Sankyo Shares Drop Following Deaths in U.S. Linked to its Diabetes Drug
Bloomberg News
December 6, 1998, 7:33 p.m. ET
Sankyo Shares Drop Following Rezulin-Linked Deaths in U.S.
Tokyo, Dec. 7 (Bloomberg) -- Sankyo Co. shares fell as
much as 1 percent after U.S. regulators confirmed that 33
deaths have been attributed to a diabetes drug produced by
Japan's second-biggest pharmaceutical company.
The drug, called Rezulin, is marketed in the U.S. by
Warner-Lambert Co. of Morris Plains, New Jersey, under a
licensing agreement.
Sankyo fell as much as 25 yen to 2,670 yen on volume of
234,000 shares, less than one-fifth the three-month daily
average.
The Los Angeles Times reported yesterday the 33 deaths
have been linked to liver injuries in Rezulin patients, up
from 21 cited earlier this year. Since Rezulin's introduction
in March 1997, its label has been strengthened three times. A
black box on the label -- considered the Food and Drug
Administration's strongest warning measure -- highlights the
section on Rezulin's risks.
While the FDA confirmed the deaths, the agency believes
the drug's benefits outweigh its risks, an administration
spokesman said yesterday.
''We still feel that the drug is safe and effective when
used as indicated,'' said spokesman Brad Stone. As with any
drug, the FDA will monitor reports of problems and update the
drug's label when necessary, Stone said.
Sankyo said in November that a 65.6 percent rise in sales
of Rezulin, known as Noscal in Japan, helped lift the Tokyo-
based company's parent first-half profit 3 percent.
The drug is used to treat type II diabetes, by far the
most common form, and is one of two key products that made
Warner-Lambert one of the world's most profitable drugmakers.
About 15 million people in the U.S. have type II diabetes.
Yet the drug's link to liver problems is well known and
even with the so-called ''black-box'' warning, doctors are
still prescribing it, they said.
''I'm not sure they can put more restrictions than what
they have,'' said Hemant Shah, an independent drug industry
analyst. ''I don't think the drug will be recalled.''
In December 1997, the drug was withdrawn from the U.K.
market, where it is sold by Glaxo Wellcome Plc, after six
users died of liver complications in Japan and the U.S.
The FDA generally obtains information on deaths or other
health problems associated with drugs from companies.
In this case, no deaths or liver transplants have been
reported in patients who started on Rezulin after the third
label change in July, said Steve Mock, a Warner-Lambert
spokesman. That label extended the time doctors need to do
monthly monitoring of Rezulin patients for possible liver
damage to eight months from six months.
Rezulin and another drug introduced last year,
cholesterol-reducing Lipitor, turned Warner-Lambert from one
of the least successful U.S. drugmakers into one seen as an
industry leader. Warner-Lambert's third-quarter profit rose 49
percent to $296 million, boosted by sales of Lipitor and
Rezulin.
Rezulin could have 1998 sales of $700 million and Lipitor
of more than $2 billion, analysts have estimated.
Just a few years earlier, Warner-Lambert had to shut much
of its drug production to meet FDA mandates. Many analysts
then thought the company might sell its pharmaceutical
business and concentrate on consumer goods, such as its
Listerine mouthwash and Dentyne gum.
Other Setbacks
While Lipitor has gained market share steadily, Rezulin
has had several setbacks. Public Citizen, a watchdog group
founded by Ralph Nader, petitioned the FDA in July to ban
Rezulin. The group cited the drug as an example of the flaws
in the FDA's recent moves to speed drug approvals.
The withdrawal of American Home Products Corp.'s
painkiller Duract in June marked the sixth time in 12 months
an FDA-approved drug was pulled from the market because of
safety concerns.
Only 10 drugs were withdrawn between 1980 and 1996, a
time when the FDA moved more slowly on drug approvals.
Responding to criticism from Congress and the industry, the
FDA has stepped up the pace of its reviews in recent years.
Rezulin, for example, was reviewed in six months.
Still, some analysts viewed an FDA decision last month on
Rezulin as a sign of the agency's confidence in the drug.
Warner-Lambert then said the FDA approved a 1,000-patient
study of Rezulin in people who don't yet have the disease.
Regulators set higher safety standards for use of drugs in
people only at risk of, and not actually suffering from, a
disease.
The real concern for Warner-Lambert may be more
competition from similar drugs with fewer side effects than
more regulation from the FDA, said Jeffrey Chaffkin, an
analyst with PaineWebber, who has a ''buy'' on the stock.
Rezulin is the first of the a class known as glitazones
approved in the U.S. SmithKline Beecham Plc and Eli Lilly &
Co. could have their own versions of glitazone drugs on the
U.S. market by 2000. Like Rezulin, these drugs work to help
the body make better use of limited insulin supplies.
''There's no question that the new glitazones are cleaner
than Rezulin,'' Chaffkin said. ''Still, we haven't seen head-
to-head comparisons. Until we see that kind of data, it's hard
to judge them.''
Warner-Lambert shares rose 2 15/16 to 78 7/16 on Friday.
--Kerry Dooley in Princeton, Jim Bonner in Tokyo and Kristin
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