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MARION MERRELL DOW NICODERM SALES OF $36 MIL.

Executive Summary

MARION MERRELL DOW NICODERM SALES OF $36 MIL. in the first quarter of 1993 were down 35% from $55 mil. at the start of 1992 but are in line with the company's original projections for the second-year performance of the smoking cessation patch. In an interim operating statement, MMD noted that "the U.S. smoking cessation market has declined markedly from early 1992, when several new products were being launched simultaneously." The downturn in the patch market also has had a negative effect on MMD's nicotine gum product, Nicorette. First quarter sales of that product declined by 18% from $22 mil. in 1992 to $18 mil. this year. The combined Nicoderm/Nicorette sales of $54 mil. put the MMD smoking cessation products on track for over $200 mil. in sales for the full year. MMD Prescription Products Division President David Roche told a recent meeting of wholesalers that a $200-$300 mil. range for both products was the initial estimate by the company before last year's surprising launch. "When you look at 1992 and then this year, the tremendous surge last year for Nicoderm was really a bump for pent up demand," Roche explained. "What we are really seeing now is a market size [for patches and gums] more in the $500 mil. range for 1993 and therefore about $200-$300 mil. for Nicoderm and Nicorette, which, you may not know, is the original forecast for this year to begin with." Roche noted that "we just didn't forecast the huge demand in the first year from the whole smoking cessation category." Alza, which manufactures the patch for MMD, noted in its first quarter report for 1993 that Nicoderm manufacturing remains at a reduced level from 1992 quantities. Nicoderm's total first-year sales in the U.S. were $186 mil. Outside the U.S., the product generated $39 mil. Nicorette U.S. sales in 1992 were $60 mil., with another $9 mil. coming from outside the U.S. MMD claims that the two products "control" over half of the smoking cessation market with 55% of the U.S. scripts. Warner-Lambert, which claims a 12% market share of the patch business for its product Nicotrol, is also predicting a smaller overall market size. At an April 21 meeting with securities analysts, W-L President Lodewijk de Vink noted that inflated first-year projections were leading observers to claim that the nicotine patch field could be a "billion dollar market opportunity." His scaled down, "more realistic" projection is now $350 mil. Cygnus, the manufacturer of Nicotrol, told the Furman Selz Generic Drug/Drug Delivery Conference that demand at the consumer level for nicotine patches continues to be strong. "The total number of prescriptions in the first two months of this year are comparable to the first two months of last year," Cygnus CEO Gregory Lawless said. "So, on a fundamental demand level the market still looks attractive and the future still looks quite good." Both W-L and MMD are seeking the consolidated market opportunities presented by large employers, labor unions and HMOs. De Vink observed that "that's where the psychological support programs that are built into the Nicotrol package can pay their fullest dividends." MMD's Roche noted that his company has established "workplace wellness programs to help create awareness of the value of pharmaceuticals in keeping people productive on their jobs." MMD will make physicians available to talk to lunchtime groups on subjects such as smoking cessation or allergies. MMD's other major products are also in volatile markets. The Seldane line of prescription antihistamines has been suffering since the relabeling for cardiovascular events in the middle of 1992. First quarter 1993 sales were off 30% at $144 mil. In 1992, worldwide sales were $878 mil., up 14%. U.S. sales were $614 mil. of which $158 mil. were recorded by the new combo addition, Seldane-D. MMD faces new competition from the Rx-to-OTC switch product Tavist (Sandoz) and Schering's new prescription non- sedating product Claritin. However, MMD recently has restarted consumer promotions for the Seldane line ("The Pink Sheet" April 19, pp. 5 & 7). Roche told the wholesalers that MMD has "recently completed an analysis of a database of 1.2 mil. prescription experiences" with terfenadine and other antihistamines. He maintained that the results of the review confirm that concurrent and serious heart disease in terfenadine patients is rare and that "current labeling is appropriate." MMD presented the information to the FDA in February, Roche said. The ability of MMD to delineate a recognizable risk profile for the product is one of the keys to reviving an effort to switch the product to OTC status ("The Pink Sheet" Dec. 7, 1992, T&G-11). In the calcium channel blocker field, MMD's Cardizem line was off 11% in the first quarter at $208 mil. Generic competition to the standard-release brand and the switch from Cardizem SR to the lower-priced Cardizem CD contributed to the lower sales. The CD version is now "the predominant dosage form of the Cardizem brand" with $118 mil. in first-quarter sales. In 1992, the CD version had sales of $256 mil. MMD says that in 1992, over 25% of the Cardizem tab patients were switched to the exclusive CD version and over 50% of the Cardizem SR patients were switched to the CD.
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