Andrx Altocor Sales Force Expands 50%; Generic Prilosec Charge Is $41 Mil.

Andrx plans to increase its sales force to 450 reps to support the cholesterol agent Altocor , CEO Richard Lane said during an Oct. 31 conference call.

"We are on our way to increasing our 300-person sales force to 450 by early 2003," Lane said. The brand product sales force is primarily dedicated to Altocor (extended-release lovastatin).

During a call with analysts in July, Lane suggested that Andrx would scale up the Altocor sales force based on early indications of commercial success (¹ (Also see "Andrx Altocor Will Test “Guerilla” Marketing In Cholesterol Market" - Pink Sheet, 12 Aug, 2002.), p. 28). Altocor was approved June 26 (² 'The Pink Sheet' July 1, In Brief).

Andrx is positioning Altocor as a product that combines the well-established safety profile of lovastatin (Merck's Mevacor and generics) with an improved delivery system - at a significant discount to the heavily promoted brands, Pfizer's Lipitor , Merck's Zocor and Bristol-Myers Squibb's Pravachol .

"We did launch Altocor with an extremely modest promotional support. One of the things we're doing right now is actively ramping that up," Lane said. Andrx "will test direct-to-consumer newspaper advertising in selected locales."

In addition, "we recently began to support our Altocor launch with major medical meetings with top national cardiologists and regional medical meetings with doctors throughout the country."

"We expect both managed care and Medicaid formulary wins over the next several months," he added.

According to physician survey data collected by Mount Laurel, N.J.-based Impact Rx, Andrx does appear to be reaching doctors despite its relatively small size.

According to Impact Rx, physicians reported that Altocor represented 6.5% of details in the cholesterol class for the week of Oct. 4.

Zocor had the highest "share of attention" as measured by Impact Rx, at 32.3%, followed by 21.4% for Lipitor and 18.8% for Pravachol. Two other specialty company products, Reliant's Lescol (13.8%) and Kos' Advicor (7.2%), round out the category.

The upcoming launch of Schering-Plough/Merck's Zetia will generate significant activity in coming months (see ³ (Also see "Schwarz Generic Prilosec Clears FDA After Deal With Andrx, Genpharm" - Pink Sheet, 4 Nov, 2002.)).

The Impact Rx data indicate that Altocor is not yet generating significant prescription activity - although the product is being heavily sampled.

In the third quarter, Andrx booked $1.4 mil. in net sales of Altocor on $10.5 mil. of shipments.

"We deferred the recognition of the balance of such shipments as net sales in our P&L due to the limited amount of prescription history as well as sales terms and other incentives offered including the right of return," Senior VP and Chief Financial Officer Angelo Malahias said.

Lane left Bristol-Myers Squibb in early April after Bristol first disclosed that inventory increases in 2000 and 2001 would adversely affect results in 2002 (⁴ (Also see "Bristol Takes Stock: Hayden To Head U.S. Rx After Lane Departs" - Pink Sheet, 8 Apr, 2002.), p. 3).

Altocor could generate $50 mil. in sales in 2003, Lane said, "but I believe the investment we have put in place behind this brand has the opportunity to drive it beyond that."

For the third quarter, Andrx reported a net loss of $32.6 mil. compared to a net income of $10.7 mil. for the same period in 2001.

Andrx recorded a $41 mil. charge fully reserving for pre-launch inventories of generic Prilosec (omeprazole). A New York City federal court ruled that Andrx' generic infringes AstraZeneca's Prilosec patents Oct. 11 (⁵ (Also see "Generic Prilosec Launch Awaits Negotiations Between Andrx And Schwarz" - Pink Sheet, 21 Oct, 2002.), p. 17).

Andrx has reached an agreement with Schwarz that will give the company some revenues from omeprazole in the near term. Schwarz' generic version was ruled not to infringe the Prilosec patents, but Andrx held the first-to-file generic exclusivity for the product. Under a Nov. 1 agreement, Andrx is surrendering its exclusivity (see ⁶ (Also see "Schwarz Generic Prilosec Clears FDA After Deal With Andrx, Genpharm" - Pink Sheet, 4 Nov, 2002.)).

Andrx is also awaiting approval of generic versions of GlaxoSmithKline's Wellbutrin SR and Biovail's Tiazac (⁷ (Also see "Naprelan Generic Exclusivity Settled; Andrx Sees Three Near-Term Launches" - Pink Sheet, 15 Jul, 2002.), p. 7).