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Executive Summary

Zofran (ondansetron) is leading the new generation of Glaxo marketed products with U.S. sales of almost $250 mil. in its first full 12-month period of reported sales (July 1991 - June 1992). Worldwide, the product is off to a fast start from its first introduction in March 1990 (in the U.K.). Non-U.S. sales have grown to over $205 mil. in the most recent fiscal year ((British pound)117 mil.). In the U.S., however, the sales acceleration has been even more pronounced. By reaching the $250 mil. annual sales level in the product's fifth through seventeenth months of marketing, Zofran appears to be easily exceeding Glaxo's preliminary public estimates for the product's market. In the first four months of introduction (March- June 1991), the product generated sales of $59.5 mil. in the U.S. Zofran is being sold in the U.S. through Glaxo's new CNS products marketing division, Cerenex, which was formed at the beginning of this year ("The Pink Sheet" Dec. 23, 1991, T&G-7). The division is still building the size of its sales force (with a 640-rep target by mid-October). Zofran is the first major product launch for the CNS group; the migraine compound Imitrex (sumatriptan injectable) is the next probable launch. The NDA for that product is still pending following a favorable advisory committee review on Oct. 25, 1991. Zofran's worldwide total was $456 mil. in sales in fiscal 1992, up 214% from $145 mil. in fiscal 1991, according to Glaxo's interim report on fiscal 1992 operating results, released on Sept. 10. In British pounds, Zofran recorded sales of (British Pound)259 mil. up from (British Pound)78 mil. the year before. The product generated over 25% of Glaxo's sales growth in 1992 and finished the year representing over 6% of the company's total sales. The anti-emetic generated more new sales (when calculated in dollars) than Glaxo's flagship product Zantac (ranitidine) in fiscal 1991. Zantac sales surpassed the $3 bil. mark worldwide, reaching $3.18 bil. compared to $2.99 bil. in 1991. By those figures, Zantac grew by $193 mil. in sales compared to $311 mil. in added sales generated by Zofran. In pounds, Zantac generated more new sales than Zofran: (British Pound)1.8 bil. in 1992, up 13% from (British Pound)1.6 bil. in 1991. In constant exchange rates, the company reported that Zantac grew by 9%. Zantac sales in the U.S. were $1.72 bil. (up 18%), the company reported. Glaxo's total U.S. pharmaceutical sales reached $2.78 bil., up 22%. Those sales were reached despite rebates to Medicaid of nearly $130 mil., or about 4.6% of the company's total U.S. sales. Glaxo apparently has been absorbing the largest rebate payments by a single company (in terms of total dollars) because of the best prices that were prevalent in the competitive gastrointestinal market. SmithKline Beecham has not disclosed its rebate payments, but that company also has steep discounts that are presumably generating sizable payments to Medicaid. SmithKline Beecham has said that if discounts were taken into account, its 7.8% AWP price increases in 1991 would actually have been 3.8% ("The Pink Sheet" May 11, p. 4). Zofran apparently has captured in short order a large share of the U.S. market for use with cancer chemotherapy. In late 1990, prior to the product launch, the company estimated that about 2.5 mil. episodes of chemotherapy occur each year in the U.S. At about $129 per course of therapy, Zofran was used in about 2 mil. courses of therapy in the U.S. in 1992. The anti-emetic has attained the high usage figures despite concerns among hospital pharmacists that the product is an example of a budget-straining new item. The head of hospital pharmacy at one major center, Duke, reported early in the year that Zofran came out of nowhere to represent 10% of his facility's budget ("The Pink Sheet" Jan. 20, T&G-3). The cancer chemotherapy indication may be the tip of the iceberg for Zofran. The product was recommended for use against post-operative nausea and vomiting by an FDA advisory committee on Sept. 3 ("The Pink Sheet" Sept. 7, p. 12). By Glaxo's estimates two years ago, the post-op market (of treatable cases of nausea and vomiting) is three to four times as large as the cancer chemotherapy market. More recently, the company has estimated that there will 29-30 mil. U.S. surgeries by 1995 with approximately 30% of those surgeries producing treatable nausea and vomiting. Zofran, however, was also recommended for prophylactic pre-surgical use, which could lead to its use in procedures beyond the 30% of cases associated with post-op nausea/vomiting. In addition to Zofran, Glaxo's other recently-introduced products contributed $183 mil. ( (British Pound) 104 mil.) in 1992, including Imitrex sales of $76 mil. ( (British Pound) 46 mil.); and Serevent and Flixonase sales of $70 mil. ( (British pound) 40 mil.). The company commented that the new generation of products represented 9% of total sales. The company's asthma/respiratory line climbed close to $1.7 bil. ( (British Pound) 964 mil.) in sales from $1.4 bil. ( (British Pound) 775 mil.). The company said sales in this category rose 22%. Ventolin generated $790 mil. ( (British Pound) 449 mil.). Systemic antibiotics reached $1.2 bil. ( (British Pound) 667 mil.), up 9%. Ceftin (Zinnat) was credited with worldwide sales of $447 mil. ( (British Pound) 254 mil.). Worldwide dermatological sales were $255 mil. ( (British Pound) 145 mil.); cardiovasculars climbed to $111 mil. ( (British Pound) 63 mil.).

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