Glaxo gives up some rights on impotence drug

GlaxoSmithKline today said it was giving up some of the rights to its Levitra impotence treatment because the market was not growing quickly enough.

The drugs giant said the growth in sales of Levitra – a competitor to high-profile pill Viagra – had not kept pace with its other blockbuster treatments for illnesses such as asthma and diabetes.

As a result, it was transferring the rights to co-promote the medicine in most markets outside the United States back to German drugmaker Bayer.

Glaxo, which launched Levitra in partnership with Bayer in the US in summer 2003 and Europe a few months later, said worldwide sales of the drug totalled €151m (£105.4m) in the first nine months of last year.

In contrast, sales of its Seretide treatment for asthma in the same period climbed to €1.9bn (£1.3bn) and its Avandamet diabetes medicine totalled €1.2bn (£829m).

Levitra has lagged behind other anti-impotence drugs on the market such as Pfizer’s Viagra and Cialis, which is manufactured by Eli Lilly and Icos.

A review of commercial strategy found that Glaxo should invest in maximising sales of drugs such as Seretide and Avandamet outside the US.

In a statement today, Glaxo said it would receive €208m (£145.2m) for returning the European and international co-promotion rights of Levitra to Bayer.

The move will also see its share of spending on the future research and development of Levitra reduced by up to €15m (£10.5m).

David Stout, president of Glaxo’s pharmaceutical operations, said: “This agreement represents an opportunity for Glaxo and Bayer to realise the maximum potential value from Levitra.”

The company would continue to be actively involved in marketing the product in the US, Italy and 25 other countries worldwide.

Glaxo was keen to keep promotion rights in the US where it is easier to persuade men to purchase the drug because there is no block on direct-to-consumer advertising.

A campaign headed by Mike Ditka, former coach of the Chicago Bears gridiron team that won the Super Bowl in 1986, was launched in the US to raise the profile of the drug among 120 million American Football fans.

“Both companies remain firmly committed to its commercial success. The relationship between Glaxo and Bayer remains strong,” Mr Stout added.

Analysts at Barclays said the sale of some of the co-promotion rights should be neutral for Glaxo.

“Levitra seems to have been losing the marketing battle to Cialis and market share has stalled,” they said.

“We consequently expect the product to grow broadly in line with the erectile dysfunction market’s low-teen growth and never become a significant product in the Glaxo portfolio.”

In a separate announcement today, Glaxo said it had launched its Rotarix vaccine in Mexico to treat cases of rotavirus, which causes vomiting and diarrhoea in children aged up to 36 months.

It plans to launch the vaccine in other Latin American countries and in Asia-Pacific during the course of this year.

Glaxo shares were 1% or 7p lower at 1243p following today’s announcements.