salesmen had
contacts and credibility with thousands of cardiologists and
primary-care doctors in the U.S. and abroad. But it lacked a good
cholesterol drug and wanted desperately to get into that market.
The extra muscle helped. "The reaction from competitors was larger
and stronger than what Warner would have been used to," says
Marie-Caroline Sainpy, head of Lipitor marketing for Pfizer. Merck
and Bristol-Myers countered that their drugs had actually been
proven to reduce heart attacks, while Warner-Lambert's had only
been shown to reduce cholesterol and other blood fats. They argued
that their drugs could lower cholesterol as much as Lipitor, albeit at
higher doses. All to little avail. Lipitor's sales in the U.S. surpassed
sales of Bristol's Pravachol this summer and cut Merck's portion of
new U.S. statin prescriptions to 40% by August (Zocor and
Mevacor had a 60% share in January). Lipitor is now close to
beating Zocor in the U.S.
Don't pity the big guys, though. Even though Lipitor's sales are
soaring, other drugmakers are continuing to thrive. All that tom-tom
beating has pushed overall statin drug sales up 28% this year, and
Carl Seiden, a drug analyst for J.P. Morgan, predicts the worldwide
market will reach $13 billion by the year 2000.
What can Warner do for an encore? Repeating the success of Lipitor
and Rezulin won't be easy: There are currently only 25
billion-dollar-a-year drugs in the world. Nonetheless, the company
has hormone replacement, arthritis, and antiseizure drugs in the
pipeline whose annual sales should hit $100 million or more in sales in
a few years.
In four years (on June 6, 2001, to be precise), the economics of the
cholesterol-lowering business could change significantly. That's when
Mevacor, Merck's oldest statin, goes off patent and cheap generic
versions could flood the market. It's unlikely that Warner-Lambert
will suffer too much, however. It has already spent years beefing up
its pharmaceuticals research, including a long-overdue investment in
biotech, and is getting lessons from Pfizer on marketing, the design of
clinical trials, and regulatory affairs. It should do a far better job of
inventing, developing, and marketing drugs than it did in the past. This
former fat kid likes it in the fast lane, and appears determined to stay
there. |
