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SQUIBB MAY OUTLICENSE PRAVASTATIN TO COMPETE IN CHOLESTEROL-LOWERING CLASS IN 1990's; CAPTOPRIL PRODUCTS COULD REACH $ 1 BIL. SALES IN 1988

Executive Summary

Squibb is discussing "strategic alliances" for the eventual marketing of its cholesterol-lowering agent, pravastatin. Squibb Exec VP Jan Leschly disclosed that the company is considering an outlicense agreement for pravastatin in a Jan. 11 speech to the Hambrecht & Quist health care conference in San Francisco. Reviewing the potential for pravastatin, Leschly said that Squibb "will be talking to partners about appropriate strategic alliances to get our share of this market in the U.S. and Europe." He reiterated that the development schedule for pravastatin calls for an NDA filing within the next six months and the first launch into major markets in 1990. The public reference to an outlicensing effort for pravastatin is noteworthy based on recent Squibb deals. The company has used statements to investment groups about its interest in outlicensing specific products as a harbinger of the announcement of final deals. For example, the firm was declaring its interest in outlicensing the follow-up ACE compounds, zofenopril and fosinopril, in the late autumn and final deals for both of those products (with McNeil and Boehringer-Ingelheim) were announced in December and January. If the same pattern holds true, Squibb's reference to pravastatin at the Hambrecht & Quist seminar indicates that the firm could be close to announcing an agreement for the cholesterol synthesis enzyme inhibitor. A co-marketing agreement for pravastatin would fit well with Squibb's current approach. Leschly emphasized the company's co-marketing and "strategic alliances" during the Jan. 11 speech. He noted that the company is using licensees in six of the world's top seven drug markets to further the marketing efforts for the company's top $ 775 mil. product Capoten (captopril). In Italy, for instance, the company began a Capoten co-marketing effort with Menarini on Jan. 14. Describing Menarini as "one of the most powerful companies in Italy," Leschly said that the agreement should give Squibb sales force parity with Merck in that market. Squibb maintains that Italy is the only market among the world's top seven in which Merck's enalapril has a larger marketshare than captopril: enalapril had 21.7% of the broad hypertension/congestive heart failure market in Italy during the third quarter of 1987 compared to 14.3% for captopril. Menarini has 300 sales representatives in Italy, and together with the existing Squibb effort, Capoten and Capozide will be pushed by a combined field force of 550 in Italy. Leschly pointed out that the recent co-promotion agreement with McNeil in the U.S. gives Squibb access to "J&J's research" pipeline. Squibb will be able to pick from J&J's full development portfolio and will not be restricted to McNeil projects. Capoten's growth is catapulting Squibb into the top ranks of the major pharmaceutical firms. Squibb ranked sixth among drug companies in the U.S. based on sales in 1987 (up from tenth in 1982). Its growth in France has been even more dramatic, from fifty-first in 1982 to fifth. Leschly maintained that Squibb has the fastest growth rate in terms of total prescriptions in the U.S. among the top ten domestic-based drug companies. Squibb's total prescriptions increased 16% in 1987 on top of a 10% increase the year before. Noting that Marion also made a presentation to the Hambrecht & Quist symposium, Leschly added, "I'm afraid [Marion President Fred] Lyons is sitting somewhere here. I think it is appropriate to mention that Marion has had a growth rate of 16% and 18% [in the two years], therefore higher than Squibb's But [Marion's growth is] obviously from a lower base." Rx GROWTH TRENDS AMONG U.S. MAJORS Reproduced from a slide in Squibb's Jan. 11 presentation to Hambrecht & Quist. The material was derived by Squibb from standard prescription audit services. The growth rates relate to total Rxs, not Rx dollars. Squibb Exec VP Jan Leschly cited the growth figures to contend that Squibb's in-line products have recently been well protected against "generic erosion." Leschly said: "This is Squibb's total prescriptions of all products in the U.S. marketplace versus major U.S. competitors. As you can see, Squibb has 16% growth in total prescriptions in 1987 over 1986. These are the top ten U.S.-based pharmaceutical companies and you will notice that six out of these companies have not had growth in total prescriptions despite the fact that some of these companies have had major new product introductions." Squibb's support for its marketing efforts is at a major league level. Leschly said the firm spent $ 500 mil. in marketing support (for drug sales of approximately $ 1.9 bil.). By 1992, Leschly said Squibb's annual marketing support expenditures will grow to $ 1 bil. The company plans to slow the growth of its sales force in the next several years, Leschly noted. Up from 2,200 in 1985, the firm now has a total sales rep census of 3,500. "We will not expand our sales forces as rapidly as we have done in the past, but rather we are looking for productivity," Leschly said. Sales by the Squibb detail force in the U.S. averaged $ 575,000 per representative, the Squibb exec reported. That level indicates 1987 Squibb U.S. drug sales of about $ 700 mil. Leschly compared the Squibb average to $ 1.12 mil. per representative at Merck, $ 1.07 mil. per rep at Smith-Kline, and $ 724,000 at Pfizer. Leschly declared that Squibb "expects over the coming years to increase our sales per representative to over $ 1 mil., which obviously will have a major impact on our profitability." Charts omitted.
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