Impotence Drugs Trigger a Marketing Battle

"The [overall] demand may not be as big as the companies had hoped it would be," said Albert Rauch, a drug industry analyst at A.G. Edwards. "But the market is growing." He predicted a yearly growth rate of 10%.

Rauch predicts Cialis will catch Viagra in U.S. market share -- with each capturing 40% to 45% in another two years. "We don't view Levitra as a blockbuster," he said. (His firm doesn't have an investment banking relationships with the companies. He doesn't own shares in Lilly; a recent research report says Rauch or a member of his family owns shares in Pfizer. Rauch has a buy rating on Lilly and a hold rating on Pfizer. He doesn't follow the other companies).

"I wasn't expecting the new drugs to create an immediate market demand," said Heather Brilliant, a drug industry analyst for Morningstar. "It just takes time. Over the next five years, the potential for U.S. market growth is 5% to 10% a year."

Pfizer "would get hurt the most" with a low overall growth rate, she said. "Levitra has done a little worse than I expected." Brilliant predicted that Viagra would hold more than half the U.S. market share over the years. She said Levitra and Cialis will essentially split the rest of the market. (On a five-star scale with five as the top rating, she gives Pfizer and GlaxoSmithKline four stars and Lilly three stars. She doesn't cover Icos or Bayer. She doesn't own shares, nor does her firm have an investment banking relationship with the companies.)