The Food and Drug Administration's approval last week of
cholesterol-fighting drug Crestor portends a ferocious pharmaceutical fight.
"Crestor is here -- let the games begin," said Tim Anderson, a drug industry analyst for Prudential Financial, in a research note to clients on Wednesday. "We expect the ensuing marketing battle to be the most competitive and expensive the industry has ever seen."
There's a $22 billion worldwide market for cholesterol drugs, Anderson said, and Crestor -- already approved in 25 countries -- should be hitting U.S. pharmacy shelves in about two weeks. U.S. cholesterol drug sales reached $12.5 billion last year, according to IMS Health, which tracks drug sales and prescriptions.
For patients, Crestor presents another drug to help fight heart disease. For cardiologists, the publicity attached to Crestor helps amplify their message that too many people are ignoring their too-high cholesterol levels.
And for investors, Crestor offers a new look at a company for which analysts have almost as many sell ratings (three) as buy ratings (five). The drug also will leave competitors scrambling to protect their franchise products.
Crestor's arrival sets up a marketing contest that affects not only the most popular U.S. class of drugs but also the world's biggest drug companies.
, the world's largest drug company. Its Lipitor is not only the biggest U.S. cholesterol drug but also the biggest U.S. drug -- with $6.3 billion in sales for the 12 months ended March 31, according to IMS.
, the world's third-largest drug company. Its Zocor, once the best-selling U.S. cholesterol drug, is now in second place -- among cholesterol fighters and among all drugs -- with $4.2 billion in U.S. sales for the 12 months ended March 31.
, the world's seventh-largest drug company, ranks third in the U.S. cholesterol sweepstakes. Bristol-Myers Squibb extracted $1.8 billion in revenue from its best-selling product during the 12 months ended March 31. Pravachol is the 15th-best-selling U.S. drug.
And there's AstraZeneca, the world's fourth-largest drug company, whose Crestor, analysts say, could both expand the cholesterol market and grab a chunk of market share primarily from Zocor and Pravachol.
There are two other brand-name cholesterol drugs and one generic product whose sales are too small for their companies to spend heavily on marketing combat for the statin class of drugs.
Statins, also known as HMG-CoA reductase inhibitors, have been on the U.S. market since 1987. They affect an enzyme in the liver that partially blocks the synthesis of cholesterol in the liver. That in turn leads to increased removal of cholesterol in the blood. The drug helps reduced so-called bad cholesterol, known by the nickname LDL, which can accumulate in -- and eventually clog -- the arteries, causing heart disease or a heart attack. The drugs can also elevate HDL -- the good cholesterol.
The FDA approved Crestor, as it has approved other statins, as part of an overall program in which patients exercise and follow a low-cholesterol diet. Given the expanding trend in U.S. obesity and revised government recommendations for lower cholesterol levels, it would appear that statins have plenty of room to grow -- at least until something better comes along.
Last year, companies spent $1.4 billion in the U.S. marketing statins to doctors, other health professionals and patients, according to IMS Health.
It's hard to predict how big the statin advertising arms race will be in the next few years. But consider this: Last year's statin ad spending was bigger than any research-and-development budget of any biotechnology company in the world and larger than the revenue of all but three medical biotechnology companies, according to sales and R&D data compiled by the magazine
Last year those statin ads outspent R&D budgets at all but 14 of the world's drug companies. And only 17 drugs worldwide produced more sales than the U.S. statin advertising budget, according 2001 revenue data compiled by the National Institute for Health Care Management.
When the marketing battle is engaged, look for AstraZeneca to tout certain test results that the FDA has allowed to be included on the drug's label. The results include information showing that at many varying doses, Crestor did a better job of lowering bad cholesterol than did its competitors.
Look for competitors to take two marketing approaches. First, they will point out that there is no reason to switch if an existing medication is effective and produces few or no side effects. Second, they will raise questions about the precautionary information about potential side effects contained on Crestor's label.
And look out for excessively aggressive marketing, as evidenced earlier this month by the FDA's criticizing Bristol-Myers Squibb's ads for Pravachol. The agency said the ads were misleading, and it said the company needed to replace the ads quickly with proper promotions.
Although many financial analysts said the FDA's approval of Crestor's label will provide AstraZeneca with a better-than-expected marketing opportunity, some physicians aren't so sure that Crestor will be as quick or as big a success as Wall Street predicts. Some analysts say Crestor will produce annual sales of $2.5 billion to $3 billion by 2006.
"This drug will have a tough row to hoe," said Dr. Jerome Cohen, professor of internal medicine and cardiology at the Saint Louis University School of Medicine. "The existing drugs are very, very good. If we use the older products to the best extent, most people will benefit."
Cohen said Crestor's initial benefit may be the raising of consumer interest and physician education about the dangers of high cholesterol. "I welcome more information," said Cohen. "The key issue is undertreatment by physicians -- not the quality of drugs." Cohen and his medical team have conducted clinical trials on cholesterol drugs for Merck, Bristol-Myers Squibb and
and are conducting a clinical trial for Pfizer.
Dr. Stephen Siegel agrees with Cohen's comments that Crestor's entry to the market will be difficult, because statin patients don't switch drugs frequently, and doctors aren't inclined to change something that works.
"I see a very reluctant market," said Siegel, assistant clinical professor in the division of cardiology at the New York University School of Medicine.
"When a patient says 'I'm good with this drug,' then I don't want to change him," Siegel said. "I won't try something new just because it's new." Siegel has done some consulting work for Pfizer and Merck, speaking about heart-disease risks to medical professionals.
Siegel added that Crestor may have trouble due to the "Baycol effect," a reference to the Bayer Pharmaceutical Division's drug that the company pulled from the U.S. 24 months ago, after the FDA received reports linking 31 deaths from a rare muscle disease to the drug. Baycol entered the U.S. market in 1997. "People might be concerned about trying something new," Siegel said.
The side-effects issue for Crestor is what had Wall Street analysts on edge, especially because an FDA advisory committee, which unanimously recommended Crestor last month, also suggested that patients taking the highest doses of the drug be monitored periodically for high levels of protein in the urine, a signal for possible kidney problems. Although the FDA usually follows the recommendations of its advisory committees, the agency declined to require monitoring of this condition, which is known as proteinuria.
The Crestor label was "better than expected," said Catherine J. Arnold, a drug industry analyst for Bernstein Research, in a research note to clients on Wednesday. "FDA's decision not to require monitoring for proteinuria makes it more difficult for competitors to raise doubts about the drug's safety." Arnold rates AstraZeneca's stock as outperform; she doesn't own shares, and her firm doesn't have an investment banking relationship with AstraZeneca.
But Prudential Financial analyst Tim Anderson noted Wednesday that Crestor's label did contain some precautionary comments, "which the competition is likely to use against Crestor."
The label says proteineuria and hematuria (blood in the urine) were detected in clinical trials primarily at a dose -- 80 milligrams -- which is above the maximum dose approved by the FDA. The agency has approved Crestor doses ranging from 5 milligrams to 40 milligrams.
But the FDA pointed out -- and the Crestor label explains -- that findings of proteinuria and hematuria were more frequent for patients taking 40 milligrams of Crestor than for those taking lower doses of the drug or for patients taking other statins.
Anderson called this "a slight negative" for Crestor. But he also noted some positive news: The FDA allowed AstraZeneca to label Crestor with test results showing that its drug did a better job of reducing bad cholesterol when compared with other major statin drugs at many different doses.
Anderson added that AstraZeneca had set Crestor's average wholesaler price at $2.63 per day for all doses of the drug -- well below the prices of most doses charged by its three major competitors.
That's a move that should help AstraZeneca make Crestor more attractive to health maintenance organizations, managed care firms and government agencies that decide what drugs they will cover for their customers.
Anderson added that the strategy seems most directed at Lipitor. Crestor's average wholesale price is well below that of Lipitor at the 20-milligram and 40-milligram levels, while slightly above at the 10-milligram level.
This approach will enable AstraZeneca "to claim that Crestor is more effective and less expensive," a strategy used in 1997 when Pfizer introduced Lipitor to attack Merck's Zocor, he said.
Anderson rates AstraZeneca's stock as a hold; he doesn't own shares, and his firm doesn't have an investment banking relationship with the company. He summed up the looming Crestor-Lipitor battle by citing the tag lines used by company executives in their talks to analysts. For Crestor, it's "Get It Right First Time." For Lipitor, it's "Power You Can Trust."
AstraZeneca's stock closed Friday at $42.02. It has been bouncing around a range of about $39 to $46 since May. The stock received a slight boost Wednesday, rising 60 cents, to $41.50, after the FDA's late Tuesday approval of Crestor, which came after stock markets had closed.
But the stock's narrow movement in recent months suggests that analysts believe that a company with $9.2 billion in sales for the first half of 2003 will need more than one new big drug to drive revenue and profit steadily upward.