Achieving Market Dominance Through Reformulation

H E A LT H C A R E
Achieving Market Dominance Through

Reformulation
A Strategic Insight
By Timothy J. Atkinson
Timothy J. Atkinson
The report author is Tim Atkinson, BSc. (Hons), an independent pharmaceutical

industry analyst and biomedical writer who has written over 10 senior management
reports for the international pharmaceutical and biodevice industries. His breadth of
experience and researching and writing repertoire includes pharmaceutical eCommerce,
business strategies for R&D-based and generics companies, advances in biodevices and
drug delivery technologies, global healthcare environments, and specialised drug
markets. Tim also provides strategic consultancy services to start-up and existing
pharmaceutical and biotechnology companies and private healthcare organisations.
He can be contacted at tja@btinternet.com.
Copyright © 2001 Business Insights Ltd

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ii
Table of Contents
Achieving Market Dominance Through Reformulation:
A Strategic Insight
Executive Summary 11
Chapter 1 Introduction to Reformulation 15

Summary 15
Pharmaceutical reformulation – application to industry 16
Role of drug delivery systems 18
Reformulation to protect and extend patents 19
Barriers to reformulation 23
Pharmaceutical reformulation systems 25
Oral reformulations 27
Biological barriers to oral formulation 27
Oral reformulation systems 28
Chronopharmacology 30
Injectable reformulation systems 31
Needleless formulations 32
Transmucosal formulations 34
Oral mucosal formulations 34
Nasal mucosal formulations 35
Vaginal mucosal formulations 36
Urethral mucosal formulations 37
Rectal mucosal formulations 38
Transdermal formulations 39
Pulmonary formulations 42
Dry powder formulations 43
Aqueous formulations 44
Inhaleable insulin – a new era in treating diabetes 44
iii
Chapter 2 Developing a Successful
Pharmaceutical Reformulation
Strategy 46
Summary 46
A commercial basis for reformulation 48
Key industry factors associated with pharmaceutical reformulation
development 50
Market conditions 51
Demand for reformulation 54
R&D issues 55
When to initiate pharmaceutical reformulation 57
A reformulation timeplan to protect patents and sustain market
dominance 62
Case study – Multiple reformulation: Aventis’ Diltiazem/Cardizem 63
Case study – Patent extension and revenue protection: Pfizer’s
Procardia 65
Technological competencies 66
Strategic collaboration 68
Successful reformulation products on the market 71
R&D reformulation focus 74
Market forecasts and growth for drug delivery based reformulation
sectors 75
Reformulation sector growth 76
Novel reformulations – the key to success? 78
Novartis: Neoral (Sandimmun/cyclosporin) 78
Johnson & Johnson: Duragesic (fentanyl) 79
Boehringer Ingelheim: Catapres TTS (clonidine) 79
Key product attributes 80
Innovative reformulation technologies 81
Oculex Pharmaceuticals: intraocular DDS 81
Flamel Technologies: Micropump 82
Helix BioPharma: BIPHASIX 82
Biosyn Inc.: C31G technology 84
NexMed Inc.: NexACT 85
Reformulation strategies for research-based companies 86
The generics threat 87
A complementary reformulation product strategy – the way forward? 88
Case study – Protecting revenue streams with branded generics:
BMS’ Capoten 89
Rx-to-OTC switching 91
Drivers of successful reformulation strategies 92
Reformulation strategies for generics companies 92
The generics opportunity 92
iv
Reformulation = differentiation 93
Drivers of success 94
Case study – the importance of strategic R&D focus for
reformulation success: Andrx 94
Chapter 3 Reformulation for Leading Drugs:

Case Studies 2000–2005 96
Summary 96
Introduction 97
Reformulation for patent expiry in 2000 99
Abbott: Hytrin 99
Product profile 99
Strategic review 101
Bristol-Myers Squibb: Glucophage 101
Product profile 101
Strategic Review 102
Eli Lilly: Humulin 104
Product profile 104
Merck & Co.: Vasotec 106
Product profile 106
Merck & Co.: Pepcid 109
Product profile 109
Pfizer: Procardia XL 110
Product profile 110
Roche: Rocephin 113
Product profile 113
Reformulation for patent expiry In 2001 115
Abbott: Biaxin 115
Product profile 115
AstraZeneca: Losec/Prilosec 118
Product profile 118
AstraZeneca: Zestril 122
Product profile 122
Merck & Co.: Prinivil 124
v
Product profile 124
Bayer: Cipro 126
Product profile 126
Eli Lilly: Prozac 128
Product profile 128
Merck & Co.: Mevacor 132
Product profile 132
Novo Nordisk: Novolin 134
Product profile 134
Eli Lilly: Axid 138
Product profile 138
GlaxoSmithKline: Augmentin 141
Product profile 141
Pfizer: Zithromax 143
Product profile 143
Sankyo:Mevalotin 145
Schering-Plough: Claritin 146
Product profile 146
Takeda/Tap: Takepron/Prevacid 150
Product profile 150
Bristol-Myers Squibb: Taxol 153
Product profile 153
Pharmacia/Pfizer: Celebrex 155
Product profile 155
GlaxoSmithKline: Flixotide 157
Product profile 157
Amgen: Epogen 160
Product profile 160
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Johnson & Johnson: Procrit 163
Product profile 163
Pfizer: Diflucan 165
Product profile 165
Bristol-Myers Squibb: Pravachol 168
Product profile 168
Merck & Co.: Zocor 172
Product profile 172
Pfizer: Zoloft 174
Product profile 174
GlaxoSmithKline: Seroxat/Paxil/Deroxat 177
Product profile 177
Chapter 4 Marketing and Branding for

Pharmaceutical Reformulations 180
Summary 180
Introduction 181
Target audiences 183
Marketing capabilities 184
The importance of branding 186
Branding reformulated products 190
Reformulation switching 190
Switching to an ethical reformulation 190
Case study – Succesful product switching: Aventis’/Biovails’s
Cardizem 191
Switching in good time 192
Switching to an OTC formulation 193
Marketing strategies for reformulated products 195
Cast study – Marketing a reformulated product: Bayer’s Adalat 195
The role of the Internet 198
Global reach 199
Benefits of reaching the online consumer 199
Reformulation and Internet opportunities 200
Advertising on the Internet 202
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Chapter 5 Strategic Reformulation Alliances 204
Introduction 204
Reformulation strategies of leading multinationals 206
Novartis 206
Reformulation alliance portfolio 206
Alza 207
Andrx Corporation 207
Applied Pharma Research 208
Cephalon Inc (formerly Anesta) 208
CIMA Labs 208
Elan 209
Eurand 209
Emisphere Technologies 209
LecTec Corporation 210
SkyePharma 210
Aventis 211
Elan 211
Ethypharm 211
Eurand 212
Inhale Therapeutics 212
GlaxoSmithKline 213
Alkermes 213
Aradigm Corporation 214
PowderJect 214
Quadrant Healthcare 215
SkyePharma 215
Watson Consumer Health 216
Weston Medical Group 216
Yamanouchi 216
Johnson & Johnson/Janssen 217
Alkermes 217
Alza 218
AP Pharma (formerly Advanced Polymer Systems) 218
Ethypharma 219
LecTec 219
Yamanouchi 219
Abbott/Knoll 220
Alza 220
Aronex Pharmaceuticals 220
Cephalon Inc (formerly Anesta) 221
Ethypharm 221
SkyePharma 221
viii
Bibliography 222
List of Figures
Figure 1.1: Sales of Pfizer’s Procardia XL, 1990–2000 23
Figure 1.2: Estimated market share of commercialised reformulation systems, 2001 26
Figure 2.3: Market forces affecting pharmaceutical reformulation 54
Figure 2.4: Theoretical representation of a pharmaceutical strategy to optimise R&D for the
designated compound and related multiple reformulation-based products 59
Figure 2.5: Revenue and patent protection achieved through reformulation of one key drug 61
Figure 2.6: Reformulation development timeplan showing patent extension and protection
possibilities through multiple reformulation products 63
Figure 2.7: R&D pipeline reformulation focus, 2001 74
Figure 2.8: CAGR of major reformulation sectors, 2000-2005 77
Figure 2.9: Commercial benefits of reformulation 86
Figure 2.10: Theoretical reformulation strategy for research-based companies to sustain market
leadership 89
Figure 2.11: Global sales of BMS’ Capotent, 1993–2000 90
Figure 4.12: Economic and commercial advantages of branded drugs 189
List of Tables
Table 1.1: Benefits of pharmaceutical reformulation 17
Table 1.2: Methods of administration for reformulated drugs 19
Table 1.3: Patent expiry of leading branded drugs, 2000-2005 20
Table 1.4: Advantages and disadvantages of orally delivered formulations 27
Table 1.5: Oral modified-release systems 29
Table 1.6: Main advantages and disadvantages for injectable formulations 31
Table 1.7: Main advantages and disadvantages for transmucosal formulations 34
Table 1.8: Anatomical characteristics of oral mucosae 35
Table 1.9: The main advantages and disadvantages of rectal formulations 38
Table 1.10: The main limitations and benefits of transdermal reformulations 40
Table 1.11: Main advantages and disadvantages for pulmonary reformulations 42
Table 1.12: Companies developing pulmonary insulin 45
Table 2.13: Commercial benefits of pharmaceutical reformulation 49
Table 2.14: Types of strategic collaborative agreements associated with reformulation 68
Table 2.15: Top-performing reformulation products, 2000 & 2005 72
Table 2.16: Top-performing reformulation products, 2000 & 2005 73
Table 2.17: Market forecast for drug delivery based reformulation sectors, 2000 & 2005 75
Table 3.18: Leading drugs with patent expiration between 2000 and 2005 and reformulation
opportunities 98
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Table 3.19: Global sales of Hytrin, 1999-2005 100
Table 3.20: Global sales of Glucophage, 1998–2005 102
Table 3.21: Global sales of Humulin, 1998–2005 104
Table 3.22: Global sales of Vasotec, 1998–2005 107
Table 3.23: Global sales of Pepcid, 1998–2005 109
Table 3.24: Global sales of Procardia XL, 1999–2005 111
Table 3.25: Global sales of Rocephin, 1998–2005 113
Table 3.26: Global sales of Biaxin, 1998–2005 116
Table 3.27: Global sales of Losec, 1998–2005 119
Table 3.28: Global sales of Zestril, 1998–2005 122
Table 3.29: Global sales of Prinivil, 1998–2005 124
Table 3.30: Global sales of Cipro, 1998–2005 126
Table 3.31: Global sales of Prozac, 1998–2005 128
Table 3.32: Global sales of Mevacor 1997–2005 132
Table 3.33: Global sales of Novolin, 1998–2005 135
Table 3.34: Global sales of Axid, 1997–2006 139
Table 3.35: Global sales of Augmentin, 1998–2005 141
Table 3.36: Global sales of Zithromax, 1998–2005 143
Table 3.37: Global sales of Mevalotin, 1998–2005 145
Table 3.38: Global sales of Claritin/Claritin D, 1998–2005 147
Table 3.39: Global sales of Takepron/Prevacid, 1998–2005 151
Table 3.40: Global sales of Taxol, 1998–2005 153
Table 3.41: Global sales of Celebrex, 1999–2005 156
Table 3.42: Global sales of Flixotide/Flovent, 1998–2005 158
Table 3.43: Global sales of Epogen, 1998–2005 161
Table 3.44: Global sales of Procrit, 1998–2005 164
Table 3.45: Global sales of Diflucan, 1998–2005 166
Table 3.46: Global sales of Pravachol, 1998–2005 170
Table 3.47: Global sales of Zocor, 1998–2005 173
Table 3.48: Global sales of Zoloft, 1998–2005 175
Table 3.49: Global sales of Seroxat/Paxil/Deroxat, 1998–2005 177
Table 4.50: Main marketing targets for pharmaceutical companies 183
x
Executive Summary
More than $165bn in ethical revenues may be cannibalised as a consequence of 31
leading drug patent expirations between 2000 and 2005. At least 60% of multinationals
with looming patent expiry for their blockbuster drugs have opted to reformulate them
into improved versions that aim to prolong patent protection and conserve revenue,
while offering greater benefits for the patient in terms of administration, efficacy,
tolerability, and compliance. From 2006, reformulated products of leading blockbuster
brands are expected to account for an estimated $33bn in annual sales value.
Pharmaceutical reformulation represents an important defence strategy allowing

multinationals to maximise their return on investment in the vulnerable pre- and post-
patent environment. Current and older drugs that were once market leaders can be
rejuvenated through reformulation with the opportunity to extend market exclusivity by
an additional 10–15 years. Other significant benefits include a reduction of up to 90%
in development costs compared with NCE discovery and development; and feasibility-
to-market can be completed in a fraction of the time it takes to commercialise a new
candidate drug. Reformulation adds value to compounds that are abandoned because of
poor solubility and/or bioavailability, drugs that are competing in a saturated
environment, and companies wishing to gain rapid market entry with innovative
products.
However, adopting a successful reformulation strategy is no simple feat and, first, and
most importantly, involves vigilance in selecting the most appropriate development
partner. For instance, a start-up company offering a single technology platform with
which to reformulate will be less attractive to a multinational than a larger, more
established drug delivery company with several broad-based technology platforms.
Investment costs are another consideration as is the skill and expertise of the senior
management team in planning and marketing lifecycle extensions of top-performing
drugs. A focused, well-planned reformulation strategy involving R&D, investment,
11
partnering, and marketing is therefore crucial for long-term commercial reformulation
success.
Achieving Market Dominance Through Reformulation: A Strategic Insight aims to

provide the reader with a detailed analysis of the drug reformulation arena with
emphasis on achieving and sustaining market dominance for new formulations through
co-development and marketing. The report, which is based upon primary research and
case studies, will help determine the important elements involved in drug reformulation
from the standpoint of patent loss for leading marketed drugs. It discusses the benefits
of reformulation and the market impact made by branded reformulated products in the
highly competitive marketplace.
In Chapter 1, the application of drug reformulation to industry is detailed, in addition to

the role of specialised drug delivery companies offering multitudinous technology
platforms. Reformulation to protect and extend patents is also discussed, highlighting
the large number of patent expirations coming over the next five years. The advantages
and disadvantages of the numerous reformulation systems are also mentioned in
addition to the R&D focus of drug reformulation in coming years. Chapter 1 also
provides a strategic insight to reformulation opportunities for oral, pulmonary,
transmucosal, transdermal, and needleless delivery of drugs, indicating which sectors
and companies are positioned for commercial success.
The implementation and development of a reformulation strategy is discussed in

Chapter 2 with emphasis on the individual elements for success. For example, a
company embarking on reformulation requires a clear understanding of a number of
important issues, including present and future market conditions, demand for
reformulation, technological competencies of collaborative specialty firms, associated
R&D investment and risk, and the marketing and promotion issues involved to
maximise exposure for the product line extension. Chapter 2 also covers key aspects of
reformulation success derived from product-related case studies.
12
Chapter 3 provides a comprehensive account of the reformulation opportunities and
oversights affecting 31 leading drugs that are scheduled to lose market exclusivity
between 2000 and 2005. The chapter demonstrates that exploitation of a drug molecule
through reformulation offers impressive scope to sustain market dominance. The
chapter also identifies 12 multinationals that have not indicated that they intend to
capitalise on reformulation opportunities, potentially opening up new doors for
companies with a strong reformulation focus.
The success of a reformulated product partly hinges on its associated marketing and
promotional activities. In Chapter 4, the importance of marketing, branding, advertising
and utility of new media are discussed in relation to new reformulations entering the
market. It shows how a branded reformulation must be promoted aggressively in the
market and how marketing strategies for reformulations must be well focused and
strategically oriented to maximise the existing brand, while utilising all media resources
available to target prescribers and dispensing pharmacists, patient groups and
consumers. This chapter also discusses the relevance of marketing to product switching
in the ethical and OTC domains.
Finally, Chapter 5 provides an overview of a selection of leading multinationals with a

strong reformulation focus, based on the volume of R&D agreements and marketed and
pipeline reformulation products. Whilst the chapter indicates the vast potential for
multinationals to reformulate drugs, it also points out that the majority is under-
achieving in this regard.
13
14
Chapter 1 Introduction to
Reformulation
Summary
Reformulation represents a major defence strategy that multinationals are

increasingly embracing to sustain market share and optimise return on investment.
By 2005, 24 blockbuster drugs in the US that collectively generate more than

$40bn in annual sales will lose market exclusivity. Reformulation opportunities
offer the greatest commercial solution for multinationals to preserve revenue for
these blockbuster drugs.
Patented drugs can be given a second life through reformulation extending market
exclusivity by an additional 10–15 years.
Approximately 56% of marketed reformulated products and 40% of

reformulations in development are orally administered. This sector is expected to
remain a driving force behind reformulation, owing to the development of orally
active macromolecule formulations that are anticipated over the next decade.
Multinational pharmaceutical companies are increasingly using oral modified-

release systems to maintain market dominance of their existing drug by
developing and manufacturing an improved formulation prior to patent expiry.
The opportunity for needleless delivery of bioactive molecules that are currently
administered parenterally is significant in the interim until the arrival of new
technologies that resolve orally-delivered bioavailabilty and solubility problems.
Current applications for needleless delivery include vaccines, anaesthetics and

hormones, but the increasing number of drugs that cannot be delivered via the
oral route will drive needleless reformulations.
Transmucosal nasal and rectal reformulations are under-developed and unrealised

in the market. There are few marketed prescription-only transnasal and transrectal
formulations. Potential therapeutic reformulation development areas include
cancer and vaccines, in addition to paediatric and geriatric patient populations.
15
Inhalational reformulations will have widespread utility, particularly for insulin.
Few companies have reformulated products that can be delivered through this
route. Specialty pulmonary delivery companies such as 3M, Aradigm, and Inhale
Therapeutics are set to become key players in the pulmonary reformulation
market.
Pharmaceutical reformulation – application to industry
Pharmaceutical reformulation is the modification of a drug to optimise its

pharmacological activity and effects in vivo resulting in improvements in clinical
efficacy, administration, and patient compliance. Of the reformulated pharmaceutical
products currently on the market, most utilise proprietary drug delivery technologies to
alter, for example, the pharmaceutical’s solubility and/or bioavailability, potentially
making it more efficacious with fewer dosing requirements and improved tolerability
and convenience of administration for the patient, thus improving overall compliance.
Huge investments in reformulation research and development (R&D) over the past 10
years has led to the emergence of a drug delivery industry currently estimated to be
worth between $25–50bn, with the expectation to exceed a staggering $100bn by 2005.
This drive in reformulation is boosted not only by the realisation that original
formulations can be superseded by products in terms of potency and tolerability, which
might also offer new solutions to unmet clinical needs through novel delivery routes
(i.e. to improve compliance), but that an even greater commercial benefit is achievable
for key blockbuster drugs that are off-patent or near to patent expiry. Intense generic
competition following patent expiration and the continued erosion of drug sales
resulting in loss of significant revenue for multinationals has led to an increased
demand for novel formulations. Companies such as AstraZeneca, Novartis, and Eli
Lilly have successfully retained market share of key drugs through new formulations,
and many others are now following their lead by intensively implementing
reformulation strategies to combat generic erosion.
16
‘Maximising the potential of a drug through new formulations is not simply a
strategy to extend market exclusivity. Reformulations can offer improved
patient benefits, which is a greater reason to introduce them even if the patent
is protected.’
Multinational industry executive
Reformulation strategies are clearly advantageous to pharmaceutical companies. Not

least, the cost of reformulating a drug is considerably cheaper than the R&D involved
in drug discovery, testing, development, and marketing of New Chemical Entities
(NCEs). Reformulation costs can range from $15–50m compared with over $600m it
may cost to discover and launch a new chemical agent. Additionally, less than 1% of
5,000 candidate compounds in R&D will make it to clinical trials and then only one
will ultimately make it to market, on average 15 years after discovery. Maximising on
the substance post-patent expiry therefore confers significant benefits to the drug
owner.
Table 1.1: Benefits of pharmaceutical reformulation
Pharmacological benefits Clinical benefits Economic benefits
Improved solubility Improved therapy Reduced R&D cost
Improved bioavailability Ease of administration Reduced R&D time
Improved chemical stability Decreased dosing frequency Reduced R&D administration
Reduced toxicity Targeted delivery Faster time to market
Increased duration of action Improved patient compliance Competitive edge over less
effective equivalents
Pathophysiological mimicry Improved safety profile Extended patent protection for

(e.g. chronotherapeutic key drugs
technologies for hypertension)
Convenient route of administration Additional revenue from new
patented formulation
Reduced side-effects Lower risk compared with drug

discovery
Improved taste of oral formulations
Source: Author’s research & analysis
17
Role of drug delivery systems
Drug delivery systems are designed to control the release of a drug in terms of rate,
volume and location, and can optimise pharmacological efficacy and tolerability. No
universal drug delivery system or technology exists that can be applied to all
pharmaceutical agents because of the multiple variations in the biochemical properties
of each therapeutic molecule. The majority of reformulated products that have been
developed rely on novel formulations of active agents delivered via specific routes of
administration (Table 1.2). The formats of the reformulated product can range from
orally delivered enteric-coated controlled-release tablets and capsules to transmucosal
nasal sprays, vaginal pessaries, subcutaneous depot implants, and inhaleable dry
powders.
The explosion in reformulation R&D over recent years has been fuelled by the huge
commercial gains potential in offering unique and novel systems to deliver drugs with
superior pharmacological activity, safety, and compliance profiles over original
compounds. Globally, over 100 specialist pharmaceutical and drug delivery companies
are currently developing more than 300 pipeline products which utilise proprietary drug
delivery systems to improve a pharmaceutical’s potency, tolerability, dosing regimen,
duration of action and patient compliance.
18
Table 1.2: Methods of administration for reformulated drugs
Route Delivery system
Oral Controlled release

Extended release
Delayed release
Sustained release
Immediate release
Targeted release
Transmucosal Sublingual
Nasal
Rectal
Intravaginal
Urethral
Injectable Intravenous
Intramuscular
Subcutaneous
Intra-arterial
Depot/implantable
Needleless Dry powder
Ocular Cream/ointment
Depot
Transdermal Patch system

Cream/ointment
Iontophoresis
Electroporation
Ultrasound-mediated
Pulmonary Inhalational dry powder

Inhalational spray
Reformulation to protect and extend patents
Only 50% of a patented drug’s lifespan is useful commercially: of a 20-year patented

period, 10 years or so are absorbed by development studies and pre-launch marketing.
Therefore, on average, pharmaceutical companies only have a 10-year window in which
to recuperate their investment – a figure that can exceed $600m as a result of R&D,
marketing, and branding. By 2005, more than 50% of the world’s major prescription
drugs will have lost patent protection. In the US, this represents 24 blockbuster drugs
19
that collectively generate more than $40bn of the estimated $300bn prescription
pharmaceutical market (Table 1.3).
Table 1.3: Patent expiry of leading branded drugs, 2000-2005
Brand Generic Company
2000
Vasotec/Vasoteric* enalapril Merck
Rocephin** ceftriaxone Roche
Procardia XL* nifedipine Pfizer
Pepcid* famotidine Merck
Humulin* insulin Eli Lilly
Glucophage* metformin BMS
Hytrin* terazosin Abbott
2001
Zestril* lisinopril AstraZeneca/Merck
Prinivil* lisinopril Merck
Prilosec* omeprazole AstraZeneca
Mevacor * lovastatin Merck
Prozac* fluoxetine Eli Lilly
Cipro* ciprofloxacin Bayer
Novolin* insulin Novo Nordisk
Biaxin** clarithromycin Abbott
2002
Augmentin* amoxycillin GlaxoSmithKline
Claritin* loratadine Schering-Plough
Axid* nizatidine Eli Lilly
Zithromax** azithromycin Pfizer
Mevalotin** pravastatin Sankyo
Takepron/Prevacid** lansoprazole Takeda
2003
Flixotide/Flovent* fluticonase propionate GlaxoSmithKline
Taxol** paclitaxel BMS
Celebrex* celecoxib Pharmacia
2004
Procrit* epoietin alfa Johnson & Johnson
Diflucan* fluconazole Pfizer
Epogen* epoietin alfa Amgen
2005
Pravachol* pravastatin BMS
Zocor* simvastatin Merck
Seroxat** paroxetine GlaxoSmithKline
Zoloft* sertraline Pfizer
Key: * Patent expiry in the US ** Patent expiry in international country/countries

Source: Author’s research & analysis, company information
20
Pharmaceutical companies now find themselves under intense pressure to aggressively
defend patents from generic erosion both prior to and following patent expiry as up to
70% of brand revenues can be lost in the first year of patent expiry. Achieving lifecycle
extension for patented drugs is critical in the longstanding battle to retain market
leadership in a highly competitive marketplace. Reformulation represents a significant
defence strategy that multinationals are embracing to sustain market share and optimise
their return on investment. Similarly, generic companies may also reformulate their
products, offering superior generic drugs in an offensive strategy upon patent expiry.
‘Reformulation will continue to be an attractive option for pharmaceutical

companies facing the pressure of generic drug competition… drug delivery
systems can enhance the quality and competitive position of existing drugs in
the marketplace.’
Drug delivery industry executive
Patented drugs can be given a second life through reformulation with an additional 10–
15 years of patent protection if reformulating the original compound leads to the
manifestation of a NCE, or if the technology utilised is protected by formulation, use,
intermediates and processes (see Chapter 2). Derivative patent applications can be filed
to extend patented periods either through previously unknown elements of the expiring
patent or through amendments to the original patent. For example, this may entail
expanding the indications for a drug through specific patient groups (e.g. paediatric
indication) or for specific diseases (e.g. orphan status for rare conditions or diseases).
Extending the patented period of an existing compound will usually involve the
combinatorial chemistry, which is inherent in the reformulation process. Other patent
protection strategies available to research-based companies include Supplementary
Patent Certificates (SPCs), which are granted for exceptional drug status or as a result
of delays in the regulatory process. These extensions are, however, only short-term
lifecycle extension options.
Reformulating off-patent compounds has the potential to not only stimulate dwindling
sales of an established product. The strategy can also extend the revenue stream and
patent period far beyond the average 10-year period. For example, by 1986 generic
21
nifedipine commanded one-third of the total sales of the original patented drug (Bayer’s
Adalat) in some European territories after the original patent expired in 1985.
Furthermore, more than 40 generic companies had marketed equivalent nifedipine
products by 1997 assuming an aggregate 70% market share.
One of the successful products competing in the market was Pfizer’s once-a-day
reformulation of nifedipine (Procardia XL) launched in 1989 and indicated for angina
and hypertension. Reformulating Pfizer’s original Procardia product reduced dosing
frequency from a thrice-daily to a once-daily administration as a result of utilising US-
based Alza’s oral osmotic (OROS) drug delivery system. The reformulation produced
as a result of the alliance generated a threefold increase in sales of Procardia XL
compared with sales of Pfizer’s original Procardia product. This strategy enabled Pfizer
to gain a far stronger foothold in the calcium antagonist market for several more years
owing to patent protection of the new formulation. Procardia XL sales peaked at over
$1.1bn in 1994 and, in 2000, over a decade after it was launched, sales reached $311m
(see Chapters 2 and 3 for more successful reformulation case studies).
22
Figure 1.1: Sales of Pfizer’s Procardia XL, 1990–2000
1400
1,175 1,177
1200 1,134
1,062
1,005
1000
822
788
800 714
Sales ($m)
600 510
404
400 311
200
0
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000
Source: Author’s research & analysis, company reports
The key to continued long-term success in protecting patented drugs from generic
erosion and sustaining revenue from the drugs after patent expiry is to produce a
superior version of the original with additional characteristics that eclipse both the
original version and the generic equivalents. However, this is not a simple task in view
of the many pharmacological and physiological barriers.
Barriers to reformulation
The basic premise of drug reformulation is that the final product must, in essence, be a
superior pharmaceutical compared with its parent compound. For this to be achieved,
chemical modification of the compound is necessary to improve its pharmacological
23
profile, and can involve changing a drug’s solubility, bioavailability, stability, taste,
release of drug, and duration of activity.
Improving a drug’s solubility is the most difficult task that reformulation science has to
overcome. According to US-based RTP Pharma, insoluble or poorly soluble drugs are a
major problem for the pharmaceutical industry and over 30% of drugs listed in the US
Pharmacopoeia are insoluble or poorly soluble in water. Solutions to the problem
include the use of excipients (e.g. disintegrants and diluents) that increase water
solubility when combined with the active compound. Polymer-based compounds such
as polyethylene glycols (PEGs) are also used to improve water solubility.
Clinical obstacles that need to be taken into consideration include the ability of a
reformulated product to reduce dosing and reduce side-effects while at the same time
offering a easy route of administration. For example, a stroke patient with dysphagia
would not benefit from a three times daily orally administered tablet. In this case, a
transdermal patch, which is less invasive than injection, might be better suited to
medicating the patient in the long-term. Therefore, careful consideration of the patient’s
status, disease symptoms and the indication for the drug is crucial for commercial
viability.
Aside from pharmacological and clinical barriers that need to be resolved, human
biological obstacles such as the skin, the blood-brain barrier, the immune system,
destructive enzymes in the gastrointestinal tract and barriers in cellular transfer of the
drug need to be addressed to enable a pharmaceutical to function adequately in vivo
(see below).
The site or route of administration of a drug is perhaps the most important point to
consider in reformulating pharmaceuticals. Drug delivery systems can be designed to
limit the barriers encountered along a drug’s journey to its target destination depending
on the route of administration. For example, reformulating the intravenous anticancer
drug paclitaxel into a vaginally administered product would provide localised therapy
24
with fewer biological barriers to cross compared with orally administered systemic or
intravenous drugs, thereby increasing the potency of the drug at the target site. In
addition, transvaginal administration of paclitaxel would be preferred by many patients
with breast or ovarian cancer over the distressing intravenous infusions for the drug,
which can take more than 24 hours to administer. The benefits of the reformulated
product would be ease of administration, fewer visits to the hospital, fewer systemic
side effects (e.g. nausea, vomiting, hair loss, joint and muscle pain, nerve pain,
numbness in the extremities) with overall improved compliance.
Pharmaceutical reformulation systems
The main reformulation systems currently on the market include oral, pulmonary,
transmucosal, transdermal, and implantable/injectable, but novel needleless and
pulmonary reformulations are expected to enter the market by 2002 or earlier which
may alter the market shares of total reformulation products considerably.
Approximately 56% of reformulated products are oral, which are likely to sustain
market leadership well in the future owing to the development of orally active
macromolecule formulations that are due to be launched over the next decade (Figure
1.2). Novel pulmonary, transmucosal and transdermal reformulated products, which are
currently being intensively researched and developed, are also expected to enter the
market within the next 5–10 years. Their respective sector growth is likely to be
significant during this outlook period.
25
Figure 1.2: Estimated market share of commercialised reformulation systems,
2001
T ransdermal
Other
6%
0%
1%
Injectable/
Implantable
8%
T ransmucosal
12%
Oral
56%
Pulmonary
17%
26
Oral reformulations
Oral reformulations are the gold standard in the pharmaceutical industry, mainly
because of their ease of use and widespread patient preference. There are a number of
advantages and disadvantages associated with oral formulations, as detailed below in
Table 1.4.
Table 1.4: Advantages and disadvantages of orally delivered formulations
Advantages Disadvantages
Ease of administration Systemic effects

Modified-release capabilities Variable absorption rates
Patient preference Enzymatic degradation
Systemic delivery of drug Acidic hydrolysis
Limited absorption of macromolecules
Interaction with food/gut contents
Biological barriers to oral formulation
Once ingested, a drug will be confronted with degradative and harmful enzymes and
hostile acidic environments as it reaches the gut. Bacterial degradation, gut contents,
and bile salts also affect the chemical composition of a drug, therefore protecting it
from the alimentary tract and vice versa are paramount in by-passing these first-line
barriers.
If a drug succeeds in entering the bloodstream it is challenged by the body’s immune

system and by organs such as the kidneys and liver, which either expel or metabolise
the drug. Furthermore, drugs that are required to affect the central nervous system must
be able to penetrate the blood-brain barrier, which is a semipermeable lipid membrane.
This barrier prevents large molecules from passing from the bloodstream into the
27
cerebrospinal fluid of the brain and is an extremely difficult obstacle to overcome
pharmacologically. To optimise transfer through the blood-brain membrane, drugs need
to be small lipid-soluble molecules.
Finally, if a drug successfully navigates past the major physiological barriers, it is then
challenged by the individual lipid bilayers of the cell. This latter stage in the journey of
a drug to meet its destination site is the most difficult because the drug will encounter
both aqueous- and lipid-rich cellular regions. As a result, the drug must possess both
water- and fat-soluble properties. It is during the transport of the drug at this cellular
level that most of the drug’s therapeutic power is lost owing to the number of
membranes it has to penetrate. Increasing the dosage of a drug will resolve the problem
but may also expose non-specific target tissues to high drug concentrations increasing
the risk of toxicity and side effects.
All orally administered reformulation pharmaceuticals must adequately challenge these

biological obstacles and retain a proportional amount of active agent to produce the
desired effect at the target site.
Oral reformulation systems
Oral reformulation accounts for around 40% of all reformulation products currently in
development and 56% of products on the market. Oral reformulations are mainly
modified-release rate-limited delivery systems that discharge the drug immediately or
over a preset time. Examples of reformulations range from slow-release dosage tablets
or capsules to novel modified-release enteric-coated multi-unit dosage pellets, beadlets
or microspheres. There are six types of oral modified-release technologies that can be
used to reformulate drugs (Table 1.5).
28
Table 1.5: Oral modified-release systems
Type Description
Controlled-release Regulated drug release via osmostic mechanisms

Delayed-release Time-release technology for precursor drugs
Extended-release Extended drug release formulations to reduce dosing
Immediate-release Rapid-acting, rapid-absorption systems
Sustained-release Constant drug release over a predetermined time
Targeted-release Selective release at sites within the GI tract
The main benefits of oral reformulations are that they can be created to protect the
stomach from irritant drugs and vice versa. Enteric coatings are widely used for
modified-release oral formulations, both protecting the active drug from destructive
enzymes and acids in the gut whilst simultaneously protecting the sensitive
gastrointestinal mucosae. Oral formulations can also be designed with rapid dissolution
to ensure fast onset of action in times of urgent clinical need, as in the case of angina
attacks or migraine. More recently, multiparticulate formats have been designed to
reduce or eliminate the effects of food in the gut to enhance absorption of the drug.
Multinational pharmaceutical companies are increasingly using oral modified-release

systems to maintain market dominance of their existing drugs by developing and
manufacturing an improved formulations prior to patent expiry. A classic example is
AstraZeneca’s Losec (omeprazole) which was reformulated as a Multiple Unit Pellet
System (MUPS) to expand the patent life, supersede the original formulations and
reduce generic erosion (see Chapter 3).
A novel method of oral delivery has been developed by Emisphere Technologies in the
US. The company’s oral drug delivery systems enable large molecules such as insulin
and calcitonin to be reconfigured with carrier molecules to form a transportable
supramolecule complex, which, in its prodrug form, can cross the cell membranes, and
dissociate, releasing the drug with optimum therapeutic activity. Emisphere is currently
applying its technology to a number of compounds including:
29
An oral calcitonin osteoporosis product in partnership with Novartis;
a novel oral parathyroid hormone and human growth hormone product in

partnership with Eli Lilly;
an orally delivered axokine to treat obesity in collaboration with Regeneron

Pharmaceuticals.
Chronopharmacology
A delayed-release oral formulation can be developed with chronopharmacological

characteristics; that is, the formulation can deliver drugs at optimal times during the day
synchronous with physiological events, such as the increase in blood pressure at waking
times. Elan’s CODAS technology is formulated into the only marketed
chronotherapeutic drug to treat hypertension. Verelan PM is a night-time dose
formulation of the calcium antagonist verapamil indicated for hypertension, and is
marketed by Schwarz Pharma. The delivery system releases verapamil at an optimal
time (approximately four hours) prior to increases in the patient’s blood pressure, in
response to the natural circadian waking phase of the sleep-wake cycle. This is also the
time when the risk of heart attack or sudden cardiac death is greatest. The reformulation
is therefore unique in providing sustained release of the drug at the time when it is most
needed.
Oral chronopharmacological reformulations, which are developed to fit in with the

body’s natural circadian rhythms, are most advantageous to conditions where the
circadian rhythm alters, as in blood pressure during the sleep-wake cycle or where there
is a disturbance of the body’s circadian rhythm as in insomnia, jet lag, or the delayed
sleep phase syndrome. Other circadian biorhythms that could be targets for
chronotherapeutics include the suppression of appetite at mealtimes in obesity,
regulation of hormones to coincide with reduction of symptoms for the menopause
30
during the working day and control over bowel function for sufferers of irritable bowel
syndrome during daily stress-related work tasks.
Injectable reformulation systems
Parenteral administration or delivery of drugs via intramuscular, intravenous, intra-

arterial or subcutaneous injection is standard practice in medicine. Injecting drugs
directly into the bloodstream or target tissues provides rapid onset of action and also
enables large biopharmaceuticals, that could not be delivered orally, to be administered
with no or reduced deleterious effects to their chemical structure and function. Injecting
reformulated poorly soluble pharmaceuticals is one solution to delivering large
macromolecules, which are otherwise limited by delivery through other routes of
administration. Currently, about 8% of reformulated drugs are injectable formulations,
a figure which is expected to increase to no more than 10% by 2005. However, the
major disadvantages of injections are that they are poorly received by patients because
they are associated with pain and discomfort (Table 1.6).
Table 1.6: Main advantages and disadvantages for injectable formulations
Rapid onset of action Invasive

Targeted delivery Cause pain and discomfort
High bioavailability Risk of infection
No interaction with gastrointestinal tract High doses limited owing to potential toxicity
Effective for patients in coma or unconscious
There are few injectable reformulated products currently on the market. One interesting
product is SkyePharma’s anti-cancer product DepoCyt, which is a slow-release
injectable formulation of the long off-patent drug cytarabine. The product is indicated
for lymphomatous or neoplastic meningitis – a complication secondary to cancer.
DepoCyt utilises proprietary DepoFoam technology, a lipid enacpsulation system,
31
which is the only US FDA-approved depot sustained-release injection technology. Once
injected, the product gradually releases cytarabine into the cerebral spinal fluid,
effectively reducing the dosing interval to once every two weeks compared with the
standard harsh intrathecal dosing regimen of two times per week. Reformulated
cytarabine exhibits greater bioavailability over the original version, which required
painful repeated injections to produce the desired therapeutic effect.
Sustained-release injections have been developed by US company Alkermes. The

ProLease system is an injectable biodegradable microsphere technology that delivers
biotherapeutic proteins and peptides in a polymer matrix. The reformulation process
allows a high degree of protein encapsulation, which releases a drug over a constant
period, eliminating the need for frequent injections. One of Alkermes’ research
programmes involves applying its ProLease technology to Genentech’s recombinant
human growth hormone.
One consideration for the future of injectable reformulated products, however, is the
advent of needleless injection systems. These drug delivery devices are designed to
improve patient compliance without the use of a needle, thereby reducing the risk of
infection and needle-stick injury.
Needleless formulations
Needleless devices offer many benefits over traditional injections. The main advantage
is the non-invasive delivery of a drug, which is extremely patient friendly. Needleless
delivery is also a convenient and practical method of drug administration and can
negate the need for regular hospital visits to receive injections from healthcare
professionals. Painless self-administration of the drug via a hand-held device, which
could be performed in the home or at the work place, is far more attractive to a patient.
32
Eventually, all large protein molecules will be able to be administered orally as new
technologies resolve bioavailabilty and solubility problems. Until that milestone is
reached, needleless delivery of reformulated products is a window of opportunity to
offer improved therapeutics over oral and injectable formulations. Current applications
for needleless delivery include vaccines, anaesthetics, and hormones, although the
increasing number of drugs that cannot be delivered via the oral route will drive
needleless reformulations, resulting in highly potent drugs that can be directly
administered into the bloodstream non-invasively, thereby offering novel solutions to
unmet clinical needs.
‘High dose multi-injection or intravenous infusion therapies will be surpassed

by more competitive, patient friendly methods of delivering the same therapy.’
Devices such as PowderJect Pharmaceuticals’ Dermal PowderJect use dry powder

formulations of microscopic solid particles, which are propelled across the skin at
supersonic speed via a helium gas jet. The small size of the particles means that the
cells of the dermis are not compromised thus leaving the skin tissue intact following
use. The company is investigating a number of potential areas for applying its new
powder injection system, including diabetes, local anaesthesia, erectile dysfunction,
migraine, and osteoporosis. One of PowderJect’s research alliances (currently at Phase
II stage) is with Chiroscience and involves the reformulation of the local anaesthetic
lidocaine utilising the Dermal PowderJect technology. Lidocaine is the most
widespread and biggest selling local anaesthetic used in many outpatient hospital, GP,
and dental clinics. A needleless reformulation will undoubtedly supplant intravenous
delivery of the drug, with the potential for significant long-term commercial viability.
33
Transmucosal formulations
Reformulating drugs for transmucosal delivery offers greater opportunity for product
development owing to the various anatomical sites of mucosae including buccal and
sublingual, nasal, rectal, vaginal, and urethral sites. Second to oral reformulated
products, transmucosal formulations account for an estimated 18% of all marketed
reformulated products.
Transmucosal drug formulations benefit from the rapid absorption of drugs through the
rich supply of blood vessels and lymphatics in the mucosal tissue. The main advantages
and disadvantages for mucosal formulations are shown in Table 1.7.
Table 1.7: Main advantages and disadvantages for transmucosal

formulations
Non-invasive Variation in permeability
Enhanced therapeutic effectiveness Vascular restrictions
Rapid onset of action Mucosal secretions inhibit diffusion (i.e. nasal, vagina)
Rapid absorption Presence of digested food in the rectal vault
Delivery of macromolecules
Patient preferred
Reduced cost compared with injectables
Oral mucosal formulations
Oral mucosal formulations have for a long time been used in preference to other
mucosal formulations owing to the ease of use. Tablets and spray products have been
designed to deliver drugs with rapid-acting effects, such as sublingual glyceryl trinitrate
to treat angina. There are three oral mucosal sites that can be used to deliver drugs:
sublingual, buccal, and local oral cavity delivery. Anatomical cellular differences and
34
physiological characteristics of the epithelium (Table 1.8) in the three regions allow for
different permeability rates.
Table 1.8: Anatomical characteristics of oral mucosae
Sublingual mucosa Buccal mucosa Local oral cavity mucosa
Rapid permeability Lower permeability than Large surface area for

sublingual mucosa permeability
Rapid absorption Restricted absorption Reduced absorption
Rich blood supply Reduced saliva volume Reduced blood supply
High saliva volume
Sublingual formulations can take the form of rapidly dissolving tablets, fast dissolving
wafers, or soft gelatin capsules filled with liquid drug. Novel oral transmucosal
formulations in development include a buccal mucosal insulin aerosol product by
Canadian biotechnology company Generex, and an insulin spray in development by
US-based company, Flemington. The potential to revolutionise the treatment of type I
and II diabetes with novel insulin sprays and inhaleable products (see the section on
pulmonary formulation systems) is expected to transform the diabetes market and
treatment options, as insulin is currently only administered by injection.
Nasal mucosal formulations
Intranasal mucosal delivery is a potential goldmine for drug reformulation owing to the
high permeability, high vascularisation, large surface area, and rapid absorption
capabilities of the intranasal cavity. The route of delivery also avoids first-pass hepatic
metabolism and the acidic gastric contents of the gut. Patients familiar with nasal
sprays and drops might also prefer intranasal administration. However, the
disadvantages of nasal formulations include impaired absorption during bouts of
rhinitis and time limitation for absorption owing to ingestion or sneezing. Furthermore,
35
the use of propellants and surfactants may cause irritation and may limit the deposition
of the active agents in the nasal mucosa.
The major use of nasal formulations is for the treatment of migraine and emesis in
patients suffering from nausea. Despite great promise as a method of delivering
reformulated drugs, very few companies are developing intranasal pharmaceuticals.
One company that is expected to fill a niche in the market for intanasal delivery,
however, is US-based Nastech, which is currently developing novel intranasal
formulations for impotence, pain relief, and nausea.
Vaginal mucosal formulations
Vaginal formulations are extremely useful in gynaecological disorders where the

delivery is localised to the lower abdomen such as in symptoms of the menopause,
ovarian cancers, or vaginal bacterial infections. The highly permeable vaginal
epithelium, mucosa and rich blood supply facilitate intravaginal administration.
However, there are a few obstacles to vaginal formulations, including problems of drug
retention, pH, variations in absorption during times of menstruation, enzymatic
degradation, hygiene issues and leakage associated with some semi-solid products.
Controlled-release mucoadhesive formulations can resolve some of the problems with

intravaginal delivery. They can also maintain drug levels at therapeutic levels, inhibit
the dilution of the drug through body fluids, and facilitate targeted delivery at a local
level. Columbia Laboratories’ progesterone bioadhesive vaginal gel, for example,
ensures a constant and controlled release of progesterone for at least two days after a
single vaginal application.
Newer devices such as the intravaginal ring were developed to deliver hormones for
contraception, and products such as the ‘Estring’, marketed by Pharmacia, indicated for
the treatment of postmenopausal urogenital conditions, releases a sustained low dose of
oestradiol over a three-month period.
36
Urethral mucosal formulations
Urethral mucosa is currently used to deliver drugs for the treatment of erectile
dysfunction – a condition that affects around 50 million men worldwide. The urethra is
highly permeable to vasodilators, which are absorbed rapidly causing vasodilation in
the surrounding vasculature. In men, this vasodilation triggers a physiological cascade
of events leading to natural erection.
The only reformulated non-injectable marketed product indicated to treat erectile

dysfunction via the urethra is MUSE, manufactured by VIVUS in the US. The MUSE
system is a single-use applicator device that dispenses a microsuppository of alprostadil
into the urethra to increase blood flow in the penis. Rapid local absorption occurs after
insertion, which relaxes smooth muscle producing an erection within 10-15 minutes.
Although the MUSE product was cleared for marketing by the US FDA in November
1996, it has been superseded in terms of volume sales by Pfizer’s Viagra. However, the
MUSE system does offer a non-systemic local treatment for the erectile dysfunction,
which is suited to those who choose not to take a tablet.
The main obstacle to urethral reformulation is patient acceptance and tolerability in

inserting the drug through the opening of the urethra. Although device applicators can
assist in the process, mild discomfort and intolerance to the procedure are sometimes
reported, hence reducing compliance. Of all the transmucosal routes of delivery,
urethral mucosal products are least developed owing to the limited permeability of
compounds and the lack of patient acceptance towards the route of administration.
37
Rectal mucosal formulations
Rectal formulations are extremely useful in situations where the patient is not
responsive to taking drugs via the traditional oral or injectable routes. In particular,
children and the elderly and those patients who have difficulty swallowing benefit from
rectal formulations, which are relatively painless, and convenient to administer. The
main advantages and disadvantages of rectal formulations are shown in Table 1.9.
Table 1.9: The main advantages and disadvantages of rectal formulations
Ease of administration Presence of faeces reduces absorption
High drug concentrations can be delivered Variable pH affects absorption
Painless with only mild discomfort Rectal irritation and ulceration
Useful in dysphagia, coma, vomiting, Colonic mucus is a barrier to drug delivery

nausea, seizures, antipyresis,
diseases of the upper GI tract. Resident bacterial flora may affect drug through
enzymatic actions
Useful to deliver analgesia and sedatives
Convenient for children and elderly
Localised/targeted effects
Rectal reformulations have great potential commercially owing to the accessibility to

the colon, which has a large capacity to retain materials over a 2-3 days compared with
a few hours in the small intestine. High concentrations of drugs delivered in a
suppository or depot can offer sustained and extended release through this route.
Although absorption is slower in the colon compared with the small intestine, the
longer period of retention in the colon is an advantage for drugs that selectively target
this part of the alimentary tract.
38
Despite the potential for rectal reformulation, there are few marketed prescription-only
rectal formulations. Potential indications of reformulation by this route of delivery
could include colorectal cancers, inflammatory bowel diseases, and abdominal pain.
Recently, Canadian pharmaceutical firm Axcan Pharma received US FDA approval for
a mesalamine rectal suppository indicated for active ulcerative proctitis. The drug
targets the inner colonic mucosa, reducing the symptoms and induces a rapid remission
of the disease. The product, CANASA, which was launched in the US in March 2001,
is expected to gain a large market share of the total mesalamine suppository market,
estimated at $22m. The company’s original product, FIV-ASA, gained an estimated
43% share of the market and the company believes its new formulation of mesalamine
will serve a larger portion of patients treated with the drug.
Transdermal formulations
Transdermal formulations are designed mainly as skin patches or as topical creams,

lotions, and ointments. US-based drug delivery company, Alza Inc., was the first to
develop and market skin patches: one was for scopolamine (Transderm-Scop) to treat
motion sickness and the other nitroglycerin (Transderm-Nitro) indicated for angina.
Marketed transdermal reformulation products account for an estimated 14% of total

reformulated products on the market. By 2005, this figure is likely to exceed 20%
owing to the increasing trend to develop transdermal products. The success of nicotine
patches as a smoking cessation aid has boosted development of transdermal delivery of
drugs into the areas of hormone replacement therapy, osteoporosis, and pain relief.
The global transdermal drug delivery market has been estimated at between $2–6bn and
is forecast to reach $12.7bn by 2005 (Naik et al, 2000; Jain, PharmaBiotech). Despite
the staggering growth expectation, transdermal delivery is confined to only eight active
agents that are formulated into commercialised products and include: clonidine,
39
fentanyl, nicotine, nitroglycerin, norethisterone, oestradiol, scopolamine, and
testosterone. The potential for transdermal delivery of a vast array of other molecules
through novel technologies may boost this reformulation sector far beyond the market
projections cited herein.
The limited number of marketed transdermal formulations, however, does illustrate that
there are inherent difficulties in delivering drugs through the skin. The limitations and
benefits to transdermal reformulation are shown in Table 1.10.
Table 1.10: The main limitations and benefits of transdermal reformulations
Limitations Benefits
Impermeability of the stratum corneum Avoidance of gastrointestinal effects
Skin irritation Avoidance of hepatic metabolism
Weak adhesion to skin High control over rate of drug delivery
Large protein molecules are not readily Easy to self-administer

absorbed
Reduced restrictions on patient’s daily activities
Limited to low dose sustained-release
drugs Large surface area for application of drug
High patient acceptance
Allows immediate discontinuation if adverse reactions

occur
Many drugs are not suited to transdermal delivery because of their large molecular size.
Reformulations for transdermal delivery usually involve a penetrant or enhancer that
helps carry the drug through the transcutanoeus layers to the blood vessels.
Microencapsulation systems that are both lipophilic and hydrophilic can enable high
drug loads to be administered. In particular, peptide drugs and oligonucleotides, which
are large charged molecules, may benefit from electrotransport methods of drug
delivery such as electroporation or iontophoresis that facilitate transition across the
transcutaneous layers.
40
Alza’s D-TRANS technology platform is an established transdermal system offering
improved compliance due to greater patient acceptance. Sustained-release allows for
continuation of medication without the need for frequent dosing and hence improved
quality of life. The system is also painless and can be controlled via removal, which
immediately terminates dosing. D-TRANS has recently been successfully used to
reformulate clonidine in Boehringer Ingelheim’s Catapres TTS product indicated for
hypertension. The technology improves drug absorption delivering sustained amounts
of the drug into the bloodstream. The technology can also be applied to drugs with poor
bioavailability, those that require injections, drugs with a narrow therapeutic index, a
limited half-life, and drugs with an inconvenient dosing regimen.
Another promising transdermal reformulation platform is Atrix Laboratories’ Solvent

Microparticle (SMP) System that allows highly water insoluble drugs to be delivered
topically. Atrix is currently developing a formulation of dapsone, a potent antibiotic
with anti-inflammatory properties with water insoluble properties, which is normally
difficult to deliver topically. The product, Atrisone combines dapsone with the SMP
system in a topical gel, which is currently in phase III clinical trials for treatment of
moderate to severe acne. The product is also in phase I proof-of-concept trials for
treatment of itch associated with healing severe burn wounds. A topical potent non-
steroidal anti-inflammatory and antibiotic administered at the site of disease is expected
to offer advantages over conventional oral treatments for both indications. In the US,
chronic severe itch associated with burn wounds is a significant problem affecting up to
85% of the estimated 1.25 million burn wound patients annually. The Dapsone gel
product with its anti-inflammatory and antibiotic activity is expected to be the ideal
drug for relieving this type of itch. Oral dapsone is currently used as a standard therapy
to treat the skin disorder dermatitis herpetiformis, which is also characterised by
extreme itch. The main advantages of a topical system include reduced systemic effects
of an oral medication and localised therapy to immediately reach the site of discomfort.
Transdermally delivered formulations in development by specialist and drug delivery

companies also include antibiotics, anti-cancer patches (e.g. Iomai’s breast and prostate
41
cancer products), patch systems for multiple sclerosis, attention deficit disorders,
dermatitis, diabetes, hormone replacement therapy, arthritis, osteoporosis, pain relief,
sexual dysfunction, and motion sickness.
Pulmonary formulations
Inhaleable formulations are used to deliver drugs directly into the lungs where they
have a direct route to the bloodstream. Lung physiology is particularly suited to drug
reformulation owing to the relatively large capillary network of the alveoli and the large
alveolar surface area. The limiting factor for pulmonary reformulation is the size of the
drug molecule. Large peptides and proteins do not easily pass through the aleveolar
surface owing to the dense mucus and cilia, which cover the area causing an
impermeable layer. However, novel technologies such as dry powder formulations and
aerosol systems are enabling this barrier to be overcome. The advantages and
disadvantages of pulmonary reformulation are shown in Table 1.11.
Table 1.11: Main advantages and disadvantages for pulmonary

reformulations
Large alveolar surface area Difficulties in permeability due to mucus, cilia &
epithelia
Rich capillary blood supply
Large proteins and peptides may become trapped at the
Direct absorption into bloodstream air/water interface
Rapid onset of action Use of an inhalational device
Avoidance of gastric and hepatic effects Lung clearing mechanism (e.g. cough) will reduce
drug deposition
Specific utility to lung disorders such as
asthma or cystic fibrosis to reduce
systemic exposure
Smaller concentrations of drug required

to produce therapeutic effect
42
Although the delivery of drugs through the lungs has been established for decades,
particularly in the treatment of pulmonary diseases such as asthma, very few companies
have reformulated products that can be delivered via this route. Notable exceptions are
3M, Aradigm, and Inhale Therapeutics who are set to become key players in the
pulmonary reformulation industry of the future. 3M has already marketed an aerosol
formulation of ergotamine for migraine, whereas Aradigm and Inhale are competing to
market the world’s first inhaleable insulin product (see below).
Dry powder formulations
Dry powder formulations can contain a much larger proportion of a drug compared with
liquid formulations. As much as 95% of pure drug can be captured in the dry powder
particle compared with only 2% or so of drug in aqueous formulations. Dry powder
systems can also transfer fivefold more drug in a single breath compared with metered
dose inhaler systems. A further benefit of dry powder formulations over liquid aerosol
systems is a reduction in bacterial contamination, which can cause serious lung
infections.
Successful pulmonary drug reformulation is achieved only by the size of the drug
molecule. Proteins and peptides with a size of 1-5µm will be delivered to the alveoli
and absorbed directly. Particle sizes that are too small will be exhaled and molecules
that are too large will become trapped in the upper airway. However, some of the larger
molecule compounds that could be reformulated into dry powder formulations include
erythropoietin, insulin, growth hormones, calcitonin and interferon, which are not able
to penetrate the skin barriers and mucosal membranes in their native forms.
Development of pulmonary formulations focuses on several advantages over other

routes of delivering reformulated products. For example, transmucosal and transdermal
delivery requires devices or additional substances to assist in enhancing penetration
through the mucosae or dermal layers. Pulmonary delivery allows direct drug transport
without the need for enhancers, penetrants or detergents. However, inhaleable
43
reformulation still requires a delivery device such as a nebuliser or a dose inhaler to
assist in the deposition of drugs to the deep lung.
Aqueous formulations
Aqueous aerosol formulations are also being developed as small particles of liquid can
be delivered deep into the peripheral lung. US company Aradigm has developed a novel
aerosol system called AERx, which can be applied to small molecules and proteins. The
liquid formulation technology in the system can improve the therapeutic effectiveness
of an active agent and the device allows automatic breath control and data capture. The
system is currently being developed to deliver agents for pain relief and for delivering
insulin.
The main advantage of aqueous inhaleable formulations over dry powder formulations
is the tendency for aggregation of dry powder particles during storage, which might
lead to varied deposition patterns in the lung. The AERx System also is unique in that it
can convert large molecules such as proteins, peptides or genes into fine particles that
can be dispensed as an aerosol.
Inhaleable insulin – a new era in treating diabetes
According to Inhale Therapeutics, pulmonary delivery of insulin is set to expand the

estimated $3bn worldwide insulin market. In the US, more than 3.5 million diabetics
need to inject insulin, which is painful, regimented, and negatively impacts on a
patient’s lifestyle. The advent of an inhaleable insulin formulation will, without
question, benefit the millions of diabetics globally who are required to inject insulin or
control diabetes through dietary modification and hypoglycaemic drugs. In addition to
the obvious advantages of pulmonary insulin, the healthcare costs of injectable insulin
could be dramatically reduced.
Inhale Therapeutics, in collaboration with Pfizer/Aventis, is leading the race to

commercialise the world’s first pulmonary insulin product, which could reach the
44
market as early as 2002. This dry powder insulin reformulation is currently in Phase III
trials. Other insulin reformulation contenders are shown in Table 1.12.
Table 1.12: Companies developing pulmonary insulin
Estimated launch date

2002 2003 2004 2005 or later
Inhale/Pfizer/ Phase III. Short-
Aventis acting powder
insulin
formulation
Aradigm/ Phase II/III.
Novo Nordisk Short-acting
liquid formulation
Dura/Lilly Phase II. Short-
acting powder
insulin
formulation
Alkermes/ Preclinical. Long-
Pfizer acting powder
insulin
formulation
Quadrant/ Preclinical.
MicroDose Rapid-acting
Technologies insulin
formulation
Inhales’s studies have so far shown that pulmonary insulin is as effective as injectable
insulin. The recent worldwide partnership between Pfizer and Aventis to build a new
insulin production plant earmarks the beginning of a new insulin reformulation therapy
for diabetic patients.
45
Chapter 2 Developing a Successful
Pharmaceutical
Reformulation Strategy
Summary
More than $165bn in ethical revenues may be cannibalised as a consequence of

patent expiry from 31 leading drug patent expirations between 2000 and 2005.
The exploitation of a molecule through reformulation will help to sustain pre-

existing market share and offer new revenue streams through additional market
sectors. A reformulation strategy is a key growth driver for drugs that patented,
are close to patent expiry, or off-patent.
Reformulation adds value to compounds that are abandoned because of poor

solubility and/or bioavailability; those drugs that are competing in a saturated
environment; and companies wishing to gain rapid market entry with innovative
products.
Switching to a new formulation can minimise the impact of generic erosion for
R&D-based pharmaceutical companies and generate additional revenue from the
branded reformulated product.
A successful pharmaceutical reformulation strategy requires consideration of
present and future market conditions; demand for reformulation; R&D issues such
as investment and partnering; and technological competencies.
Reformulating a drug can reduce NCE development costs by up to 90% and

feasibility-to-market can be completed in one-fifth of the time it takes to
commercialise a candidate drug.
Novel biotherapeutic formulations of established and new drugs will drive growth
in pharmaceutical industry until the next milestone in medical therapeutics
arrives, namely genomics.
A robust pharmaceutical development strategy should include the funding

requirements to conduct necessary reformulation testing at the same time as its
parent molecule’s drug development.
46
This will facilitate the economic creation of a range of products that might
reinforce and protect original molecule product development, patent rights, and
marketing investment.
Implementing reformulation is recommended as early as possible in the

development phase of the candidate patented drug.
Multiple reformulations for one drug can add more than 40 years of additional
patent protection with consequential revenue preservation.
Partnering companies offering a comprehensive product development plan for

reformulations, in addition to novel and numerous technology platforms that
reduce investment and R&D risk, will be more appealing to multinationals.
Orally active drug reformulations are primary R&D candidates owing to the vast
potential for convenient administration of large biomolecules that can currently
only be administered parenterally. Other significant development sectors by route
of administration include transdermal, transmucosal, inhalational, and needleless
formulations.
A successful reformulation must clearly exhibit superior advantages over the

parent and competitor products, add long-term value to its original branded parent
compound, offer a unique solution to unmet clinical needs, or provide a greater
utility through compliance or administration.
A novel reformulation of an established key drug appears to offer the greatest

return on investment, owing to its uniqueness in the market, branding success,
and demand from patients and physicians.
To maintain market leadership, reformulations should simultaneously protect

patents, extend product lines, and expand indications for both established drugs
and new entrants to the market. Novel pharmaceutical formulations that provide
unrivalled medical solutions to diseases and disorders where current
pharmacotherapeutics fail will become sustainable market leaders.
47
A commercial basis for reformulation
Global patent expiry of 31 best-selling ethical drugs over the next few years will result
in more than $45bn in sales being cannibalised by generic competition during the
collective first 12 months following patent expiry, with an additional estimated $165bn
of revenue potentially absorbed by generic equivalents during the period 2000–05. In
view of this, pharmaceutical reformulation represents a viable option to maintain
market leadership for key drugs that belong to all major pharmaceutical companies,
including generics companies. The synthesis of a drug delivery system with a patented
active substance can create a new formulation of the original product, which can protect
sales revenue and extend the drug’s lifespan far beyond the original patented period of
the molecule.
‘Reformulation has gained recognition as one alternative to protect a product

against the loss of exclusivity.’
Reformulation also provides additional value for compounds that are abandoned
because of poor solubility and/or bioavailability; those drugs that are competing in a
saturated environment, and companies wishing to gain rapid market entry with
innovative products.
‘New formulations are an effective means of optimising the molecule where

re-design of the drug is not possible.’
Multinational industry executive
48
The main commercial benefits of pharmaceutical reformulation are shown in Table
2.13.
Table 2.13: Commercial benefits of pharmaceutical reformulation
Pharmaceutical area Commercial benefit of reformulation
Patent period Patent extension through New Drug Application

or Supplementary Patent Certificate
Pharmacokinetics Improved solubility and/or bioavailability of the
drug to improve a drug’s performance
R&D drop-outs Abandoned drugs can rescued through
reformulation technology
R&D investment and time Less R&D funding and time involved in
reformulating products owing to patented
reformulation systems
Market launch time Rapidity to market as less R&D involved with
proprietary drug delivery technologies
Product differentiation Reformulated drugs are superior over competitor
products in a saturated market. Product
differentiation can enhance sales and reduce
competition.
Product line extension Switching to reformulated drug prior to patent
expiry can sustain market share of the brand.
Risk Reduced risk in partnering with competent
biotechnology firms.
Pharmaceutical companies, now squeezed by ever-increasing pressure to sustain market

share, have recognised that reformulating drugs will be one of the key drivers of growth
during the next decade. The economic exploitation of individual molecules will help to
sustain a product’s commercial shelf-life as new formulations of the same compound
offer new revenue streams through additional market sectors. By cross-marketing the
same compound in different dosages and formats to different patient populations and
for specific indications, companies will maximise their sales potential whilst
simultaneously safeguarding their brand through multiple line extensions. Switching to
a new dosage formulation one or two years prior to patent expiry, for example, can
minimise the impact of generic competition for R&D-based pharmaceutical companies
49
and incur additional revenue from the rebranded product. Generic reformulation can
also offer similar advantages over their main rivals in the saturated generics
marketplace.
However, adopting a successful reformulation strategy is no simple feat and, first, and
most importantly, involves vigilance in selecting the most appropriate development
partner. For instance, a start-up company offering one or two technologies will be less
attractive to the long term-success of a reformulation strategy than a medium-sized and
established drug delivery company with several broad-based technology platforms.
Investment costs are another consideration as is the skill and expertise of the senior
management team in planning and marketing the second lifecycle of a top-performing
drug. A focused well-planned reformulation strategy involving R&D, investment,
partnering, and marketing is therefore crucial for long-term commercial reformulation
success.
Key industry factors associated with pharmaceutical

reformulation development
To implement and develop a pharmaceutical reformulation strategy there are a number

of important factors involved that require consideration, including:
Market conditions;
demand for reformulation;
R&D issues such as investment and partnering;
technological competencies (i.e. for strategic alliances).
50
Market conditions
Pharmaceutical reformulation is still in its infancy and development of the industry will
be largely based on the rapidly growing drug delivery sector – growth which is
currently estimated at between 15–20% per year. Drug delivery technologies are used
not only in pharmaceuticals but also in biomedical devices such as cardiac stents and
biomaterial-based products that deliver drugs in vivo to heal and repair bone and tissue
(e.g. collagen or hyaluronic acid based products) or provide sustained release of drugs
for chronic disorders (e.g. implantable depots).
By 2005, it is estimated that up to 20% of the global pharmaceutical market will be

represented by reformulated products developed by drug delivery companies and
speciality pharmaceutical firms. Penetration of the individual territorial markets will,
however, ultimately depend on the prevailing market conditions pre- and post-market
launch within each country.
There are many important market forces that need to be taken into consideration for a
reformulation strategy to be successful. There is no point in commencing a
reformulation strategy if, for example, the healthcare environment in a country is
extremely resistant to new and more expensive formulations over original or cheaper
generic versions. Countering resistance may take the form of superior medical benefits
over competitors, although the price of the drug will also play a vital part in whether or
not a drug is prescribed and reimbursed.
Despite global expansion of the pharmaceutical industry, there is a widespread

reduction in international government healthcare spending, which impacts on
reimbursement through aggressive cost-containment drives. One method of cost-
containment is the introduction of an essential drug list, which usually recommends
which drugs should be prescribed for certain conditions and diseases and lists a drug’s
price to enable the prescriber to budget accordingly. Drugs on essential drug lists and
on hospital formularies can also be marked for reimbursement, which is a critical factor
51
in persuading doctors to prescribe the drug and hence influence sales for the
manufacturer.
There are two major challenges here for reformulations:
Firstly, the reformulated product must adequately pass the compulsory review
process to ascertain clinical efficacy before it is registered on any list;
secondly, if the product passes the review process, it has to be priced appropriately
for the market to counteract competition while at the same time incur profit for the
manufacturer.
Although this is not an exclusive process in all market territories, many European and
Asian markets are showing signs of a trend towards regulated prescribing by use of
essential drug lists, formularies, and best practice recommendations (e.g. NICE in the
UK).
Mounting pressure on healthcare environments to become cost-efficient has also

resulted in growing trend towards generic prescribing in many markets. This has
sparked grave concerns for some well-established products in certain territories whose
sales have fallen off considerably. To compensate, new ethical drugs with proven
clinical benefit have been priced highly by research-based companies to recoup
investment and recapture sales revenue lost to cheaper generics. Innovative drugs are
also complex compounds to manufacture, which is another reason for their high price.
Although high prices might be affordable in the rich developed countries, the poorer
undeveloped and developing countries may not be able to purchase high priced drugs,
leading to political and social unrest. This is exemplified in the recent case of South
Africa and its inability to pay for high priced HIV medications. The outcome from the
widely publicised and controversial High Court case of South Africa’s government
versus 39 pharmaceutical companies who were contesting a 1997 law allowing the
South African government to provide cheaper drugs came to an end in April 2001,
52
when the pharmaveutical companies unconditionally dropped their case. South Africa is
now able to import cheaper generic HIV drugs from India and Brazil at one-third the
price of patented drugs. The landmark victory against pharmaceutical companies
demonstrates the high profile morality issue involved in providing drugs at reasonable
prices for the economic climate.
Reformulations of established and even innovative drugs might, however, offer the
right balance between cheaper basic drugs and high priced innovative products in some
markets. Generic companies are already manufacturing competitively priced superior
generic drugs with benefits that eclipse the original patented and original generic forms.
Careful consideration of the target market and the prevailing and potential future
market conditions is thus critical to reformulated product planning in the long-term. A
number of the important market forces that should be considered when embarking on a
reformulation strategy are shown in Figure 2.3 on the following page.
53
Figure 2.3: Market forces affecting pharmaceutical reformulation
Healthcare provision Healthcare spending

>Managed care >Cost-containment drives
>National health >Budgetary limitations
insurance schemes
>National health
Healthcare policy service
Marketing
>Ruling policies >Private healthcare
>Sales/distribution
>Reforms >Re-branding/branding
>Targeting
doctors/patients
Regulatory issues
>Patents
>Registration Manufacture
>Medical organizations REFORMULATION >Ease of production
recommending best >GMP
practice >Local industry
>Import/export
Pricing
>Pricing trends
R&D
>Discounts
>Investment
>Generic pricing Prescribing >Discovery and
>Reimbursement >Essential drug lists development
>Formularies >Scientific
>GP prescribing advancement
trends
Demand for reformulation
Demand for reformulation is based on a number of drivers, including:
The advancement of biomedical science to improve medicines;
government pressures to contain costs and provide cost-effective medicines (i.e.

pharmacoeconomics);
demand from doctors and healthcare professionals for improved drugs (i.e. medical
rationale);
demand from patients and consumers for new products.
54
A cheaper non-invasive reformulated drug that enables a faster onset of action, a
reduced toxicity profile resulting in fewer distressing side-effects, and a reduction in the
dosing frequency will undoubtedly incur a higher degree of demand from the patient,
clinician and healthcare provider over lesser beneficial drugs. A reformulation may also
influence decision-making when selecting a drug among a high volume of products in
the same therapeutic class. The drug with markedly improved pharmacological
characteristics would help to differentiate it from similar agents helping the clinician,
and in some circumstances the patient, select the most appropriate and economical
treatment option. Cost considerations related to non-compliance are also an issue for
the prescriber. Patient acceptance of and satisfaction with the drug is critical for
compliance and therefore the administration of the drug and the presentation of the drug
must be attractive to the patient to overcome this hurdle. In the US, an estimated $9bn
in healthcare costs arises as a result of non-compliance, that is, from patients seeking
further medical help through hospital or clinic visits because of relapses of their
illnesses.
Demand for new drug formulations can also result from socio-environmental pressures
such as the international efforts to reduce pollutants and reduce ozone depletion in the
atmosphere. There has already been a move to replace CFCs used in pulmonary
inhalers, and certain types of plastics are avoided in devices because of their toxicity or
non-biodegradability.
In the main, demand for reformulated products will be concentrated in the richer
developed countries such as in the US and Europe. These countries can afford to pay
for innovation and embrace new medicines if the cost-benefit analysis is favourable.
R&D issues
Delivering innovative pharmaceuticals is a costly enterprise involving huge investment

in R&D. Reformulating pharmaceuticals, which can reduce overall development costs
by up to 90% compared with discovering and developing NCEs, is one economical
strategy that enables pharmaceutical firms to sustain market leadership via renewed
55
patent protection for their molecules. Development of formulation systems began in the
1960s by drug delivery companies such as Ireland-based Elan and US-based Alza who
pioneered sustained-release formulations. These companies now have a very strong
foothold in the drug delivery market - total sales for Elan’s products and services
exceeded $1bn in 2000 making it the premier drug delivery company globally.
Pharmaceutical companies embarking on a reformulation strategy will be required to
invest an estimated $15–$50m in R&D for reformulating one product, although this
figure could be more or less depending on the R&D status of the molecule under
scrutiny and the level of development that is required to bring a reformulation to
market.
Although some companies conduct their own reformulation R&D for their products,
many opt to collaborate with external partners (see Strategic Alliances). This
outsourcing facilitates the synthesis of proprietary delivery systems with patented active
molecules, thereby reducing overall experimental work and potentially speeding up
time to market for the new formulation. Rather than the 7–10 years of development
work for NCEs, reformulation testing can be completed in 2–4 years or sooner,
depending on the intensity of R&D studies, administration, and registration and
regulatory issues involved. For example, the collaboration between Ethypharm and
Aventis to produce a new extra strength formulation of diltiazem (Cardizem CD) took
only three years from feasibility to marketing approval.
Generally, a partnering company with a novel formulation or drug delivery technology

will already possess a patented process or system that has been approved by the FDA or
medicines control bodies, eliminating the time required for large-scale preclinical
studies. A new formulation of an existing patented compound would merely require
clinical testing if the preclinical toxicology studies that were conducted previously were
deemed satisfactory.
Over the past decade, numerous technology driven licensing deals have been struck up,
and continue to be initiated, between major multinationals and smaller biotechnology
56
and drug delivery firms to elicit novel biotherapeutic formulations of established and
new drugs. These partnerships are expected to drive growth in the pharmaceutical
industry until the next milestone in medical therapeutics is reached, namely genomics.
The deals can generate significant revenue for both parties: the technology transfer
under license allows the technology company to receive milestone payments plus a
percentage of sales, while the pharmaceutical manufacturer receives a larger proportion
of the sales revenue under its branded portfolio.
When to initiate pharmaceutical reformulation
In the past, pharmaceutical development strategies primarily focused on preclinical

studies for the original molecule and did not take on board the potential for
reformulation at early stages of the R&D process, mainly because of economic
constraints or strategic oversights. However, in recognising the potential to reformulate
further down the compound’s product life-span, a robust pharmaceutical development
strategy should now ideally include the funding requirements to conduct the necessary
reformulation testing at the same time as the original molecule’s drug development.
This will negate the need for supplementary development work at a time when a
product could be quickly switched to a new format to extend its lifecycle. Leaving it too
late will result in increased opportunity for generic competition close to patent expiry.
Knowing the reformulation possibilities for a molecule prior to commercialisation is

also a good starting point for marketing purposes as it will allow the narrowing down of
the drug’s potential to, for example, satisfy unmet clinical needs or assist in placing a
reformulation product within an existing therapeutic category.
Because reformulation is a relatively new strategy that multinationals are only now
embracing with vigour to extend patents for their best-selling drugs, reformulation
R&D was previously conducted towards the end of a drug’s patent life rather than the
beginning. Incorporating reformulation possibilities in parallel with a original drug’s
57
R&D at the onset might, however, in the long-term save time, effort, and investment
while concurrently assisting the decision-making process of the long-term business
development strategy for the product range owing to outcomes of study data.
A hypothetical reformulation development scenario is shown in Figure 2.4, where the

key drug programme is carried out simultaneously with the reformulated sister
compounds. Ideally, development of a cluster of reformulated products with varying
indications and delivery mechanisms may be more advantageous than a single
reformulation product. However, in some cases this is not possible owing to the
pharmacokinetics and available technologies. The end-point to this strategy is the
economic creation of a range of products that can be stored or utilised at critical times
as next generation drugs to reinforce and protect original molecule product
development, patent rights, and marketing investment.
Despite the economic advantages of reformulation, NCE discovery is still a necessity

for pharmaceutical companies in order to sustain growth in future markets.
Multinationals will need to rely on a constant flow of candidate NCEs being launched
each year to sustain market share and allow co-development through novel
formulations. The number of alliances with drug discovery biotechnology companies
illustrates this trend, where high throughput technologies are used to screen candidate
compounds. However, it is estimated that up to 40% of candidate molecules will
require reformulation technologies to improve their solubility and/or bioavailability.
Therefore, utilising appropriate technologies at the outset of the R&D process may be
the only way forward for the success of some of these agents.
58
Figure 2.4: Theoretical representation of a pharmaceutical strategy to
optimise R&D for the designated compound and related multiple
reformulation-based products
Discovery/
Molecule Selection
File patents at File

optimal times to patent
extend original
Reformulation Original development

platforms programme
Strategic
alliances
R&D preclinical and clinical
Indication(s) Therapy Area Drug Class
Reformulation Original
selection drug
Launch reformulated products

during the original product’s
patented period boosting brand Market
name and consumer preference
through choice of product or
launch one or several products
to counter generic erosion close
to patent expiry. Market
conditions
The main disadvantage of embarking on a reformulation strategy at the outset of

development work for the designated molecule is the delay in bringing the reformulated
product(s) to market. On the basis of a 10-year patent protection window for a
successful marketed drug, a reformulation can, in theory, be introduced to the market
1–2 years prior to patent expiry allowing the company to switch the drug’s patient
population to the newer superior product. However, this means that if the original and
reformulated product were co-developed at the same time, then the reformulation could
59
in fact be superseded by next generation competitor products launched onto the market
during the 10 years or less that it is on stand-by. Nonetheless, countermeasures for
exploration could include the repackaging of reformulated products to filter into the
market at the same time or at logistic intervals through the patent period of the original
drug, slowly extending the patent period for the product range. This could be achieved
through expanded indications or demand for drugs with varying modes of delivery to
satisfy unmet needs (e.g. once-weekly oral formulations or transdermal formulations).
Potentially, sales could be increased from a tiered platform of products such that
revenue could be sustained from, for example, three reformulations plus the original
patented compound (see Timeplan for Reformulation on the following page).
Clearly, implementing reformulation is recommended as early as possible in the

development phase of the patented drug. The sooner a company realises that
reformulation equates to long-term revenue protection, the more time it will have to
plan the options available to maximise the return on investment (see Figure 2.5). If
there are only a few years until patent expiry, then a company has the option of either
partnering to expedite the launch of a new formulation or it can compete post-patent in
the generics or OTC sectors.
In an ideal scenario, reformulation R&D should start no later than 12 months following
the launch of a new drug or at the same time as R&D for the designate molecule. This
ensures that there is adequate time for planning, clinical trials, manufacturing,
recruitment, marketing, and also time to make contingency measures should there be
strong competitor products entering the market in the interim.
60
Figure 2.5: Revenue and patent protection achieved through reformulation of
one key drug
Revenues
Innovation
Launch Launch
(R&D) Original Reformulations Original Time
Patent patent
grant expiry
Indicates patent extension of an

additional 20-30 years following
expiry of the original patent
Sustained revenue protection
61
A reformulation timeplan to protect patents and
sustain market dominance
Patent extension through one reformulated product confers an additional 10–13 years of
market exclusivity if the reformulation is launched approximately 2–3 years prior to the
original expiring patent and NDA filing is submitted approximately eight years prior to
patent expiry of the technology (NDA filing would not be necessary if the technology is
patented for the same period). If a reformulation is launched at the same time as patent
expiry, up to 15 years of additional protection can be achieved, as in the case of
Novartis’ Neoral (reformulated Sandimmun/cyclosporin).
The development of more than one reformulated product can potentially add further
value to the lifespan of the original compound. A total of three new formulations, for
example, developed and launched prior to and within 5–6 consecutive years following
patent expiry of the original compound should secure an additional 28 years of patent
protection if the technology is patent protected for the same period or protection is
achieved through new patent filings for the reformulated product. Extended patent
protection of molecules can be achieved through technology integration without the
need for new patent filing or NDA.
For example, Pfizer’s reformulated Procardia product, Procardia XL, which utilises
Alza’s OROS technology conferred an additional 16 years of patent protection owing to
patent protection of Alza’s technology until 2007. However, commercial success of the
reformulation product line will very much depend on the presence of innovative drugs
in the market, which may supersede the reformulated products, pricing, and the
prevailing market conditions. Despite these issues, the hypothetical scenario illustrated
in Figure 2.6 shows that one original compound can theoretically extend its patented
life for 48 years depending on demand for the drug, market conditions, and corporate
commitment to the marketability of its product range.
62
Figure 2.6: Reformulation development timeplan showing patent extension
and protection possibilities through multiple reformulation products
0 5 10 15 20 25 30 35 40 45 50
Patent years
ORIGINAL Original patent expiry

PATENTED
DRUG
MOLECULE
First formulation
R&D Launch patent expiry
File NDA
FIRST
REFORMULATION
R&D Launch
Second formulation
patent expiry
SECOND
REFORMULATION File NDA
R&D Launch
THIRD
File NDA
REFORMULATION
Third formulation
R&D Launch
patent expiry
Case study – Multiple reformulation: Aventis’ Diltiazem/Cardizem
The classic multiple reformulation product line strategy for Marion Laboratories’ (now
Aventis) original hypertension and angina product Cardizem was shown to be
extremely successful between 1980–1995 and reformulations continue to be marketed
owing to the huge success of the brand. The original branded product, Diltiazem, was a
three-times-daily orally administered drug, but prior to patent expiry Marion
Laboratories collaborated with Elan to produce a sustained-release twice-daily
formulation, Cardizem SR. The product was launched close to patent expiry so that
through aggressive marketing campaigns the company could influence physicians to
switch to the new dosage formulation.
The strategy proved successful in that by the time the Cardizem patent had expired, the
Diltiazem market was almost completely served by Cardizem SR with little
63
competition from generic diltiazem. The strategy was repeated in 1992 when a once-
daily formulation Cardizem CD was launched superseding Cardizem SR. Furthermore,
Aventis later collaborated with drug delivery company Ethypharm to develop a new
360mg extra strength formulation of Cardizem CD. The once-daily dosage utilised
Ethypharm’s Multicaps sustained-release high density multiparticulate technology,
which consists of hundreds of highly charged microgranules in active ingredient and
coated by a polymeric membrane. The reformulation allows a high dosage to be
administered once daily whereas previous high doses could only be administered twice
daily in 180mg doses and resulted in compliance problems. The 360mg capsule
formulation ensured efficient therapeutic coverage of patients over a 24-hour period
and provided heart specialists with a unique high strength product that was not
available in any other tablet.
In February 2000, the new 360mg extra strength capsule was launched in the US adding
a further product to the Cardizem franchise. After a period of 12 years since the original
product was marketed, reformulations of the original molecule are estimated to
collectively exceed $800m per annum despite cheaper and widely available generic
equivalents (apart from the new 360mg dose). Although several successful formulations
had been developed in addition with a strong brand, Aventis decided to sell the US
rights to the Cardizem family of products for $410m to Bioavail in January 2000. In
recognising the future possibilities of franchise extension, Biovail has indicated that it
will further add to the Cardizem product line with its development of an improved
once-daily diltiazem product. The product has already been approved by the FDA for
certain indications and is currently undergoing further clinical trials to broaden the
applicable prescribing indications on the product's label. Biovail’s new formulation,
Cardizem XL, is expected to demonstrate superior control of blood pressure and heart
rate during the critical early morning hours where adverse cardiovascular events occur
most frequently, along with other competitive advantages. Launch of the new product is
anticipated in the first half of 2002. The five formulations of Cardizem and the strong
brand will ensure continued success of the franchise for Biovail and Aventis.
64
Case study – Patent extension and revenue protection: Pfizer’s Procardia
An example of patent extension and revenue protection through a single reformulated

product is Pfizer’s Procardia (nifedipine). Launched in 1982 for the treatment of angina
and hypertension, the product began to lose patent protection in some territories in
1991. Three years prior to patent expiry, Pfizer launched and extended-release
formulation of nifedipine – Procardia XL – which utilised Alza’s osmotic oral drug
delivery system (OROS). The new formulation reduced dosing to a once daily
administration based on improved bioavailability. The product was able to stave off
competition from generic sustained-release nifedipine and retain market share through
the market presence of both Procardia and Procardia XL.
Despite declining sales of Procardia XL in recent years, the reformulation is patent

protected under OROS technology to 2007. This has added a further 16 years to the
lifecycle of the product, thereby making it extremely difficult for competitor generic
companies to market a product that exhibits similar properties to the reformulated
product without infringing Alza’s OROS patent. In the US, the original patent for
Procardia XL expired in 2000 leaving the market open to generic extended-release
nifedipine products.
65
Technological competencies
The critical element to continued long-term success in protecting patented drugs from
generic erosion and sustaining revenue after patent expiry is to produce a superior
version of the compound with additional characteristics that eclipse both the original
version and its generic equivalents. Not least in commercialising a successful
reformulated product is the scientific expertise in conducting R&D to match the active
molecule with the best and most appropriate reformulation system to produce a
superior, efficacious, and safe product.
Modern computer technologies will soon be able to provide very efficient shortcuts to
match drug molecules with reformulation compounds, eliminating the need for
protracted experimentation design to achieve therapeutic success. For example, US-
based technology company, Tosk, Inc., recently announced the availability of its
animal-based screening technology to systematically identify new, less toxic
formulations of marketed drugs. The company’s technology platform, Optimizing
Marketed Drugs (OMD) uses an animal-based strategy to select a new drug formula
with the same efficacy and mechanism of action, whilst showing a reduction in acute
and chronic toxic effects. The main application for the technology would be drug
development, as results have shown that the technology can reduce toxicity in up to
75% of top selling drugs. According to the company, OMD enables companies to
refresh the patent life of a marketed drug, or reinstate the patent on a generic drug, by
reducing the drug's toxic side effects. Tosk has already optimised two cancer drugs –
cisplatin and methotrexate – using the technology. The aim being to identify
chemotherapeutics that are toxic to cancer cells but not normal cells.
Over 100 specialty pharmaceutical and drug delivery companies worldwide have
developed numerous proprietary technologies that can be combined with molecules to
reformulate them into new products. Selecting the most appropriate development
66
partner with exceptional technological competence and development facilities is crucial
to the long-term success of any reformulation strategy.
Importantly, integration of reformulation solutions into long-term product development

strategies hinges on the benefits that partnering will bestow on both parties, not least
the financial recompense. A key attraction of partnering is the redistribution of R&D,
marketing, and manufacturing. Companies may wish to either acquire more control
over the reformulation process or choose to delegate a large portion of the
reformulation development process. For example, a pharmaceutical company might
wish only to license a reformulation technology, preferring to carry out the necessary
R&D in-house.
Eli Lilly and US-based Emisphere Technologies, who are collaborating on the
development of orally delivered hormones, typify this scenario. Under the terms of this
agreement, Eli Lilly receives worldwide rights to develop and commercialise the
products utilising Emisphere’s oral drug delivery technology, while Emisphere receives
product royalties, and milestone payments. On the other hand, large multinationals
might wish to leave the development work to the partnering company to free up R&D
efforts and expedite the time to market. Novartis, for example, has partnered with Elan
who is responsible for developing an oral extended-release undisclosed compound from
Novartis’ portfolio. Under the terms of this agreement, Elan is responsible for R&D and
manufacturing, whereas Novartis will focus on the safety, efficacy and NDA filings.
67
Strategic collaboration
Generally, there is no standard formula for entering into a collaborative R&D

agreement, owing to many individual differences in corporate strategy and investment,
IP contribution, technology values, timelines for R&D, and marketing and
manufacturing competencies. However, agreements within the pharmaceutical industry
related to reformulation tend to fall into five main categories, which are outlined in
Table 2.14.
Table 2.14: Types of strategic collaborative agreements associated with

reformulation
Type of Agreement Details

Affiliate Multinationals develop a reformulation system in-house or through
subsidiaries
Contract research Multinationals will team up with a research party to conduct feasibility
studies to reformulate a drug. The agreement is usually extended into
licensing and supply arrangements with the company on satifactory
completion of the reformulated product
Licensing Drug delivery companies apply proprietary technologies to a range of
products under exclusive licenses to pharmaceutical majors
Co-marketing A reformulation is co-marketed by different multinationals in different
territories, e.g. Sequus markets Doxil (doxorubicin HCl) in the US, whereas
Schering-Plough markets the drug in parts of Europe
Partnership Multinational and drug delivery company associate for the duration of
product development and commercialisation
Non-exclusive Drug delivery companies license out technologies on a non-exclusive basis
In the main, partnering companies offering novel technologies with which to

reformulate drugs will be received more favourably by multinationals if they are able to
provide a comprehensive product development plan involving, for instance, a detailed
programme of feasibility studies, complete formulation development, analytical assays,
clinical studies, regulatory support, manufacturing and packaging facilities, and
assistance in product launch. The greater the risk reduction a reformulation technology
company can confer to a product development plan, the more attractive it will be to the
68
multinational. In addition, the number of technology platforms that a company offers
can also influence whether or not collaborating will be successful in the long-term. A
large company offering a variety of broad-based reformulation systems with an ethos of
developing next generation technologies will be far more likely to secure alliances
compared with a smaller company with a single-platform technology that has no
funding to further develop its proprietary systems.
‘The key component of a successful partnering is being able to offer multiple

technology platforms within an environment supported by a tested
infrastructure. There is enough risk in the drug discovery and development
game. The more drug delivery companies can do to reduce the risk of
reformulation the more approachable and attractive they will be to pharma
companies.’
There are also a number of important issues to consider when companies are embarking
on strategic collaborations, which should be clearly documented in contractual dealings.
They include:
Precise boundaries of the research programme including timelines;
ownership of intellectual property (IP) and research-elicited IP;
ownership and demarcation of all rights;
confidentiality agreement for all R&D and IP matters;
recognition of parties taking ownership of patentable inventions or IP arising from

the research programme;
responsibility of filing, maintenance and litigation arising from related patents;
reversion option related to patents if parties fail to adequately exploit the

technology;
enforcement of patent protection when dealing with third parties who infringe
patent rights;
69
responsibility for litigation related to third parties who make unauthorised use or
disclose IP;
placement of warranties and indemnities related to all rights;
responsibility for all regulatory affairs related to reformulated products;
accurate financial terms disclosed between both parties;
knowledge of competition in the market.
Another factor that should be taken into account when seeking a suitable development
partner is the number of successful drugs that have been marketed or manufactured by
the partnering company. Historical information will help to assess the risk involved in
partnering with a company over an extended period of time. A company that has
successfully developed profitable products under previous alliances should be rated as a
lower risk than a company that has no history of commercial success, unless the risk is
outweighed by the ground-breaking innovation inherent in the technology platform.
Larger drug delivery companies do wield some power by offering a wide range of
different solutions based on their selective technological competencies. Multinationals
can therefore utilise these platforms in a one-stop shop scenario: for example, the
multinational wishing to reformulate vaccines into inhaleable or needleless
formulations will be better placed by collaborating with companies who are experts in
dry powder formulation systems or inhaleable devices.
Chapter 5 details a number of important strategic reformulation alliances between

multinationals, biotechnology, drug delivery, and speciality pharmaceutical firms.
70
Successful reformulation products on the market
Certain pharmaceutical reformulations have achieved annual sales exceeding $1bn as

shown in Table 2.15, which lists the top five established reformulation products for the
five main routes of administration. The oral reformulation sector is the largest, with
global sales reaching approximately $28bn in 2000. However, the emergence of novel
needleless and pulmonary formulations of major macromolecules (e.g. insulin) over the
next few years, in addition to growth in other key segments of the market is expected to
reduce the market size for leading oral reformulations by an estimated 34%. In 2005,
the global market for current leading oral reformulated products is forecast to decline to
around $17bn. However, the total oral reformulation drug delivery based market is
expected to achieve sales of around $54bn by 2005, due to novel oral delivery of large
biotherapeutic proteins and peptides (see Market Forecasts for Reformulation).
71
Table 2.15: Top-performing reformulation products, 2000 & 2005
Technology/
Marketer Developer Product Proprietor Generic Indication Sales ($m)
2000 2005
ORAL
AZ Astra Prilosec/Losec MUPS/AZ Omeprazole Ulcers 6,500 2,000
S-P Cardinal/ Claritin Zydis/ Loratidine Allergic 3,170 2,100
RP Scherer RediTabs RP Scherer rhinitis
Merck & Co Cardinal/ Innovace Melt/ Zydis/ Enalapril Hyper- 2,100 650
RP Scherer Vasotecc RP Scherer tension,
BPH
TAP N/a Prevacid Enteric coated Lansoprazole Duodenal 2,200 2,300
delayed ulcers
release/TAP
Novartis Cardinal Neoral/ Softgel Cyclosporin Organ 1,400 745
Sandimmun capsules/Novartis rejection
transplant
PULMONARY
GSK GSK* Flovent/ Rotadisk/GSK Fluticasone Asthma 1,200 2,086

Flixotide proprionate
GSK GSK* Serevent Diskus/GSK Salmeterol Asthma 1,100 950
xinafoate
AZ AZ Pulmicort Turbuhaler/AZ Budesonide Asthma 810 875
GSK GSK* Seretide n/a Salmeterol + Asthma 150 710
fluticasone
proprionate
BI/3M 3M Atrovent n/a Bromide + Asthma 605 500
ipratropium
fenoterol
hydro-
bromide
*Pfizer Inhale Insulin (short- Needless Inhance Insulin Diabetes n/l 2,710
acting) System/Inhale type I & II
Key:
AZ = GSK = S-P = BI = *Pipeline
AstraZeneca GlaxoSmithKline Schering-Plough Boehringer Ingelheim products
Source: Datamonitor, Author’s research & analysis
72
Table 2.16: Top-performing reformulation products, 2000 & 2005
Marketer Developer Product Technology/ Generic Indication Sales ($m)
Proprietor
2000 2005
TRANSMUCOSAL
Wyeth-Ayerst N/a Premarin Intravaginal/n/a Conjugated Atrophic 1,900 2,400
Vaginal Cream estrogens vaginitis
Kraurosis
vulvae
vaginitis,
GSK GSK Imigran/ Imitrex Intranasal/GSK Sumatriptan Migraine 1,000 790
GSK GSK* Flonase/ Intranasal/GSK Fluticasone Asthma/ 680 780
Flixonase proprionate rhinitis
S-P S-P Nasonex Intranasal/S-P Mometasone Asthma/ 390 750
furoate rhinitis
monohydrate
Novartis Novartis Miacalcin/ n/a Calcitonin Osteoporosis 410 485
Miacalcic
INJECTABLE
TAP Takeda Lupron Depot Injectable polymer Leuprolide Cancer 815 675
system/n/a acetate (Prostate),
Endo-
metriosis,
Central
precocious
puberty
AZ AZ Zoladex LA Implantable Goserelin Cancer 737 612
depot/n/a
Novartis Novartis Sando-statin n/a Ocreotide GEP, Cancer, 390 440
LAR acetate Acromegaly
Takeda Takeda Leuplin Depot Injectable polymer Leuprolide Cancer 521 433
endo-metriosis,
Central
precocious
puberty
Abbott Takeda Lupron Depot Injectable polymer Leuprolide Cancer 150 125
Endometriosis,
Central
precocious
puberty
TRANSDERMAL
J&J J&J, Alza Duragesic D-TRANS/ Alza Fentanyl Pain 610 950
Novartis Alza Estraderm D-TRANS/Alza Estrogen HRT, Osteo- 270 210
porosis
BI Alza Catapres D-TRANS/Alza Clonidine Hyper-tension 200 175
Novartis Alza Trans-Derm D-TRANS/Alza Nitro-glycerin Angina 217 160
Nitro/
Nitroderm TTS
Schering AG 3M Climara (Once Latitude/3M Estrogen HRT, 91 115
weekly) osteoporosis
*BMS Elan (Sano) BuSpar Transdermal/Elan Buspirone Anxiety, 700 ** 1,156 **

ADHD
Key:
AZ = BI = GSK = J&J = S-P = * *= includes all
AstraZeneca Boehringer GlaxoSmithKline Johnson & Johnson Schering-Plough buspirone family
Ingelheim products
73
R&D reformulation focus
A survey of the pipeline reformulation industry reveals that companies are developing
more orally active pharmaceutical reformulations than any other category (40%) (see
Figure 2.7). This is mainly because of the huge return on investment potential for
convenient administration of large peptide and protein molecules that up to now can
only be administered parenterally. For example, significant developments that may
result in large-scale commercialisation of oral vaccinations or gene therapy would
benefit the oral modified-release sector markedly.
The second largest pipeline reformulation sector identified is transdermal (20%)

followed by the transmucosal (15%) and pulmonary sectors (13%), respectively.
Interestingly, a small number of speciality pharmaceutical companies are concentrating
R&D on niche organ-specific areas of reformulation. For example, Oculex
Pharmaceuticals is reformulating pharmaceuticals specifically for the eye; another
company, Nastech, focuses on reformulating drugs that are only administered
intranasally.
Figure 2.7: R&D pipeline reformulation focus, 2001
Pulmonary
13%
Ocular
2%
Injectable Oral
10% 40%
Transmucosal
15%
Transdermal
20%
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Market forecasts and growth for drug delivery based
reformulation sectors
The global drug delivery based reformulation market is expected to rise to $88.6bn by
2005 according to Datamonitor figures (Table 2.17). Oral reformulations will maintain
market leadership to 2005 despite significant double-digit compound annual growth
from pulmonary (12.0%), transmucosal (10.1%), and transdermal (11.2%)
reformulation sectors (see Reformulation Sector Growth below).
Table 2.17: Market forecast for drug delivery based reformulation sectors,
2000 & 2005
Technology 2000 2005 & Change

($m)
Oral 28,356 53,645 +89%

Pulmonary 8,412 14,825 +76%
Transmucosal 6,052 9,792 +62%
Injectable/Implantable 3,543 5,094 +44%
Transdermal 2,518 4,389 +74%
Other 539 860 +59%
Total 49,420 88,605
In particular, inhalational reformulations, second to oral reformulations with compound

annual growth at 12%, are anticipated to significantly expand the global pulmonary
sector of the industry.
By 2005, pulmonary reformulations will reach an estimated $14.8bn. At least five

inhalational insulin products are being developed, with Inhale and Pfizer close to
marketing the first inhaled insulin product in the world. This will be a highly significant
product, as there is still no alternative to injection in the insulin market. The market for
inhaled insulin has been estimated at $4.5bn annually in the US alone, given the hugely
attractive market for non-invasive inhaled delivery to treat the inadequately controlled
1.5–2.5 million type-II diabetics. By 2006, approximately 50% of diabetics in the US
75
are forecast to benefit form inhaled insulin over traditional injectable insulin and oral
hypoglycaemic drugs.
Reformulation sector growth
Based on sales projections, Datamonitor estimates that the oral reformulation sector
will achieve the highest growth rate of 13.9% between 2000–2005. This is consistent
with current and projected sales values and R&D intensity for pipeline products to
2005. The oral modified-release sector will be closely followed in growth terms by the
pulmonary, transdermal and transmucosal sectors, which will collectively sustain
average growth of 11.1% to 2005.
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Figure 2.8: CAGR of major reformulation sectors, 2000-2005
16
14 13.6
12.0
11.2
12
10.1
9.8 9.8 9.8
10
7.5
CAGR (%) 8
0
d
al
er
al
le
l
al
ts
ra
le
c
os
an
ab
th
O
pi
ha
er
O
uc
pl
ct
To
In
sd
Im
je
sm
In
an
an
Tr
Tr
Reformulation s ecto r
Growth in the injectable sector is expected to maintain a lower annual rate of 7.5%,
owing to the advent of needleless formulations and the expansion of other sectors that
are able to conveniently deliver macromolecular drugs in a non-invasive and effective
manner. For example, demand for non-invasive pain relief for cancer pain will lead to
drugs such Johnson & Johnson’s three-day fentanyl patch (Duragesic) achieving
significant success; Duragesic is estimated to reach sales of $950m by 2005.
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Novel reformulations – the key to success?
For a reformulation to succeed in the market place it must clearly exhibit superior
advantages over the parent and conventional/generic drugs, whilst adding significant
long-term value to its original branded parent compound. Alternatively, a reformulation
must offer a unique solution to unmet clinical needs or provide a greater utility through
compliance or administration to establish its place in the market. A novel reformulation
of an established key drug appears to offer the greatest return on investment owing to
its uniqueness in the market, branding success, and demand from patients and
physicians. Novel reformulation products that effectively combine delivery systems and
biological drugs are expected to become the blockbuster products of the future.
Evidence of this trend comes from continued market dominance of reformulations of
established branded products such AstraZeneca’s Losec/Prilosec (omeprazole);
Schering-Plough’s Claritin (loratadine) product line (see Chapter 3); Novartis’ Neoral
(Sandimmun/cyclosporin); Johnson & Johnson’s Duragesic (fentanyl); and Boehringer
Ingelheim’s Catapres TTS (clonidine), which are discussed below:
Novartis: Neoral (Sandimmun/cyclosporin)
Sales of Novartis’ Sandimmun (cyclosporin) reached $1.2bn in 2000, despite losing

patent protection in the US in 1995. The success of the drug post-patent is due in part to
the reformulated cyclosporin, Neoral, which utilised RP Scherer’s SoftGel oral delivery
system and provided patent protection of the drug for a further 15 years to 2010. Neoral
is a microemulsion form of cyclosporin that allows more consistent absorption of
cyclosporin, providing benefits such as a reduction in hospitalisation and less strict
adherence to a controlled diet. The expansion of indications for Sandimmun and the
improved Neoral formulation have successfully impeded competitor sales erosion both
in the short and long term. Neoral is now approved in 66 countries and within 18
months of launch it enjoyed product conversion rates from Sandimmun of between 80–
100% in some market territories.
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Johnson & Johnson: Duragesic (fentanyl)
Sales of Johnson & Johnson’s opioid agonist Duragesic reached $656m in 2000 and are
forecast by Datamonitor to rise to approximately $950m by 2005. Although the product
loses patent protection in 2004, it is expected to sustain market leadership owing to its
unique transdermal patch formulation. Duragesic was launched by Johnson & Johnson
in 1991 and has grown rapidly in the chronic pain relief market. The analgesic was
reformulated incorporating Alza’s diffusion-based transdermal controlled-release
system (D-TRANS). The product is highly desirable for non-invasive continuous
treatment of chronic pain associated with chemotherapy. The trandermal patch system
provides enhanced convenience over injectable and oral delivered drugs.
Boehringer Ingelheim: Catapres TTS (clonidine)
Sales of Boehringer Ingelheim’s transdermal clonidine formulation reached $211m in

2000. The drug, indicated for the treatment of hypertension, is usually administered
orally. The main benefits of the transdermal formulation over oral administration
include sustained delivery over seven days with fewer side effects. The transdermal
adhesive patch formulated by Alza also allows higher loading of the drug making the
system more therapeutically effective. Despite generic competition from off-patent oral
clonidine Catapres TTS has recorded increasing sales year-on-year: in 1999 sales were
$180m; $159m in 1998. The uniqueness of delivering the drug transdermally under
patented technology makes it difficult for competitors to manufacture similar products
without infringing Alza’s patents.
It is estimated that by 2005, 25% of drugs on the market will be reformulations, as a

result of many of the world’s top-performing drugs lsong patent protection and the
emergence of new drugs that are vastly improved through advanced biotechnological
capabilities. To maintain market leadership, future reformulations will be required to
simultaneously protect patents, extend product lines, and expand indications for both
established drugs and new entrants to the market. Novel pharmaceutical formulations
that provide unrivalled medical solutions to diseases and disorders where current
pharmacotherapeutics fail are perhaps the key to reformulation success. Market
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dominance will almost certainly be assured if superlative reformulations offer
significant medical benefits for therapeutic areas that still lack long-term, efficacious,
non-invasive, tolerable, and patient friendly drugs – areas such as infectious diseases
(e.g. HIV, sexually transmitted infections) cancer, and respiratory disease.
Key product attributes
In general terms, a reformulated drug will achieve market success in the market if it can
exhibit the following characteristics:
Ease of use;
reduces dosing frequency;
improves patient compliant;
improved efficacy;
few or no side effects;
cheaper than competitors in its therapeutic class;
satisfies unmet clinical needs.
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Innovative reformulation technologies
Presently, there are hundreds of reformulation possibilities owing to the huge volume of
companies operating in the field. Coverage of all pipeline reformulated drugs is beyond
the scope of this report owing to the large volume of R&D: a survey conducted for this
report indicates that there are over 350 products that are in preclinical and clinical
studies. However a snapshot of some exciting and interesting innovative reformulation
technologies with significant market potential include those detailed in the following
scetion.
Oculex Pharmaceuticals: intraocular DDS
Oculex focuses almost exclusively on development of drugs for the treatment and
prevention of major eye diseases. Its proprietary drug delivery system (DDS) delivers
sustained-release therapeutic agents over preset periods of time. The system uniquely
delivers drugs intraocularly enabling ophthalmologists to treat diseases that are not
effectively treated with current pharmaceuticals. Marketed ophthalmic prescription
products include eye drops, oral drugs or injections – forms of administration that have
been associated with numerous side effects. Additionally, the anatomy and physiology
of the eye is such that current drugs do not always achieve adequate dosage owing to
the difficulties in penetrating the cornea and the blood-eye barrier.
The market opportunity for drugs that are localised to the eye eliminating system effects
is immense – according to the company, an estimated 40% of eye disorders affect the
back of the eye (posterior segment) but less than 3% of ophthalmic drug sales are
associated with this relatively inaccessible region. Oculex has marketed its first
intraocular product, Surodex, which utilises its DDS technology to treat inflammation
following cataract surgery. Total worldwide ophthalmic pharmaceutical sales were
estimated to have been over $4bn in 2001, within the total global ophthalmology
market, which is estimated at $25bn.
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Flamel Technologies: Micropump
Flamel’s Micropump technology utilises an oral delivery system based on

microencapsulation that enables controlled delivery and long-lasting absorption in the
small intestine. The Micropump is a multiple-dose system containing a large number of
microparticles (the order of 5,000–10,000 per dose) contained in either a tablet or
capsule form. On administration, microparticles are released in the stomach and pass to
the small intestine, where they operate as a miniature delivery system releasing the drug
at a variable rate over an extended period of time by means of osmotic pressure. The
microencapsulated particles are designed to slow down transit through the small
intestine.
Flamel is developing two products utilising the Micropump system: Asacard, a 24-hour
controlled-release aspirin in two dosage forms (162.5 mg and 325 mg); and Genvir, an
improved oral formulation of acyclovir indicated for acute genital herpes. Genvir was
developed to overcome the main problem of oral aciclovir – a short half-life in plasma,
which is limited to 2.5 hours. This problem results in five-times daily dosing for acute
genital herpes and herpes Zoster and has been a major obstacle in terms of patient
compliance. Dosing throughout the night is therefore impossible because when a
patient sleeps, therapeutic coverage is reduced or eliminated completely. In addition,
oral formulations require specific absorption characteristics as aciclovir is absorbed
only in the small intestine and principally in the duodenum. Micropump technology in
the Genvir formulation is expected to improve night-time dosing and overcome the
problems associated with limited bioavailability. It is expected to improve patient
acceptance and compliance, with the potential to supersede GlaxoSmithKline’s Zovirax
product line to treat genital herpes and herpes Zoster, which achieves sales in excess of
$1bn annually.
Helix BioPharma: BIPHASIX
Helix’s BIPHASIX technology was developed to avoid the problems associated with
needles. It is a stabilised, lipid-based microencapsulation system that transports
pharmaceutical agents across mucosal barriers. Formulations of BIPHASIX can be used
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in preparations with varying viscosity such as creams, lotions, and liquids to provide
convenient forms of administration. The technology can also be used to alter the depth
of tissue penetration depending on what the patient requires, for example, dermal or
localised therapy, or a transdermal systemic therapy. In addition, the BIPHASIX system
can also be controlled to have a certain drug release profile at a specific destination site.
Helix is developing a BIPHASIX cream formulation of interferon-α indicated for

human papilloma virus (HPV) infections and cancer prevention. The reformulation
offers a breakthrough therapy to combat HPV infection eliminating the need for
surgical intervention, electrovaporisation or interferon-α injections that are current
treatment options to eradicate the main symptom of HPV virus infection, namely
genital warts. By applying the product to the entire ano-genital area, interferon-α is
released to both lesions and surrounding areas in a controlled manner. According to
Helix, the product may make genital warts a thing of the past, eliminating early cervical
dysplastic lesions, and prevent further progression of cervical cancer and other ano-
genital cancers.
As HPV infections are the most common sexually transmitted diseases, affecting more
than 40 million people worldwide, the Interferon-α-BIPHASIX Cream is a market
opportunity for successful penetration into the interferon market estimated at over $3bn
per annum.
Helix is also developing an innovative transdermal insulin patch for type I and II
diabetic patients who currently require daily insulin injections to control blood glucose
levels. Limitations to injections include inconvenient and painful injections,
complications of inadequate blood glucose control management, and fluctuations in
glucose levels that can lead to metabolic disorders, kidney disease, neuropathies, and
blindness.
Helix’s BIPHASIX-based patch technology could potentially revolutionise the

treatment of diabetes by not only responding to the need for pain-free insulin
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administration but also to provide controlled-release of insulin for sustained periods.
The insulin patch represents a breakthrough adjunct therapy to the emerging inhaled,
oral/pre-prandial insulins for type I diabetes, or, possibly even a future stand-alone
alternative to oral hypoglycaemics for the treatment of type II adult-onset diabetes. The
global diabetes market is worth an estimated $8bn annually.
Biosyn Inc.: C31G technology
Biosyn’s core technology platform focuses on a family of small, organic molecules that
exhibit broad-spectrum antibacterial and antiviral activity, low toxicity and promote
wound healing. The technology platform, C31G, binds chemically to the cell surface of
microbes, including viruses, bacteria or fungi, and destroys the cell membrane essential
to its survival. Biosyn’s main pipeline products utilising C31G technology include
Oramed, Savvy and Gyne-Rx. The collective market opportunity for these products is
around $1.2bn based on individual product estimations from the company.
Biosyn’s Oramed is locally applied viscous liquid treatment for two critical infections
caused by immunosupression: oral candidiasis and herpes simplex virus. The product,
currently in Phase II trials, is expected to be submitted to the FDA for market approval
in 2003. The total market for these indications in the US is estimated at $350m
according to the company. SAVVY is a glyminox-based vaginal microbicide gel
designed to prevent the transmission of HIV and other sexually transmitted diseases.
The product is currently undergoing an expanded phase I program to optimise
formulation prior to entering combined phase II/III trials in 2001. The company expects
to submit an NDA by the end of 2003 for contraception and prevention of gonorrhoea
and chlamydia, and for HIV prevention by 2004.
The commercial opportunity for anti-HIV transmission is vast as the number of people
infected with HIV has reached 30 million worldwide. The World Health Organisation
has stated that one in 100 sexually active adults is living with HIV infection and that
only one in ten of these infected individuals is aware of their HIV status. According to
Biosyn, SAVVY and other microbicides in development will prove critical in
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preventing transmission of the AIDS virus. The company estimates the US market for
this indication to exceed $500m annually. Biosyn is also developing an emollient
vaginal cream formulation (GYNE-RX) for non-sexually transmitted vaginal infections
including recurrent candida infection and chronic bacterial vaginosis. Phase I trials are
antcipated in 2001 with an NDA expected in 2003. The company estimates that US
sales of the product could reach $400m.
NexMed Inc.: NexACT
NexMed has developed a transdermal delivery technology, NexACT, which consists of

over 40 patented skin penetration enhancing molecules that help the rapid absorption of
an active agent directly to localised diseased sites. Currently, the topical drug market is
poorly served, owing to the limitation of absorption of active ingredients through the
skin. To its advantage, NexACT technology enables rapid delivery of high
concentrations of active drug through the skin within a short period of time. NexMed’s
product pipeline of new topical products includes therapies for pain and inflammation
of arthritis and sports injuries, antifungals, antivirals, cosmeceuticals and vitamins.
Current development programmes include an off-patent alprostadil (prostaglandin E1)
cream for treating male erectile dysfunction, which has entered phase III clinical trials.
The product, Alprox-TD, is a special cream formulation utilising NexACT skin
penetration enhancement technology. Alprox-TD is a target-delivered cream applied
directly to the tip of the penis at least 15 minutes before sexual intercourse.
The product is expected to offer significant advantages over systemic Viagra in that it is
locally applied, causing fewer systemic side-effects, and would not involve injections or
inconvenience of administration as seen in alternative methods of treating erectile
dysfunction. As impotence affects 10% of the male population worldwide there will be
a greater demand for safe and fast-acting treatments. Pending approval, Alprox-TD will
offer the first topical treatment for male erectile dysfunction in selected international
markets and will be uniquely positioned to compete in the multi-billion dollar
impotence market. Nex-Med is also developing a novel alprostadil product, Femprox,
to treat female sexual dysfunction. The Nex-ACT-based product is expected to have
85
applications in diagnosing circulatory problems as a cause of female sexual arousal
dysfunction in addition to restoring sexual function.
Reformulation strategies for research-based companies
Research-based companies develop and market reformulation drugs for a number of

commercial reasons, the main ones being:
Patent protection and extension;
product line extension and differentiation;
defensive strategy to counter generic and competitor erosion;
brand reinforcement through product line expansion;
sustained revenue with reduced risk;
increased return on initial investment.
Figure 2.9: Commercial benefits of reformulation
Commercial benefits
of reformulation
Patent protection & Sustained revenue

extension with reduced risk
Increased return on Product line extension

initial investment & differentiation
Defensive strategy to Brand reinforcement

counter generic & through product line
competitor erosion expansion
86
Reformulation strategies are now recognised as viable routes of sustaining revenue
following patent expiry and also increasing revenue during the patented period through
novel formats of the active ingredient to maximise sales potential. Since the mid-1970s
research-based drug manufacturers have been using utilising reformulation systems to:
Modify an existing patented compound into a new dosage form or delivery format,
and then market it as a superior product;
apply a drug delivery system to an off-patent drug to improve its performance then
relaunch it;
apply to switch the drug to an OTC non-prescription formulation;
use reformulation technologies to expand the indication e.g. to produce a paediatric

formulation;
develop a franchise for a successful brand or product.
The generics threat
Ultimately, research-based companies want to sustain market dominance for their best-
selling drugs and protect patents as long as possible in the face of strong global generic
competition. The total value of branded products losing value because of patent expiry
has been estimated at between $41–43bn (FDA/Sicignan, 2000), although this figure
could be higher based on the number of products that are competing in the marketplace.
This huge threat of generic erosion has driven more companies to develop
reformulations if only to buy time in the regulatory bottleneck. Paediatric line
extensions for example provide an additional six months of patent protection in the US.
Additionally, Supplementary Patent Certificates (SPCs) both in the US and the EU –
which are the result of regulatory efforts in the US and the EU to compensate
pharmaceutical manufacturers for market exclusivity lost during the regulatory review
process – can yield up to five years of added patent protection.
87
SPCs fall into three marketing exclusivity categories:
Five years of additional market exclusivity may be granted for new active
ingredients;
three years of exclusivity may be granted for a new drug application (NDA) if
another NDA with the same active ingredient has previously been approved and
certain other conditions are met;
three years of exclusivity may be granted for an NDA supplement.
Although a number of interim patent extension options are available as indicated above,
reformulations should be regarded as the key to longer term patent and revenue
protection. Integrating pricing and marketing strategies (i.e. branding and promotional
activities) with reformulation plans will also assist in the quest for sustainable market
dominance (see Chapter 4).
A complementary reformulation product strategy – the way forward?
During the lifetime of a patented drug, research-based companies do have the advantage
of competing with other multinationals and generics firms both during and after
marketing exclusivity, whereas generics companies can only compete after a patent
expires. Product reformulations may offer continued market success during and after
the patented period if the original brand is strong and the new product(s) provide
superior benefits. Nevertheless, cheaper generic alternatives will always be in demand
following patent expiry.
However, to minimise generic erosion post-patent and potentially complete a

compounds’ reformulation lifecycle, the introduction of a low priced generic
formulation would logistically complement the branded product range. Following
expiry of the original substance patent, the company’s own generic formulation could
effectively compete with alternative generic forms, ‘me-too’ products, and the
company’s own next generation reformulations (see Figure 2.10).
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Figure 2.10: Theoretical reformulation strategy for research-based companies
to sustain market leadership
REFORMULATION STRATEGY
Rx branded
product line
reformulations
OTC
formulation
Generic
Original
PRODUCTS reformulation
patented
Patent expiry
Patent
extension
20 year initial patent period
Companies such as Novartis, that have their own generics division or contract
manufacturing alliances with generics firms, will ease the transition of competition to
the generics sector. Such a strategy not only reduces external generic sales erosion, but
also preserves some of the branded reformulation revenue owing to reduced sales from
competing companies offering possibly inferior generic equivalents.
Case study – Protecting revenue streams with branded generics: BMS’ Capoten
BMS, for example, successfully chose to compete in the German generics market when
its blockbuster Capoten came off patent. Capoten is indicated for mild to moderate
hypertension and was the first ACE inhibitor to be launched in 1980. In 1996, the
product had sales just over $1,000m, but sales fell by 27.1% between 1996 and 1997, to
$795m in 1997, after Capoten’s US patent expired in 1996. The patent had originally
been due to expire in 1995 but BMS obtained a 12-month extension under GATT. In
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subsequent years, sales have continued to fall and reached $484m in 1999 and $356m
in 2000.
Figure 2.11: Global sales of BMS’ Capotent, 1993–2000
1,600 1,530 1,545

1,470
1,400
1,200 1,091
1,000
Sales ($m)
795
800
636
600 484
356
400
200
0
1993 1994 1995 1996 1997 1998 1999 2000
Source: Author’s research & analysis, company reports
Although Capoten’s sales generally declined, BMS succeeded in protecting its revenue
streams in individual markets, in this case Germany, through the introduction of
branded generics. The German patent on captopril expired in February 1995, prior to
which BMS and the German company, Schwarz Pharma, held nearly 50% of the
German ACE inhibitor market with their respective captopril brands, Lopirin and
Tensobon.
To reduce the impact of looming generic competition, BMS launched two additional
captopril brands, Acenorm and Capto-ISIS, nearly 12 months before the patent was due
to expire. To this end, BMS collaborated with Azupharma and Schwarz Pharma’s
generics subsidiary, ISIS Pharma. Two further brands were launched in 1994 at a 26%
average discount to the original brand. Before the German patent expired, the additional
brands were able to capture a significant proportion of the generics market, which
proved to be highly competitive once the patent on captopril had expired. Competition
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was so fierce that the 45% price discount of the first ‘true’ generics was soon beaten by
discounts in the region of 75% compared to the original brands.
In the long term, the strategy chosen by BMS in Germany nevertheless proved to be
worthwhile, since nearly two years after the patent had expired, the original and second
brands still held a value market share of over 80% (Foerster et al., 1997). Since BMS
did not have an in-house generics business, the company benefited significantly from
collaborating with Schwarz Pharma’s generics arm.
Rx-to-OTC switching
Furthermore, the switching of an off-patent branded drug to an OTC formulation could

also enhance sales and even protect patents in the short-term. For example, in the US,
Rx-to-OTC switching may extend market exclusivity for a further three years under the
Waxman-Hatch Act, where exclusivity is granted under special circumstances. Clinical
studies to support a switch to OTC status may be considered as relevent to this end and
the FDA must recognise the studies as essential to the switch.
Although this strategy might not be suited to all drugs, it could provide another avenue
to protect products from generic erosion.
Using a complementary reformulation strategy, revenue protection is guaranteed

through the commercialisation of new patented, generic and OTC formulations. The
high return on investment is set against an additional 20–30 years of patent protection
through individual reformulations plus market presence of an own-brand generic
formulation to stave off competition in all sectors after all reformulation patents expire.
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Drivers of successful reformulation strategies
The success of any reformulation, however, ultimately depends on a company’s

economic motivation to introduce reformulated products across prescription and OTC
sectors, in addition to other important factors:
‘There must be a well defined market opportunity, corporate motivation to

complete a partnership for reformulation; good medical rationale; good
understanding of the pharmacokinetic requirements of the reformulated
product; and good understanding of the technology that is mature enough to
help mitigate the risks inherent in pharmaceutical product development.’
Specialist drug delivery industry executive
Reformulation strategies for generics companies
Generics companies compete in the marketplace by manufacturing cheaper equivalents

of a branded drug after the substance patent expires. Since 1984, the Bolar provision of
the Waxman-Hatch Act allowed US generics companies to develop versions of patent-
protected products whilst the original patent is still in force. As part of the ruling,
generics companies can submit an abbreviated new drug application (ANDA) to the
FDA, together with proof of bioequivalence. This means that generic manufacturers can
effectively launch their versions on the day the original patent expires, since they can
build up stocks ahead of the expiry date.
The generics opportunity
As the global healthcare industry is becoming further squeezed by cost-containment

initiatives such as the use of essential drug lists and formularies that recommend the
prescribing of cheaper generic drugs over more expensive branded products, the
generics sector is well positioned for high value and volume growth. Additionally, the
next five years will see 24 of the world’s best-selling drugs come off-patent in the US –
the world’s largest pharmaceutical market. Despite intense competition from rival
generics firms and the expected fierce patent litigation from multinationals, these
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expiries open up vast opportunities for generics companies to expand their market
share.
Reformulation = differentiation
Like their research-based counterparts, generics companies are discovering that

reformulations can offer distinct benefits over competitor products. In the case of the
saturated generic markets, the advent of superior drug delivery-based generics can
differentiate a product from less efficacious products. Until recently, the main strategy
employed by generics companies was to merely produce a fast-to-market bioequivalent
version of the patented product. Today, a generics company’s strategic approach is
more inclined involve the following:
To rapidly market proven bioequivalent generic versions of branded products;
to rapidly market reformulations of the original version with better medical benefits
i.e. ‘supergenerics’;
to produce OTC generic formulations of branded products.
The reformulation option is increasing in popularity within the generics sector as

companies try to bolster their profit margins in the face of intense competition. By
developing reformulated ‘supergenerics’ companies can effectively compete with not
only generic competitors but also ethical drug manufacturers. As a growing number of
generics companies implement proactive reformulation strategies, multinationals will
be forced to re-evaluate their own product strategies in the face of more sophisticated
post-patent expiry competition.
The most important aspects of reformulation strategies for generics companies include
the ability to be the first or second to market with new prescription-only and OTC
formulations of the selected branded pharmaceutical. Additionally, the company’s
ability to offer the highest level of service to healthcare providers and customers is
necessary to promote the product(s) in the competitive marketplace.
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Drivers of success
Drivers of success in the generics reformulation domain include the following:
A focused R&D strategy to capitalise on the most profitable therapeutic category;
a focus on the process by which they can optimally exploit the exclusive rights of
R&D-based companies;
technological competence to reformulate;
efficient manufacturing capabilities;
a high profile marketing campaign; and a robust relationship with distributors to

ensure timely delivery and distribution of products.
With these factors in place, the generic firms will be well positioned to secure a
competitive advantage with their new reformulated products, thereby achieving a
leading share of the market.
Case study – the importance of strategic R&D focus for reformulation success:
Andrx
Successful generics manufacturer Andrx incorporates proprietary oral controlled-

release drug delivery systems to improve a drugs’ efficacy, reduce side effects, lower
dosing frequency and improve compliance. The company uses its reformulation
systems to develop bioequivalent versions of high volume pharmaceuticals nearing
patent expiry, and to differentiate branded products. A good example of the importance
of a focused R&D strategy concerns Andrx’s development of generic Prilosec
(omeprazole). The company’s ANDA filing for the world’s highest selling drug is
believed to be the first, and if Andrx wins the current litigation with AstraZeneca over
the drug, it has the potential to have a significant positive impact on Andrx’s revenues.
Andrx received tentative approval in March 2000 and will be awarded the 180 days
marketing exclusivity associated with being the first to file an ANDA once the final
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approval is given. This is currently held up until the expiration of AstraZeneca's
composition of matter patent. In January 2001, Andrx received a US patent for the
tablet formulation of omeprazole, which utilises the company’s Stabilised Tablet
Delivery System. The formulation differs from AstraZeneca’s Losec by avoiding the
need to use a coating layer to separate the omeprazole core from the enteric coating
layer.
If the launch of generic Prilosec is successful, Andrx will be able to establish a name
for itself in the gastrointestinal market and, as the company is also covering other major
drugs, including the blockbusters Claritin and Glucophage, it should also establish
market awareness in further sectors.
Andrx also markets high value generic drugs with modified release capabilities such as
extended-release diltiazem products (Cartia XT/Diltia XT) for hypertension, which
achieved sales of $134m in 1999. These formulations are expected to provide sustained
revenue along with an array of pipeline reformulated generic products close to market.
Furthermore, to optimise its revenue stream the company also out-licenses the rights to
its technologies to other pharmaceutical companies to reformulate their own products.
In particular, Andrx has worked with Bayer to reformulate the two OTC products
(Aleve Cold and Sinus medicines). Bayer filed an NDA for the first of these in 1999.
Andrx now has a strong generic and branded drug platform, with sales, marketing and
distribution capabilities. The focused strategy of reformulating leading off-patent
compounds into generic and OTC products has proved to be very successful in gaining
market share for the company in the fiercely competitive generic environment.
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Chapter 3 Reformulation for Leading
Drugs: Case Studies 2000–
2005
Summary
Between 2000–2005, 31 global best-selling drugs are scheduled to come off-

patent – 24 will lose marketing exclusivity in the US and 7 that will lose
exclusivity in other territories around the world.
At least 60% of patented drug manufacturers with looming patent expiry have
opted to reformulate their drugs into improved versions that aim to prolong patent
protection and conserve revenue, while offering greater benefits for the patients in
terms of administration, efficacy, tolerability, and compliance.
From 2006, reformulated products of leading blockbuster brands are expected to

account for an estimated $33bn in annual sales.
For the companies that do not take advantage of the reformulation route to
optimise their molecule and extend patent and revenue protection, an estimated
$12bn in sales revenue may be absorbed by competition during the collective 12
months post patent expiry.
There are 12 multinationals with drugs that have recently expired or are
approaching patent expiry that have been identified to benefit from reformulation.
They include: Abbot’s Hytrin, Pfizer’s Procardia XL, Roche’s Rocephin,
AstraZeneca’s Zestril, Merck’s Prinivil and Mevacor, Sankyo’s Mevalotin,
BMS’s Taxol, Pfizer’s Celebrex, Amgen’s Epogen, BMS’s Pravachol, and
Pfizer’s Zoloft.
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Introduction
Between 2000–2005, 31 leading drugs are scheduled to come off-patent – 24 of which

will lose marketing exclusivity in the US and 7 that will lose exclusivity in territories
around the world (Table 3.18). Approximately 61% of the drug manufacturers have
opted to reformulate their drugs into improved versions that aim to prolong patent
protection and conserve revenue, while offering greater benefits for patients in terms of
administration, efficacy, tolerability, and compliance. From 2006, reformulated
products of leading blockbuster brands are expected to account for an estimated $33bn
in annual sales value.
Reformulation therefore represents an extremely attractive option to sustain a product’s

market share and claw back ethical revenues for these highly lucrative products in the
face of declining sales and patent expiry. For the companies that do not take advantage
of the reformulation route to optimise their molecule and extend patent and revenue
protection, an estimated $12.3bn in sales revenue may be absorbed by generic
equivalents during the collective 12 months post patent expiry. Considering the huge
initial R&D investments for these leading drugs and the high costs involved for
developing and marketing NCEs, a reformulation strategy to lengthen and strengthen an
existing drug’s presence in the market represents a worthy low risk venture to
rejuvenate the commercial life of the patented molecule.
The reformulation strategies of the world’s 19 best-selling drugs that are due to lose
patent protection between 2000 and 2005 are discussed below in addition to strategic
appraisals of 12 leading drugs where no reformulation plans are indicated.
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Table 3.18: Leading drugs with patent expiration between 2000 and 2005
and reformulation opportunities
Estimated annual
revenue potential
($m) for
Sales $m of reformulated
Patent original brand product(s) (post
Company Brand Generic Reformulation Expiry 2000 2005e patent expiry)
Abbott Hytrin Terazosin Not known 2000 776 259 0
BMS Glucophage Metformin Glucophage XR 2000 1732 690 1200
Lilly Humulin Insulin Various 2000 1115 960 1000
MSD Vasotec Enalapril Innovace Melt 2000 2100 650 1300
MSD Pepcid Famotidine OTC/ 2000 850 360 600

Pepcid AC
Pfizer Procardia Nifedipine Not known 2000 488 73 0
XL
Roche Rocephin Ceftrioxone Not known 2000 1013 800 0
Abbott Biaxin Clarithromycin Biaxin XL 2001 1241 1200 1200
AZ Losec Omeprazole Losec MUPS 2001 6260 2000 4100
AZ Zestril Lisinopril Not known 2001 1188 740 0
MSD Prinivil Lisinopril Not known 2001 1075 500 0
Bayer Cipro Ciprofloxacin Various 2001 1645 900 900
Lilly Prozac Fluoxetine Prozac Weekly/ 2001 2574 500 1500
extended-
release
MSD Mevacor Lovastatin Not known 2001 520e 408 0
Novo Novolin Insulin Various 2001 1591 900 1200
Nordisk
Lilly Axid Nizatidine In development 2002 321 200 300
GSK Augmentin Coamoxiclav Various 2002 1845 2150 1900
Pfizer Zithromax Azithromycin Various 2002 1382 1000 1100
Sankyo Mevalotin Pravastatin Not known 2002 1510 880 0
S-P Claritin Loratidine Various 2002 3011 2100 2500
Takeda/ Takepron Lansoprazole Modified- 2002 2500 1800 2150
TAP release
BMS Taxol Paclitaxel Not known 2003 1592 1000 0
Pfizer Celebrex Celecoxib Not known 2003 2614 4495 0
GSK Flixotide Fluticasone Various 2003 1332 2100 1700
Amgen Epogen Epoeitin alpha Not known 2004 1962 2200 0
J&J Procrit Epoeitin alpha Injectable 2004 2709 2100 2400
sustained-
release
Pfizer Diflucan Fluconazole Various 2004 1014 300 650
BMS Pravachol Pravastatin Not known 2005 1817 2300 0
MSD Zocor Simvastatin Combination 2005 5280 6000 5600
product
Pfizer Zoloft Sertraline Not known 2005 2140 1700 0
GSK Seroxat Paroxetine Modified- 2005 1332 2100 1700
release
TOTAL 33952 43365 33000

Key:
AZ = AstraZeneca
GSK = GlaxoSmithKline
MSD = Merck Sharp & Dohme
S-P = Schering-Plough
Source: Company reports, Datamonitor forecasts
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Reformulation for patent expiry in 2000
In 2000, seven of the world’s leading drugs were scheduled to come off-patent. These
included:
Hytrin (terazosin; Abbott);
Glucophage (metformin; BMS);
Humulin (insulin; Eli Lilly);
Pepcid (famotidine; Merck & Co);
Vasotec/Vasoteric (enalapril; Merck & Co);
Procardia XL (nifedipine; Pfizer);
Rocephin (ceftriaxone; Roche).
Abbott: Hytrin
Product profile
Abbott’s Hytrin (terazosin hydrochloride) was first launched as an anti-hypertensive

drug in 1987, but was also approved as a treatment for benign prostatic hyperplasia
(BPH). The condition, which affects up to four million men in the US, causes
enlargement of the prostate resulting in urinary incontinence, irritation and discomfort
during urination. Hytrin was a leading drug for treating BPH with sales reaching $776m
in 2000.
Prior to terazosin’s patent expiry, Abbott was involved in patent litigation cases with
US-based companies Zenith Laboratories and Geneva Pharmaceuticals who applied to
market generic terazosin. In 1998, both lost their cases against Abbott but entered into a
mutual agreement: under the resolution Zenith acknowledged the validity of Abbott's
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patents and refrained from selling a generic version of terazosin hydrochloride until the
expiration of the US patent; Geneva agreed that it would not market its FDA-approved
generic terazosin hydrochloride capsules until resolution of pending litigation between
the parties. However, in August 1999, Abbott and Geneva terminated their April 1998
agreement and Geneva consequently entered the market with its generic product. The
financial details of the agreement were not disclosed.
In 1999, Abbott also entered into a collaboration with Boehringer Ingelheim to

distribute and co-promote Boehringer’s leading benign BPH treatment, Flomax
(tamsulosin HCl) in the US. The product was licenced from Yamanouchi
Pharmaceuticals and was introduced into the US market in October 1997. Since its
launch it has become the most commonly prescribed BPH medication by urologists,
attaining 30% total market share in the first half of 1999. Over the next five years, it is
estimated that Flomax will become the leading BPH treatment achieving 20% growth
in the US BPH market currently estimated to be $500m. The agreement with Abbott
was based on it being one of the most experienced marketing partners in the field of
BPH with the collaboration expected to put Abbott in a leading position in the
treatment of BPH. Under the terms of the agreement with Boehringer Ingelheim,
Flomax will be promoted in the US by both companies; however the terms of the deal
were not disclosed.
Abbott’s promotion of Flomax in preference to its own Hytrin product will inevitably
erode sales that are estimated to decline to $259m by 2005 (Table 3.19).
Table 3.19: Global sales of Hytrin, 1999-2005
($m) 1999 2000 2005
Sales 652 776 259
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Strategic review
Although the patent for Hytrin expired in 2000, there are no indications that Abbott is
reformulating the drug from its once-daily multi-dose softgel capsules (1mg, 2mg, 5mg
and 10mg dosage). Moreover, the company is currently researching a promising new
compound for BPH, which is aimed at improving the active lifestyle of adult patients
and could supersede both Hytrin and Flomax.
In the interim, Abbott’s strategy appears to focus on simultaneous marketing and

promotion of the leading Flomax drug and off-patent Hytrin. Facing the prospect of
generic erosion, a reformulation of terazosin might confer additional benefits over the
branded product, possibly by reducing systemic side-effects and offering a localised
therapy, such as with a rectal suppository formulation. Another consideration to the
advantage in commercialising a reformulated terazosin product is the time to market for
the new BPH product in R&D. Reformulating Hytrin to extend its patent until the new
drug is launched would be an option for Abbott to maximise on the molecule and
sustain revenue in the short-term, which would otherwise be lost to generic
competition.
Bristol-Myers Squibb: Glucophage
Product profile
Glucophage (metformin) improves insulin sensitivity by increasing the peripheral

utilization of glucose. It acts act mainly by augmenting insulin secretion and is
consequently effective only when some residual pancreatic beta cell activity is present.
The drug was approved in the US in 1994, either as first line monotherapy, or for
combination use with existing drugs when they do not reduce glucose levels
sufficiently. Glucophage has gained its significant market share due to the benefits that
it holds over oral sulphonylureas - an older class of antidiabetic drugs. Such benefits
include weight loss rather than the weight gain and associated benefit of reducing the
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risk of cardiovascular disease. In addition, use of Glucophage is not associated with
hypoglycaemia.
During 2000, sales of Glucophage increased 31.5% to $1,732m (Table 3.20). This was
due to the FDA approval of Avandia in combination with Glucophage for the treatment
of type II diabetes. Avandia, a GSK product and is being co-promoted by BMS in the
US.
Table 3.20: Global sales of Glucophage, 1998–2005
($m) 1998 1999 2000 2005
Sales 861 1,317 1,732 690
Strategic Review
As Glucophage is the leading prescription drug for type-II diabetes in the US with more
than 5 million patients with diabetes benefit from the drug, a reformulation strategy to
optimise its long-term sales and extend patent protection was a prudent move by BMS.
First the company extended the patent by six-months as a result of paediatric
exclusivity to September 2000. This was granted on the basis that BMS could perform
clinical studies to assess the safety, efficacy and pharmacokinetic profile of Glucophage
in paediatric populations.
Second, prior to patent expiry in March 2000, BMS submitted a NDA for Glucophage
XR (metformin hydrochloride) – a once-daily extended-release formulation of
Glucophage. In October 2000, the company received FDA approval for the product,
which is designed to offer people with type-II diabetes a more convenient option to
better manage their condition over current oral hypoglycaemics, which require multiple
dosing throughout the day. Glucophage XR is intended to help patients control their
blood sugar by making it easier to comply with their daily treatment regimen.
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Additionally, BMS received FDA approval in 2000 for Glucovance (glyburide and
metformin HCl tablets) – the first unique combination drug that combines the two most
widely prescribed oral anti-diabetic agents in a single tablet. These agents act
synergistically to improve glycaemic control in patients with type-II diabetes.
Glucovance works by targeting two of the main causes of type-II diabetes and may
provide a new treatment option for the more than 14 million patients who cannot
adequately manage their condition with diet and exercise alone, according to BMS.
BMS’s three-pronged strategy to prolong the patent and sustain the revenue stream for
metformin included reformulating the compound into an extended-release and
combination products whilst still marketing the original. The company’s anti-diabetic
product range now includes:
Glucophage;
Glucophage XR;
Glucovance/Avandia.
Glucophage XR is expected to maintain market dominance over Glucophage based on

its convenient one-a-day dosage, which compares favourably with administration of
sulphonylureas and twice-daily or more dosing of Glucophage.
Revenue erosion from the competitor products is not likely until 2002: GSK has a
glitazone product in development (BRL 49653). Takeda and Lilly’s glitazone, Actos
(pioglitazone) is expected to gain a significant portion of the market given its low
dosing requirements whilst maintaining efficacy compared to troglitazone.
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Eli Lilly: Humulin
Product profile
Humulin is a recombinant insulin originally developed by Genentech, which was

launched in 1982. It is a popular product with more than 4 million diabetics worldwide
using it daily. The Humulin brand remains Lilly’s leading product range consisting of
several formulations of recombinant human insulin (with different durations of action
and onset times) that are available in different delivery formats. In 1996 Eli Lilly
launched the first insulin analog, Humalog (insulin lispro injection (rDNA original)), in
the US, which, together with novel pen delivery formulations of Humulin, are expected
to sustain market share in the insulin sector following patent expiry of Humulin in
2000.
Datamonitor forecasts Humulin sales of $1,240m in 2001, falling to $1,050m in 2004

and $960m in 2005 (Table 3.21).
Table 3.21: Global sales of Humulin, 1998–2005
($m) 1998 1999 2000 2001 2004 2005
Sales 959 1,065 1,115 1,240 1,050 960
Strategic review
Eli Lilly has continued to cleverly develop its insulin product range in the face of patent
expiry through two strong product line routes, namely Humulin and Humalog.
Approximately 14 years after Humulin was launched, Lilly introduced its first insulin
analog (Humalog) in the US in 1996. Three years later it launched three new US
products delivering insulin through a pen device: Humulin 70/30, Humulin N and
Humalog. In 2000, Lilly launched the Humalog Mix75/25 Pen – the first insulin premix
to contain the rapid-acting insulin Humalog. Benefits of the pen-based products over
traditional needle and syringe included convenience in transport, administration, and
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storage of insulin in a lightweight, pocket-sized, disposable device and portable insulin
vials. Furthermore, the pens are adjustable allowing controlled delivery of the drug to
meet personal requirements.
This multi-product development strategy has enabled the company to offer a diverse
range of insulin formulations tailored to patient groups with varying medication and
lifestyle requirements. The Humulin Pen systems offer a novel and convenient way to
administer Humulin extending the product line and sustaining revenue protection for
the brand in six formulations:
Short Acting Humulin R;
Intermediate acting Humulin N;
Intermediate acting Humulin L;
Long Acting Humulin U;
Premixed Humulin 70/30;
Premixed Humulin 50/50.
Lilly’s Humulog product range includes Rapid Acting Humalog and Premixed
Humalog Mix 75/25. Humalog is recommended for use with a longer-acting insulin,
except when used in combination with sulfonylureas. Humalog is a mealtime insulin
that offers people with diabetes convenience, control and flexibility according to Lilly.
Its rapid action mimics the body's insulin activity following meals; and Humalog Mix
75/25 is a rapid onset hypoglycaemic that is more effective than regular human insulin,
allowing for convenient dosing immediately before a meal (within 15 minutes).
Lilly has also marketed Actos (pioglitazone HCL), which is indicated as an adjunct to
diet and exercise to improve glycaemic control in patients with type-II diabetes and
completes the company’s diabetes product line.
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In summary, Lilly’s reformulations of Humulin and Humalog offer choice and
flexibility to the patient over injectable and oral hypoglycaemic drugs. The product
range is expected to sustain market dominance until the advent of more convenient
insulin products hit the market such as inhaleable insulin, which is being championed
by Inhale Therapeutics and Pfizer. Lilly’s novel short-acting inhaleable powder insulin
formulation is currently in phase II trials, but is not expected to reach the market until
2004 or later. The market impact of Inhale’s inhaleable insulin product is expected to
significantly impact on Lilly’s share of the insulin market. Inhaleable reformulations of
Humulin and Humalog would potentially offer additional value to Lilly’s product range
and further protect and extend revenue streams if pulmonary delivery of insulin was
integrated with the company’s diverse formats already on the market.
Merck & Co.: Vasotec
Product profile
Vasotec (enalapril) is indicated for hypertension and was one of the first ACE inhibitors
to be marketed. Since its launch in 1984, many ‘me too’ products have also entered the
market, leaving the product largely undifferentiated from other ACE inhibitors. Despite
this, Vasotec has been regarded as the gold standard in the treatment of hypertension.
The patent for Vasotec expired in August 2000 after gaining six-month paediatric
exclusivity in the US. Patents for enalapril have already expired in several countries,
including Germany, Japan and Finland in late 1999. However, protection for enalapril
in major markets such as the UK, France and Italy, has been extended through SPCs
with expiry dates between October 2002 in the UK and August 2009 in Italy.
Vasotec benefits from several additional indications, which have increased the patient
potential for the drug, including heart failure and asymptomatic left ventricular
dysfunction (LVD). The drug is also highly rated on grounds of efficacy, safety, dosage
interval, hepatic bioactivation, interactions, dosage forms and cost when compared with
competitors for the treatment of hypertension and congestive heart failure.
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Following patent expiry in 2000, global sales of Vasotec are expected to decrease to
$1,080m in 2001 and $220m in 2005 (Table 3.22). These estimations are based on the
widespread launch of generic enalapril, which was first introduced to the market in
September 2000 and resulted in a significant drop in market share for Vasotec with a
corresponding increase in market share for enalapril. Brand erosion of at least 75% was
seen in the US when generic enalapril entered the market.
Table 3.22: Global sales of Vasotec, 1998–2005
($m) 1998 1999 2000 2001 2004 2005
Sales 2,400 2,305 1,790 1,080 340 220
Strategic review
Vasotec was the leading ACE inhibitor prior to 1998, and although it has now been
taken over by Pfizer’s calcium-channel blocker Norvasc (amlodipine), which achieved
sales of $3,362m in 2000, it still remains a billion-dollar blockbuster drug.
Although substance patent expiries of Vasotec in 2000 resulted in a 22.3% decrease in

sales to $1,790m, the full impact of generic enalapril will not be known until 2001.
Merck’s other ACE inhibitor, Prinivil, is also patent protected until 2001 and might
help sustain market share for the therapeutic sector. However, Merck’s angiotensin II
antagonist class products, Cozaar and Hyzaar, have been actively promoted in favour of
Vasotec in light of the patent expiries – drugs that are recognised as highly effective
and well tolerated. In 2000, sales for these products grew by 24% maintaining strong
leadership in their class reaching collective revenue of $1.7bn in 2000. Despite growing
competition, physicians are increasingly prescribing them for more than 10 million
patients worldwide according to the company. Switching the Vasotec patient population
to Cozaar would also be a safer long-term strategy as the patent is protected until 2009.
In addition the Vasotec brand could be fully exploited by being co-promoted and co-
marketed in a ‘bundled’ treatment package for cardiovascular disease along with
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Cozaar and Hyzaar to sustain market share. This will be particularly suited to markets
such as France where generics are not widely accepted. However, since Cozaar’s
launch, many new me-too products have entered the market, but in some territories
Merck has introduced a once-daily formulation to improve patient benefits and
compliance.
Facing the introduction of low cost generic enalapril and other therapeutic competitors
that will almost certainly reduce sales of branded Vasotec, Merck developed a number
of new formulations of Vasotec, to protect its sales. These include the development of
Innovace Melt - the Zydis formulation in-licensed from RP Scherer, which dissolves in
the mouth allowing for easier dosing. This technology improves the efficacy of the
product and will help to protect future sales. Although Innovace Melt is differentiated
from competing products via improved drug delivery, it is still likely to suffer strong
competition from newer products and less effective, but markedly cheaper generics.
Although reformulations of Vasoteric will help sustain its market share in the presence
of cheaper generics, Merck’s strategy appears to be to persuade physicians to either
remain loyal to the brand or switch to its superior class of anti-hypertensives, the
angiotensin II antagonists. Despite the success of its reformulation plan, there is still
potential for Merck to offer a superior branded enalapril product based on the number
of new delivery technologies available. For example a chronopharmacological
reformulation might offer improved assurance for the patient during sleep or offer
benefits at waking time when the body’s natural circadian rhythms affect blood
pressure changes the most. Applying new technologies to enable Vasotec to become a
once-weekly formulation might also help sustain market share of the product.
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Merck & Co.: Pepcid
Product profile
Merck’s Pepcid H2-receptor antagonist (famotidine), indicated for the treatment of

gastro-oesophageal reflux disease and gastric ulcers, entered the market in 1986. It
works by reducing basal, nocturnal and stimulated acid secretion thereby accelerating
peptic ulcer healing and reduces relapse rate.
The brand is well established with sales exceeding $1.1bn in 1998. Despite strong
competition from GlaxoSmithKline’s best-selling peptic ulcer drug, Zantac. worldwide
prescription sales of Pepcid were $850m in 2000; however the introduction of generic
famotidine in 2001 is likely to erode sales significantly. By 2005, product sales are
expected to fall to $360m (Table 3.23).
Table 3.23: Global sales of Pepcid, 1998–2005
($m) 1998 1999 2000 2005
Sales 1,110 910 850 360
Strategic review
The patent for Pepcid was due to expire on 15 October 2000, but Merck gained
paediatric exclusivity for a further six months to 15 March 2001. Rather than
reformulate prescription Pepcid in the competitive prescription-only antacid and
gastroesophageal reflux market, Merck opted to switch the product to an OTC antacid
formulation – Pepcid AC. The rationale being to develop blockbuster OTC products in
the face of patent expiry for blockbuster prescription products. The approach has been
successful in that the launched OTC formulation gained up to 22% of the indigestion
market in some market territories at the expense of older antacid products. In
partnership with Johnson & Johnson, Pepcid AC was launched in a different dosage
and indication over the original brand, claiming that the new formulation prevented and
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cured heartburn, which was hoped to differentiate it from competitor products.
Subsequently, Pepcid AC achieved significant market share in countries such as
Sweden through its strong branding campaigns and differentiation in the marketplace.
A recent study, published in May 2001, also revealed that an evening dose of OTC
Pepcid AC is faster and more effective at suppressing night-time stomach acid than a
second dose of Prilosec.
The introduction of the OTC Pepcid formulation is expected to offer longer-term value
to Merck’s antacid and anti-ulcer product range despite losing substance patent
protection for Pepcid in 2001. A reformulated, greater strength prescription brand of
famotidine might also offer greater market potential for Merck in the long-term to
compete with generic famotidine, which is already on the market.
Other companies who recognise the huge market opportunity in the anti-ulcer/antacid
market are also developing superior formulations of Pepcid. For example, US-based
Penwest Pharmaceuticals announced in May 2000 that it received approval in Spain for
a generic version of famotidine utilising the company’s ProSolv technology. The
reformulated product is expected to significantly enhance patient compliance while
improving the market position of the drug. According to the company, the commercial
benefits of the technology platform include a cost-effective direct compression
formulation, more compact, easier-to-swallow tablets, with increased levels of the
therapeutic drug and reduced levels of excipients, and a rapid scale-up.
Pfizer: Procardia XL
Product profile
Pfizer’s calcium antagonist Procardia (nifedipine) was originally launched in 1982 for
the treatment of both hypertension and angina. Its major therapeutic effects are
vasodilation, coupled with a reduction in peripheral resistance, blood pressure and
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afterload. The drug is often used in combination with a diuretic or beta-blocker for the
treatment of both hypertension and angina.
Procardia began to lose patent protection in 1991 but three years prior to expiry it
launched Procardia XL, an extended-release formulation of nifedipine utilizing Alza’s
oral osmotic drug delivery system (OROS) reducing the dosing requirements of
nifedipine from three times to a once-daily dosing. The reformulation of Procardia
successfully generated an additional $9.1bn of sales for Pfizer between 1990 and 2000,
relative to the $542m achieved by Procardia over the same period. By 2005, sales of
Procardia XL are estimated to decline to $73m (Table 3.24).
Table 3.24: Global sales of Procardia XL, 1999–2005
($m) 1999 2000 2005
Sales 521 488 73
Strategic review
Pfizer has successfully reformulated nifedipine to maximise and protect its value and
sales potential for an additional 16 years following patent expiry of the original brand.
Although patent expiry of Procardia XL was in 2000, the reformulated product is still
protected under Alza’s OROS technology patent until 2007 and will continue to bring
in revenue for Pfizer despite generic erosion. The reformulation of nifedipine under
patent represents a significant barrier to generic companies wishing to market generic
extended-release nifedipine without infringing Alza’s patents. However in 2000, Mylan
became the first company to launch a generic version of Procardia XL, after settling a
patent litigation suit with Pfizer in March 2000. The product was developed in
conjunction with Penwest and utilised the company’s TIMERx technology - a
polysaccharide-based gel matrix delivery system. The system was not found to infringe
Alza’s technology and proved to be bioeqivalent to Procardia XL. Under the terms of
the patent suit resolution, Pfizer will manufacture the product and Mylan will sell it
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under its own generics label. Although Pfizer will receive royalties and manufacturing
revenues from Mylan, the latter is likely to be able to offset these fees by the sales of its
generic version of Procardia XL, which could rapidly reduce those of Procardia XL
once the product is launched.
Although a number of companies have attempted to develop nifedipine with alternative

delivery systems, there has been a number of failures in this area owing to the
difficulties of producing a drug which is comparable to OROS-enhanced Procardia XL
– the exception being Mylan.
Procardia XL did play an important role in sustaining market dominance for Pfizer’s
cardiovascular franchise until the launch of Norvasc, which reached blockbuster sales
in 1995. Norvasc is an anti-hypertensive with a slow onset of action, which is marketed
worldwide for the treatment of hypertension and angina. The dosing schedule is either
5mg or 10mg once daily, without the need for any drug delivery technology since the
drug has an ultra-long duration of action (plasma half-life 36 hours). Its key strengths
are its once daily dosing, its efficacy in a wide range of hypertensive patients and its
low side effect and interaction profile. Once daily dosing is a key feature for an anti-
hypertensive drug. This encourages compliance with therapy and the associated slow
onset or cessation of action contribute to fewer side effects.
Sales of Norvasc (amlodipine besylate) are estimated to reach $3.3bn in 2000 and the
drug has overtaken Procardia XL to become not only Pfizer's leading cardiovascular
product, but also the company's top-selling drug globally. Together with Procardia XL,
the company’s cardiovascular franchise is not expected to decline dramatically in terms
of market share despite cannibalisation of Procardia XL through generic extended
release equivalents and promotion of Norvasc in preference to Procardia XL.
The strategy of line extensions through reformulation is clearly very successful as

shown in the case of Pfizer’s Procardia XL. Although a rapid decline of sales of the
original product were expected after patent expiry, the new formulation was shown to
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more than compensate in increased sales far beyond the patented period and in the
presence of generic equivalents. Here reformulation is highly beneficial as a stop-gap in
circumstances where new drugs will not be available to take over from pre-existing
drugs whose patents are due to expire. Although the window of opportunity for
reformulation may be small as in this case, it could potentially be worth billions in
terms of annual product revenues.
Roche: Rocephin
Product profile
Roche’s Rocephin (ceftriaxone) is a third generation broad-spectrum cephalosporin

indicated to treat infections due to sensitive gram-positive and gram-negative bacteria,
including lower respiratory tract infections, skin and skin structure infections, urinary
tract infections, uncomplicated gonorrhoea and acute otitis media. The product is also
approved for use as a surgical prophylaxis agent. Rocephin’s main advantage is that it
has a long life in plasma and does not need to be injected more than once daily. Its use
has been increasing in hospitals, especially in the US where it has been recommended
by the US Center for Disease Control and Prevention for use in acute otitis media
sufferers not responding to treatment with amoxicillin after three days.
Rocephin is Roche’s biggest selling product. In 2000, its sales reached $1,013m,
showing a slight decline on 1999 levels. By 2005 sales will further decline to an
estimated $800m (Table 3.25).
Table 3.25: Global sales of Rocephin, 1998–2005
($m) 1998 1999 2000 2005
Sales 1,083 1,170 1,013 800e
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Strategic review
Rocephin was introduced to the market in 1982 as an intravenous or intramuscular

injection administered once a day. It has a wider range of applications and spectrum of
activity than first and second-generation cephalosporins. Competition for Rocephin
comes from a number of quinolones, including Bayer’s Cipro and generic versions of
ceftriaxone. Sales of Rocephin are expected to decline slowly owing to a number of
factors including: increased commercialisation of generic ceftriaxone; reduction in the
number of prescriptions of antibiotics due to healthcare budgets; and the emergence of
resistant strains of bacteria.
Expecting more intense competition, Roche has sought to expand the indication and
sustain revenue protection for Rocephin in the US by launching One-Shot Rocephin for
otitis media. In addition, the company is developing a once-daily broad spectrum,
injectable/oral quinolone antibiotic. Because Rocephin has a unique position in its class
and the brand is well established it remains to be challenged only by the continued
growth of GSK’s Zinnat, which is patent protected until 2003.
However, reformulating ceftriaxone to a more convenient delivery system such as oral

administration might serve to improve patient acceptance and enable the drug to be
administered in an out-patient setting, potentially enhancing sales potential
significantly. The product also could uniquely address administration unmet needs by
being the only once-daily intravenous broad-spectrum antibiotic on the market, which is
appropriate for patients for whom there is no adequate alternative. Non-invasive
delivery of ceftriaxone might, however, also serve to protect the molecule’s long-term
revenue potential far beyond the existing patent period. By moving its blockbuster into
the retail business outside hospitals, Roche would be in a far better position to build
and defend Rocephin’s brand, an issue becomingly increasingly important following the
expiry of its patent.
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Reformulation for patent expiry In 2001
In 2001, drugs scheduled to lose original substance patent exclusivity in the US

include:
Biaxin (clarithromycin; Abbott);
Prilosec (omeprazole; AstraZeneca);
Zestril (lisinopril; AstraZeneca);
Prinivil (Merck & Co);
Cipro (ciproflaxacin; Bayer);
Prozac (fluoxetine; Eli Lilly);
Mevacor (lovastatin; Merck & Co);
Novolin (Novo Nordisk).
Abbott: Biaxin
Product profile
Biaxin (clarithromycin) is a macrolide antibiotic derived from Abbott’s earlier

commercially successful drug, erythromycin. The Japanese company Taisho originally
developed erythromycin but Abbott was granted marketing rights to Biaxin for most of
the world under its agreement with Taisho.
Biaxin is approved for a range of indications including upper and lower respiratory tract
infections; skin and skin structure infections; treatment and prevention of
mycobacterium avium complex (MAC), an opportunistic infection that is common in
AIDS patients; and eradication of the ulcer causing bacterium, H. pylori.
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Although the drug is a leading treatment for respiratory tract infections in the US, it is
the latter two indications above for which Abbott is developing sales most actively.
Approval of the drug for the prevention as well as the treatment of MAC dramatically
increased the potential for the product’s use amongst AIDS patients. In the anti-ulcer
market, Abbott is well positioned as Biaxin was the first antibiotic to be specifically
indicated for the eradication of H. pylori.
Sales of the product grew rapidly post-launch and it remains Abbott’s best-selling
product with worldwide sales of $1,241m in 2000 (Table 3.26). The main competition
between in the anti-infectives amrket is between Biaxin and Pfizer’s Zithromax
(azithromycin). In 1999 and 2000, Zithromax surpassed sales of Biaxin to assume
leadership in the market.
In the future, principal threats to Biaxin’s position in the market will be the launch of
generics with the loss of patent protection in international territories from between 2001
and 2008 and the loss of patent protection in the US in 2005. In addition, the spread of
erythromycin cross-resistance will affect sales in the longer term. The emergence of
cheaper generics would either decrease the volume of sales or drive down the price of
Biaxin. Increasing rates of bacterial drug-resistance will also encourage physicians to
switch prescriptions away from Biaxin towards new fluoroquinolones and emerging
new classes of drugs. As a result, sales of Biaxin are estimated to decline from 2004 as
generic competition increases.
Table 3.26: Global sales of Biaxin, 1998–2005
($m) 1998 1999 2000 2001 2004 2005
Sales 1,254 1,275 1,241 1,300 1,430 1,200
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Strategic review
Although patent expiry of Taisho’s clarithromycin is not expected until 2005 in the US,
patent expiry in other territories from 2001 was expected to impact on sales through
generic competition. However, Abbott has been able to extend the lifecycle of the
molecule through reformulating it into an extended release tablet called Biaxin XL. The
drug was launched in 1998 in Europe as a once-daily administration over the
immediate-release formulation of Biaxin. The new formulation allowed it to compete
with Zithromax’s once-daily administration and revive declining sales. The use of an
extended-release tablet improved compliance in comparison to the previous twice daily
dosing and in addition, fewer treatment interruptions due to gastrointestinal events or
abnormal taste occurred in patients taking Biaxin XL tablets.
Subsequently, Biaxin XL was launched in the US in April 2000. This would provide
enough time to switch patients to the new formulation in advance of patent expiry in
2005. Abbott’s strategy to sustain market share was to also introduce new indications
and, in October 2000, the company submitted a supplemental new drug application to
the FDA seeking approval of a new seven-day indication for Biaxin XL for the
treatment of mild to moderate community-acquired pneumonia (CAP). If approved,
Biaxin XL would be available to the 2–3 million Americans each year who are affected
by CAP, the most common type of pneumonia. Abbott’s reformulation strategy will be
important to the long-term success of Biaxin and further innovative reformulations such
as an inhaleable Biaxin that can be administered direct to the site of infection in CAP
patients might also show great promise particularly for patients are unable to swallow.
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AstraZeneca: Losec/Prilosec
Product profile
Astra’s proton pump inhibitor Losec (omeprazole) is the world’s best-selling

prescription drug with global sales exceeding $6.2bn in 2000 (Table 3.27). It is
approved for the acute and long term treatment of reflux oesophagitis, the treatment of
symptomatic gastro-oesophageal reflux disease (GERD), dyspepsia, peptic ulcer
disease, non-steroidal anti-inflammatory drug (NSAID) associated upper
gastrointestinal disorders and paediatric reflux oesophagitis. It is marketed
internationally as Losec and as Prilosec in the US. Although patent expiry for
omeprazole began in 1999 the substance patent in the US is due to expire in 2001.
AstraZeneca’s collective nested patents protect omeprazole through uses, formulations,
intermediates and processes and begin to expire in international territories between
2005 and 2016.
Patent term extensions were granted for some of omeprazole’s patents in many
countries based on the drug’s exceptional status; for example, in the US, a
Supplementary Protection Certificate was granted by the FDA until 2003; in Europe,
patent extensions range from years 2002-2004; and in Japan, patent expiry is 2004. In
addition to SPC benefits, AstraZeneca was also approved a six-month paediatric
extension for Losec in the US from May 2001, which will delay the original substance
patent expiry to October 2001. This six-month period of exclusivity added to all
relevant patents could easily be worth over $2bn in additional revenues, and the
company’s strategy to extend patent protection for as long as possible has been a
worthwhile goal in this regard.
Despite patent extension there has been fierce international patent litigation suits
between generic companies and AstraZeneca, with only two companies in the US
gaining tentative approval to market generic omeprazole on patent expiry in 2001. Over
the past five years, AstraZeneca has been fighting more than 50 patent infringement
118
cases concerning omeprazole across a range of markets including the US, Germany,
Australia, Canada, Finland, Denmark, Norway and Israel. The use of varying and
multitudinous patents to protect Losec is expected to result in further court and legal
proceedings owing to the huge revenue opportunities that generic omeprazole presents.
Table 3.27: Global sales of Losec, 1998–2005
($m) 1998 1999 2000 2005
Sales 4,799 5,909 6,260 2,000
Strategic review
Although Losec is protected by several nested patents, including those covering

formulation, use, intermediates and processes, which do not expire in most markets
until 2005-2016, expiry of the substance patent in 2001 would allow market entry for
generic omeprazole. Although patent expiry in major territories began in 1999, Astra
was granted interim patent term extensions in many countries based on the drug’s
exceptional status. Despite these short-term patent extensions, the company saw
prudence in launching and marketing a new formulation of Losec to sustain market
dominance for its blockbuster drug. Prior to substance patent expiry in the US in 2001,
the company launched a new formulation of the drug, Multiple Unit Pellet System
(MUPS), initially in Europe in 1998, to preserve revenue and extend patent protection
internationally. The MUPS tablet formulation had the same licensed indications and
equivalent efficacy and healing rates as the original Losec capsules. However, the
rapid-dissolving tablets provide greater patient convenience and ease of administration
as they are 20% smaller than the original capsules, thus improving patient compliance
and benefiting those patients who have difficulty swallowing.
In light of numerous litigation suits from generic companies worldwide seeking rights
to patent generic versions of the drug, the MUPS reformulation strategy has been
successful in so far as extending the sales revenue for the Losec brand until cheaper
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generic omeprazole products hit the market. This reformulation strategy however is
only partly associated with AstraZeneca’s intention to maintain market leadership in the
gastrointestinal field. It also cleverly embarked on another strategy to aggressively
defend its market share in the face of generic competition.
A new compound, Nexium (esomeprazole), was developed to take over from Losec,
and is now patented in 60 countries and approved in the EU in July 2000. The
company’s twofold strategy appears to first involve replacing original Losec with
MUPS in some countries and also encourage switching to the new compound to ensure
minimal erosion of sales from generic omeprazole. Furthermore if AstraZeneca phased
out the original Losec brand it could also reduce the effect of parallel imports and delay
the introduction of generic competition. By withdrawing the original product replacing
it completely with the MUPS formulation, AstraZeneca removes the potential of
parallel imports on the capsule formulation. Additionally, this tactic forces generic
manufacturers to perform safety and efficacy studies on the generic versions, thus
delaying generic product launches.
AstraZeneca could also consider launching an OTC version of Losec once patients have
been successfully switched to Nexium. In this way, AstraZeneca could compete
indirectly with generic versions of omeprazole by capitalizing on its strong brand image
within the gastrointestinal field. It is estimated that AstraZeneca could potentially gain
$300m per year from OTC sales of Losec, providing the switch is supported by focused
marketing to patients and physicians to ensure it does not cannibalize Nexium’s or
Losec MUPS branded sales.
As detailed above, AstraZeneca has used both new formulations and indications to
protect Losec’s patent situation and further product growth. Since the product was
launched in 1988, the company gradually expanded the range of indications for Losec,
which has contributed to continued product growth.
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Despite the diverse indications for Losec, the introduction of next generation
omeprazole, Nexium, is expected to protect its key product line for a further 15–20
years based on improved efficacy of the drug over Losec. Nexium is shown to exhibit
an improved pharmacokinetic, metabolic and pharmacodynamic profile compared with
Losec enabling more comprehensive and predictable delivery of the treatment. For
example it has been shown to significantly heal patients with reflux oesophagitis in a
shorter period of time compared with Losec (four weeks healing time for Nexium
compared with eight weeks for Losec). Other benefits include: a reduction from GERD
symptoms in significantly more patients; a faster onset of action with sustained effects;
a faster reduction in heartburn symptoms compared with Losec; and satisfactory healing
of H. pylori-associated duodenal ulcers with one-week Nexium triple therapy without
the need for follow-up antisecretory monotherapy. Furthermore, one-week Nexium
triple therapy is highly effective in eradicating H. pylori, for the prevention of
recurrence of H. pylori-associated peptic ulcers. Nexium was launched in the US in
March 2001 with multiple indications for the treatment of heartburn and other
symptoms related to gastro-oesophageal reflux disease. By mid-July 2001, Nexium’s
share of new prescriptions in the US PPI market had reached 10.7%, ranking it third in
the market for new prescriptions in the class, surpassing both rabeprazole and
pantoprazole. Sales of Nexium for the first half of 2001 were $127m and its peak sales
are forecast to exceed $3bn.
The short time between the launch of Nexium and patent expiry of Losec in the US in
2001 means that AstraZeneca will have only a small window to persuade physicians to
switch to the new product. Nevertheless, the product is expected to sustain market
dominance in the estimated $12.6bn antacid and peptic ulcer disease market. By 2005
the collective peak sales revenues from Losec, Losec MUPS, and Nexium will be
estimated to be worth around $11bn making the product line one of the most profitable
franchises in the world. Reformulation in this case is significant in that not only did
Losec MUPS serve as a platform to extend revenue protection pre-Nexium in the face
of Losec’s patent expiry, but it also reinforced the brand through improvements in
compliance and unmet needs.
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AstraZeneca: Zestril
Product profile
AstraZeneca’s angiotensin-converting enzyme (ACE) inhibitor Zestril (lisinopril

dihydrate) was launched in 1988 and was indicated for hypertension, angina and
congestive heart failure (CHF). The product is also commonly available in conjunction
with a diuretic (chlorthalidone) under the brand name, Zestoretic. The active ingredient,
lisinopril, has been licensed from Merck & Co, who also markets a formulation of the
drug under the brand name Prinivil (see below). In the US, lisinopril is due to come off-
patent in December 2001 although AstraZeneca is optimistic that the FDA will grant a
six-month patent extension from ongoing paediatric trials.
Lisinopril’s key strengths lie in its anti-hypertensive efficacy in a once-daily dosing

formulation and its low incidence of major side effects. The most significant side effect
of ACE inhibitors is a dry cough, caused by the build up of bradykinin.
Sales of Zestril were $1,188m in 2000, but are likely to decline sharply over the coming
years to $740m by 2005 (Table 3.28). The decrease will largely result from the loss of
patent protection in 2001 and the subsequent competition from generic versions of
Zestril, but also competition from generic enalapril and gold standard drugs from other
classes. Zestril is the world’s second best selling ACE inhibitor and the most widely
prescribed in the US.
Table 3.28: Global sales of Zestril, 1998–2005
($m) 1998 1999 2000 2005
Sales 1,126 1,221 1,188 740
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Strategic review
Zestril has a strong brand with unique indications – for example it became the first
ACE inhibitor to be indicated for use as a life saving therapy in the time period 24
hours post myocardial infarction. In addition, Zestril was approved in the UK in 1998
for the treatment of renal and retinal complications in non-insulin dependent diabetics.
Zestril was also the first ACE inhibitor licensed for the daily treatment of CHF, all
indications of hypertension and acute myocardial infarction.
In 1998, Zestril recorded sales of $1,221m making it AstraZeneca’s second highest

selling product. Future growth is threatened, however, by competing ACE inhibitors
which have come off-patent, allowing generic competition (e.g. Vasotec/enalapril) and
leading drugs in other therapeutic classes (e.g. once-daily calcium channel blockers).
Sales of ACE inhibitors are also likely to suffer due to the introduction of angiotensin II
antagonists, the first of which, Merck’s Cozaar (losartan), was launched in April 1995.
Angiotensin II antagonists have similar efficacy to ACE inhibitors, but a better side
effect profile; in particular, they do not cause the dry cough experienced by many ACE
inhibitor patients. By 2005, sales of Zestril will have declined to an estimated $740m.
In the face of stiff competition post-patent, AstraZeneca has sought to extend the
lifecycle of Zestril through additional indications. One of these is high dose usage in
congestive heart failure. Data reported in 1999 from the Assessment of Treatment with
Lisinopril and Survival (ATLAS) trial in 3,164 patients confirmed the benefits of the
drug and also highlighted the importance of high doses of ACE inhibitors in heart
failure, rather than the low doses often prescribed. Based on the results of the ATLAS
trial, AstraZeneca gained regulatory approval for label amendments in several major
markets, which may serve to minimize damage to sales from generic competition in the
US. The additional indication of CHF could also generate new growth for lisinopril.
Reformulation of Zestril has however been thwarted by the introduction of new

therapeutic classes which show greater efficacy over ACE inhibitors and which are
promoted aggressively by competitors. Although paediatric patent extension will
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expand the utility of the drug there are no signs that it will be reformulated to further
optimise the molecule. Moreover, AstraZeneca has a wide range of cardiovascular
products to compensate for patent expiry of Zestril including the long-acting ACE
inhibitor Ramace (ramipril) under licence from Aventis, and the new angiotensin II
antagonist Atacand (candesartan cilexetil), which is being developed and marketed by
both AstraZeneca and Takeda. Atacand represents a new class of agents for
hypertension and AstraZeneca has exclusive marketing rights to the product in certain
European countries, Australia, Canada and the US. Atacand is currently approved for
use in the once-daily treatment of hypertension in 50 countries, and is now available in
25 countries. In addition to the eight marketed anti-hypertensives, AstraZeneca also has
six combination formulations to add to its cardiovascular portfolio.
Merck & Co.: Prinivil
Product profile
Prinivil (lisinopril) is Merck’s ACE inhibitor indicated for the treatment of

hypertension, heart failure and myocardial infarction. Its combination product,
Prinizide, is a combination of Prinivil and a diuretic, hydrochlorothiazide. In 2000,
combined sales of the products reached $1,075m. Merck has also licensed lisinopril to
AstraZeneca for co-marketing in the US under the Zestril brand. Patent expiry for
lisinopril is scheduled for December 2001.
Although sales peaked in 2000 for Prinivil, they are estimated to fall to about $500m by
2005 (Table 3.29).
Table 3.29: Global sales of Prinivil, 1998–2005
($m) 1998 1999 2000 2005
Sales 690 815 1,075 500
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Strategic review
Although Merck’s Prinivil is protected from generic erosion until December 2001,
there is no protection from similar competing ACE inhibitors, including AstraZeneca’s
Zestril in the US and competition from new therapeutic class drugs such as calcium
channel blockers and angiotensin II antagonists. AstraZeneca is also hoping to obtain a
six-month extension of US marketing exclusivity for lisinopril, by performing
paediatric studies with the product. This would extend US market protection until the
end of June 2002.
Although both AstraZeneca and Merck have invested large amounts of money in
advertising and promoting their competing products, the direct competition has eroded
prices affecting the revenues generated both by Prinivil and the remainder of Merck’s
hypertension portfolio including Zestril. This opportunity to reformulate at an earlier
stage might have differentiated one of the products in the saturated market and
sustained market share.
In the long-term, Merck has the opportunity to reformulate lisinopril into more
compliant formats such as once-weekly or even delayed-release tablets, thereby
optimising the drug for certain patient populations where risk of blood pressure changes
are at their greatest (e.g. night-time, waking, stress, exercise). Because of the high
volume of me-too products and the introduction of superior class drugs, lisinopril will
need to be differentiated in the market place if it were to sustain market dominance.
Reformulation technologies might offer new solutions to improve its dwindling
position in the market after patent expiry.
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Bayer: Cipro
Product profile
Cipro (ciprofloxacin) is a fluoroquinolone antimicrobial drug indicated for the

treatment of infections, such as urinary tract infections, acute uncomplicated cystitis in
women, and chronic bacterial prostatitis caused by indicated susceptible pathogens.
It was launched in 1987 and has become the second most successful antibacterial
product behind GSK’s Augmentin. In 2000, Cipro achieved sales of $1,645m (Table
3.30) with more than 100 million prescriptions dispensed, making it one of the most
widely prescribed drugs in the world.
Cipro’s popularity is a result of its efficacy, ease of treatment, breadth of indications

and close to immaculate safety record. Cipro is heavily prescribed for infections of the
urinary tract, commonly caused by gram–negative bacteria and has an extremely strong
presence in the US and all EU countries except France. It does, however, achieve
negligible sales in Japan, the world’s second largest anti–infectives market.
Table 3.30: Global sales of Cipro, 1998–2005
($m) 1998 1999 2000 2005
Sales 1,185 1,423 1,645 900
Strategic review
Bayer has built on the strong and successful Cipro brand and added new indications and
formulations to the product. For example, in 1997, Cipro tablets were approved for the
treatment of acute sinusitis; and, in 1998, Bayer received FDA clearance to market a
new dual action formulation, Cipro Otic (ciprofloxacin hydrochloride and
hydrocortisone Otic suspension), indicated for the treatment of acute otitis externa
(‘swimmer's ear’) in adults, as well as in paediatric patients over 12 months old.
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Bayer’s ciprofloxacin product range includes:
Cipro tablets;
Cipro IV infusion;
Cipro Oral Suspension (5% and 10%);
Cipro Otic Suspension.
The Cipro Otic suspension formulation is administered as drops in the affected ear
twice daily for seven days. The product combines the bactericidal activity of
ciprofloxacin with hydrocortisone to reduce inflammation and associated pain. The
twice-daily dosing regimen is more convenient for patients than that of existing
treatments with hydrocortisone, which are typically administered three or four times a
day. The new formulation thereby provided wider patient acceptance and unmet
delivery needs. In addition a twice-daily dosage may be especially helpful for parents
and caregivers of young children.
In addition to tablets, Cipro is also available as an intravenous therapy and as an oral

liquid supension formulation. Because Cipro was originally administered intravenously
over a 60-minute period, Bayer addressed unmet administration needs by producing the
two other formulations. The oral suspension contains ciprofloxacin microcapsules and
diluent, which is administered orally and is taste-masked to improve patient acceptance.
The Cipro brand is most threatened by the high number of Cipro resistant strains of
bacteria – reported in 80% of US hospitals. In addition, generic competition and
competition from Daiichi’s, J&J’s and Aventis’ levofloxacin products the will counter
sustained growth for Cipro in the longer term. These products are comparable with
Cipro in terms of efficacy, although they are deficient in terms of range of indications.
Levofloxacin is well placed to take advantage of Cipro’s loss of patent protection.
These products are protected by patents until 2008 and are positioned to become the
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dominant branded products in the quinolone market, providing new indications can be
gained quickly.
Nevertheless, in the short-term, Bayer’s reformulation strategy has been successful in

sustaining market share between 1998 and 2001, by differentiating the product in terms
of delivery mode, expansion of indications and choice for the patient and clinician.
Cipro’s efficacy, although comparable to other antibacterials, enabled it to reach
blockbuster sales through treating a wide range of indications (and, therefore, a large
patient population) and through being available in both oral and intravenous
formulations. Cipro’s dual formulations also meant that it addressed an administration
unmet need, being suitable for use in both community and hospital environments.
Eli Lilly: Prozac
Product profile
Lilly’s Prozac (fluoxetine) is a selective serotonin re-uptake inhibitor indicated for the
treatment of depression, bulimia nervosa and obsessive compulsive disorders. The
product has become the highest selling CNS drug worldwide, with an extremely strong
international brand.
In 2000, Prozac sales reached $2,574m (Table 3.31). For a number o years prior to that,
the drug hads accounted for approximately one-quarter of Lilly’s total annual sales.
Since its original launch in Belgium in 1986, the company has made an astonishing
$22bn from he drug.
Table 3.31: Global sales of Prozac, 1998–2005
($m) 1998 1999 2000 2001 2004 2005
Sales 2,812 2,613 2,574 1,900 700 500
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Strategic review
In the EU, the patent on Prozac began to expire in 1999 and in the US, the original
substance patent was due to expire in January 2001, whilst the method of use patent
was valid until December 2003. However, Lilly prematurely lost its US method of use
patent for Prozac by almost three years due to a ruling from the US Court of Appeals.
Although Lilly appealed against the ruling, August 2001 saw the challenge of generic
competition in the US become reality, with the launch of Barr’s generic 20mg capsule.
As witnessed in the UK, where the introduction of geenric fluoxetine in 2000 saw
Prozac lose 80% of its revenues in that market, the impact of generic fluoxetine in the
US will inevitably erode Lilly’s share of the estimated $12bn global antidepressant
market. Although Prozac sales were declining owing to other branded drugs in the
market, it remains a leading drug in its class. In the first year of US patent expiry, losses
of up to $2bn may result from intense generic competition. Protecting its revenue
stream is therefore critical to maintaining market share. Lilly’s long-term plans to
maximise the potential of Prozac, however, include a fourfold strategy to extend patent
protection and sustain market dominance:
Reformulation. A new 10mg scored tablet was launched in June 1999, offering
greater dosing convenience. It was engineered to compete with generic fluoxetine,
which would be in a capsule form, thus restricting the dosage. In addition, Lilly has
since developed a once-weekly formulation, which was approved in March 2001,
and a further combination product with the antipsychotic Zyprexa (olanzapine) is in
development. The once-weekly formulation resolves a major unmet need as patient
compliance rates are notoriously low for antidepressants. The new Prozac,
therefore, offers a clear competitive advantage over the current market leaders,
including the original Prozac, which are administered once daily. However, the
drug’s use will depend on physicians’ willingness to prescribe;
Increased indications for the drug. Prozac was already approved for the treatment
of obsessive-compulsive disorder and the eating disorder bulimia, but, in July 2000,
further approval was granted for fluoxetine (marketed as Sarafem) to treat
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premenstrual dysphoric disorder, making it the first prescription medicine to treat
the condition. The drug is marketed under the brand name Sarafem. Lilly also
expects to file for approval for panic disorder and post-traumatic stress disorder in
the near future;
Paediatric exclusivity. Lilly filed for paediatric exclusivity in 2000 after it carried
out clinical trials in children. Following approval, Lilly was to extend fluoxtine’s
patent for an additional six months to August 2001;
Next generation Prozac. In addition to the above indications and formulations, Lilly
was also developing a single isomer version of fluoxetine, r-fluoxetine, with
Sepracor which owns r-fluoxetine. Lilly had expected to file an NDA in 2001, but
the compound had to be pulled from trials because of safety issues.
Lilly’s range of patent and revenue protection strategies have been relatively successful
for Prozac, with a particular focus on adding value through reformulation, fighting
infringement cases and optimising lifecycle management for its product line. Defending
Prozac’s patent has been a key strategy for Lilly and the company has numerous on-
going court cases with generics manufacturers wishing to market generic fluoxetine.
The company has already settled out of court for a $4m payout with Barr Laboratories
and Geneva Pharmaceuticals which both challenged the validity of two of Prozac’s US
patents. Although gaining paediatric exclusivity in the US will served only to push back
the patent expiry date by six months, it added over $1bn to Lilly’s revenues for Prozac.
Reformulating Prozac is another important defence strategy for Lilly and this
additionally benefited the company by adding value to the original product. Since the
product was first launched, it has been reformulated several times. The first was the
introduction of a scored tablet in 1999, which improved dosing convenience. In
addition to the original daily dosing, scored tablet, and Prozac liquid formulations, the
newer once-weekly reformulation offers a significant advantage over the traditional
forms thereby improving compliance across all indications. According to the company,
Prozac Weekly is the first and only prescription medication administered weekly and it
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indicated specifically for the continuation phase of long-term depression treatment. The
product offers a novel longer-term dosing option to maintain symptoms, which is
unique to Prozac and not available with any other antidepressant on the market. The
Prozac Weekly formulation contains 90 mg of fluoxetine with an enteric coating that
delays release into the bloodstream. The reformulation utilises the protective effects
found in fluoxetine's naturally long half-life. The significant delivery and compliance
improvements exhibited in reformulations of Prozac undoubtedly helped to sustain
market leadership for the drug.
Within Lilly’s portfolio, Duloxetine, is a serotonin and norepinephrine uptake inhibitor

(SNRI) that is in phase III development for depression and also for urinary
incontinence.
The launch of duloxetine in the depression market is becoming more vital to the future
prospects of Lilly. Following the loss of the Prozac’s patent and the failure of r-
fluoxetine in clinical trials, duloxetine represents the last chance for the company to
retain an interest in the massive antidepressant class. Although this product, assuming it
is successfully steered through development, will gain market share, it is unlikely reach
the success of Prozac as the improvements it offers over existing drugs, such as
American Home Product’s Effexor (venlafaxine) are unlikely to be of major
significance. It is likely that Lilly will make a late 2001 filing for duloxetine, with a
launch in late 2002.
Stress incontinence is a relatively untapped medical market. This indication has

received little interest from pharmaceutical players, with the current treatments being
confined to adult diapers. Lilly recently completed a 550 patient phase II clinical study
for duloxetine indicated for this therapy area, and has now initiated phase III trials.
Potential commercialization is likely in late 2003.
Sales of duloxetine could reach $700m by 2006.
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Merck & Co.: Mevacor
Product profile
Mevacor (lovastatin) was launched in September 1987 for use as a treatment for
hypercholesterolaemia. The drug has been a successful ‘statin’ (HMG CoA reductase
inhibitior) reaching peak sales of $1.1bn in 1997. In its favour, the drug benefits from
long-term morbidity and mortality data and has a number of additional indications such
as use in patients with normal lipid levels.
The patent expiry of lovastatin which is due in 2001 will significantly and negatively
impact on other patented, and next generation statins including Merck’s Zocor
(simvastatin) and Pfizer’s Lipitor, which are leading lipid-lowering blockbusters. The
advent of cheaper generic lovastatin and other statins will be extremely attractive to
healthcare providers in the current cost-conscious market.
Mevacor sales have shown a steady decline over recent years owing primarily to the
introduction of new statins with better side-effect profiles. Further competition from
second generation statins and new drugs with greater efficacy will further damage sales
of lovastatin in the long-term. By 2005, Mevacor sales will decrease to an estimated
$408m (Table 3.32).
Table 3.32: Global sales of Mevacor 1997–2005
($m) 1997 1998 1999 2000 2005
Sales 1,100 745 600 520 408
Strategic review
Mevacor has been superceded by Merck’s Zocor and is preferentially promoted owing
to it has a longer patented shelf-life (to 2005) and benefits from an additional, and
unique, indication, namely the prevention of myocardial infarction. Although Zocor is
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Merck’s best-selling drug, achieving sales of $5.2bn in 2000, the patent expiry of
Mevacor in 2001 poses a very significant threat to its long-term revenue potential in
addition to all other hyperlipidaemia treatments that have similar lipid-lowering
capabilities. For instance, the introduction and wide availablity of generic lovastatin
will allow cost-sensitive physicians to switch to cheaper generic statins over branded
versions – this transition is most likely to occur with cost-sensitive managed care and
health maintenance organisations in the US.
Although Mevacor was taken over by Zocor, Merck’s opportunity to reformulate

lovastatin could theoretically expand the revenue protection for not only Mevacor but
also for its most profitable and superior hypolipidaemic drug, Zocor. Protecting the
patent through improvements in delivery or through sustained release would enable
Merck to sustain market share for Zocor and Mevacor for an additional four years until
patent expiry of Bristol-Myers Squibb’s Pravachol and Merck’s Zocor, which are due to
come off patent in 2005. In this case, a reformulation of Mevacor would strategically
favour the larger revenue potential for Zocor as it would delay the introduction of
generic lovastatin, which could start to cannibalise Merck’s lipid-lowering franchise
from 2001 onwards.
The huge opportunity to market a superior version of lovasatin has already been taken
up by Andrx and the company has applied to market an extended-release formulation,
Lovastatin XL. Andrx has recognised that the hyperlipidaemia market is increasing as
the rate of diagnosis grows and, as lovastatin is expected to be launched by 2005, it is
well placed to capture sales from expiry of Zocor and Pravachol in addition to off-
patent Mevacor.
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Novo Nordisk: Novolin
Product profile
Novo Nordisk’s family of insulin products was launched as early as 1946 when it
developed isophane insulin (NPH), a neutral insulin with prolonged action. In 1982, the
company developed human monocomponent insulin, which was the world's first
porcine derived insulin preparation identical to human insulin. In 1985, the company
developed and launched NovoPen, which is an insulin injection system similar in
appearance to a fountain pen, with replaceable insulin cartridges. Since then it has
produced a blockbuster range of insulin products in varying formats and dosages under
the brand Novolin.
Patent expiry for Novolin is to due in the US in 2001, which represents a major threat
as Novo Nordisk is heavily reliant on its single blockbuster - Novolin accounts for
approximately 60% of its total ethical sales. However, in the long-term, Novo Nordisk
hopes to capitalize on two major trends:
first, the number of people with type II diabetes who require insulin is growing;
second, more and more insulin users in the developed world are switching to
multiple daily insulin injections in order to obtain better blood sugar control.
Novo Nordisk’s increasing Novolin product range is expected to offer more choice to
patients while improving compliance through delivery.
Novolin sales reached $1.59bn in 2000 (Table 3.33) and it continues to dominate the
diabetes market in terms of global sales. This is due to the uptake of its pen injection
system and its strong presence in Japan, where it commands a 80% share of the insulin
market despite the termination of Novo Nordisk’s joint marketing agreement with
Yamanouchi in 1996.
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Also, there is increasing emphasis, particularly in the US, on the disease management
concept, where Lilly may hold the advantage with its Humulin and Humalog package
and delivery devices. Additionally, Novo Nordisk’s own products NovoRapid and
Novomix are expected to cannibalize Novolin’s sales. In addition, Novolin also faces
increased competition from new and rapidly growing classes of oral antidiabetics, such
as the glitazones and the alpha glucosidase inhibitors.
Table 3.33: Global sales of Novolin, 1998–2005
($m) 1998 1999 2000 2005
Sales 1,334 1,601 1,591 900
Strategic review
There are only two leading companies that compete in the insulin therapy sector: Novo
Nordisk with its Novolin brand and Lilly with its Humulin and Humalog brands.
Novolin’s revenue protection strategy is based on maintaining a large share of the
insulin market through the use of patented delivery systems, thereby diluting the impact
of blockbuster patent expiry as these patents will not all expire simultaneously. Like
Lilly, Novo Nordisk has formulated insulin into a variety of different dosages to
provide rapid-, short-, intermediate-, and long-acting versions that may be injected
separately or mixed in the same syringe.
Novo Nordisk has also benefited from the use of its patented delivery systems, such as
the NovoLet pen injection system, in conjunction with its range of insulins. The insulin
pens were a major advance in convenience for diabetics who had previously had to
carry bottles and syringes, and sterilize these items before use. Additionally, many
diabetics who had problems with self-administering insulin using the bottle and syringe
techniques, for example children, found that the pens were more straightforward to use.
Since 1885, Novo Nordisk has expanded the number of different formulations of
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insulin under the Novolin brand which are intended to offer more patient choice, ease
patient administration, and improve patient compliance. These include:
Novolin R: Regular, Human Insulin Injection;
Novolin N: NPH, Human Insulin Isophane Suspension;
Novolin L: Lente, Human Insulin Zinc Suspension;
Novolin 70/30: 70% NPH, Human Insulin Isophane Suspension & 30% Regular,
Human insulin Injection;
Novo Pen 3 Insulin delivery System: offering accurate single-unit dosage selection;
Novolin Prefilled: Human Insulin in a 1.5 ml pre-filled syringe Insulin Delivery

System;
NovoNorm (Prandin in the US) oral treatment for type II diabetes.
Novo Nordisk is also co-developing (with Aradigm) a novel electronic pulmonary

insulin delivery system, AERx iDMS. The delivery technology utilises a liquid insulin
reformulation that can be delivered as an aerosol particle. An integrated electronic
breath control device also allows delivery only if the rate of breathing is correct. The
system is also one insulin unit dosing, which results in a high level of absorption
enhancing patient convenience and compliance. The main benefit of a pulmonary
insulin system is the freedom from injections, which causes significant barriers in
patients self-administering because of fears of needle use. Pulmonary insulin will
potentially revolutionise insulin therapy for diabetes because of its non-invasive
delivery and Novo Nordisk will be well placed to utilise its existing Novolin brand and
formulations to sustain market share in the long term. However, Novo Nordisk short-
acting liquid insulin formulation is in phase II/III studies and is not expected to come to
market until 2003. Ahead of the game are Inhale Therapeutics and Pfizer/Aventis with
their short-acting powder insulin formulation currently in phase III trials and could be
on the market by 2002.
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In the interim, Novo Nordisk’s strategy – similar to Lilly’s – is to commercialise more
sophisticated products, strengthening the brand until it can gain a foothold in the
inhaleable insulin market. To complement the Novolin brand, Novo Nordisk has
recently developed new products to help sustain market share. These include:
Velosulin BR Human: Buffered Regular, Human Insulin Injection;
NovoRapid/NovoLog (insulin aspart), the first rapid-acting insulin analogue. The

product was approved by the European Medicines Evaluation Agency (EMEA) in
September 1999. NovoRapid is available for administration in NovoPen and
NovoLet delivery systems, including the new NovoPen 3 Demi. Additionally,
NovoRapid will also be available in Innovo, the world's first insulin doser;
Innovo - a new insulin doser, featuring an electronic display and dosage memory;
Innolet - a new disposable insulin doser with increased ease of dose-dialing.
Novo Nordisk’s new delivery system, Innovo, complements its existing range of
administration devices with its unique in-built memory. Introduced in 1999, the insulin
doser has an easy to read display that helps patients in keeping a track of their dose
intake, thereby aiding compliance and increasing patient confidence. The company also
expanded its range of NovoFine needles, shortly after the diabetes pens and needles
were made available on prescription in the UK. It launched NovoFine (31G) 6mm
needle with an aim to expand patients’ choice of needles to suit their preferences. The
thinner walls of the new Novofine needle gives it an advantage of having a wider bore
than standard needles, reducing resistance to the flow of insulin. This means less force
required when injecting. Additionally, being shorter than the standard needles, it avoids
the risk of accidental intramuscular injection.
Furthermore Novo Nordisk has recognised the potential for increasing its revenue
steam for Novolin products in the US retail pharmacy sector. A strategic deal with Wal-
Mart will almost certainly help to sustain market share for its products as they are
increasingly promoted and made more available through in-store pharmacies. From
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August 2000, the company, in association with Wal-Mart, added Novolin human
insulins to Wal-Mart's ReliOn brand of diabetes healthcare products. By expansion of
the ReliOn portfolio to include Novolin human insulin, the alliance is expected to
increase the profile of the two brands in the US, while simultaneously offering patients
a low-cost treatment option. In addition to Wal-Mart's growing ReliOn brand of
healthcare products, which include ReliOn Insulin Syringes, ReliOn Glucose Tablets,
ReliOn Blood Pressure Monitors and ReliOn Lancets, Novolin human insulin will be
offered in three human insulin formulations: Novolin R (Regular), Novolin N (NPH)
and Novolin 70/30.
In 2002, six leading drugs are due lose market exclusivity internationally. They include:
Axid (nizatidine; Eli Lilly);
Augmentin (amoxycillin/clavulanic acid; GlaxoSmithKline);
Zithromax (azithromycin; Pfizer);
Mevalotin (Sankyo);
Claritin (loratadine; Schering-Plough);
Takepron/Prevacid (lansoprazole; Takeda).
Eli Lilly: Axid
Product profile
Lilly’s Axid (nizatidine) is a histamine H2-receptor antagonist that is indicated for the
treatment of ulcers and other gastric acid disorders including endoscopically diagnosed
oesophagitis, and associated heartburn due to GERD (gastroesophageal reflux disease).
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It was launched in 1988 in the US and is currently marketed in approximately 80
countries.
Although the drug has long since been superseded by other leading antacid products
such as Merck’s Pepcid and AstraZeneca’s Losec, it achieved sales of $321m in 2000.
New and generic entrants to the anti-ulcer and antacid market over the next few years,
however, are likely to impact negatively on the sales of Axid in addition to US patent
expiry in 2002. With these factors taken into consideration, sales of Axid will fall
significantly to and estimated $150m by 2006 (Table 3.34).
Table 3.34: Global sales of Axid, 1997–2006
($m) 1997 1998 1999 2000 2006
Sales 525 418 349 321 150
Strategic review
In preparation for Axid’s patent expiry in 2002, Lilly has embarked on a co-
development and co-marketing strategy to optimise the product’s revenue potential. In
September 2000, it announced that it was going to sell sales and marketing rights for
Axid to Reliant Pharmaceuticals in the US, excluding Puerto Rico. The strategy of
partnering is intended to maximise future sales of Axid through increased marketing
and sales efforts and to also off-load the development of additional formulations to
expand the product line. The agreement will enable Lilly to continue to realize the full
potential of Axid while directing its in-house resources to support several new products
in the pipeline.
Although Lilly retains ownership of the NDA and continues to manufacture Axid,
Reliant will pay a royalty to Lilly for sales related to any reformulated products in the
US. Furthermore, Lilly will have an option on any new formulations of Axid outside
the US. Lilly’s prudent move is expected to offer sustained revenue for Axid through
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the alliance with Reliant: both companies will benefit from extended sales while
patented new formulations will offer protection from generic erosion in the long-term if
new formulations are found to offer greater compliance or improved delivery. Building
additional brand value through line extensions will also help to sustain market share in
the highly competitive anti-ulcer antacid market.
Apart from delegating the crucial reformulation development and co-marketing of Axid
to a strategic partner, Lilly is also investigating new avenues to optimise the potential of
nizatidine. Although it is not approved for weight reduction, Lilly has conducted trials
showing that administration of 300mg twice daily nizatidine reduced treatment-
emergent weight gain by approximately 50% among patients taking Lilly’s Zyprexa
(olanzapine) indicated for schizophrenia. A common side-effect of antipsychotic
medications is weight gain, although data have shown that weight gain associated with
Zyprexa stabilized over time and that patients with higher body mass had a reduced
tendency to gain weight
Results announced in 2001 show that nizatidine therapy can help patients prevent or
reduce weight gain. Although the data is preliminary, co-administered nizatidine
(300mg twice daily) with Zyprexa may offer physicians an acceptable medical option to
accompany behavioural interventions when appropriate. In the future, patients and
physicians concerned about weight gain may find comfort in a reformulation of
nizatidine that reduces weight gain side-effects of Zyprexa. In some instances,
physicians may be reluctant to prescribe Zyprexa to patients at risk of serious co-
morbidity (e.g. obesity, diabetes, cardiovascular disease) therefore a safe reformulation
of nizatidine and Zyprexa that meets this unmet clinical need to inhibit weight gain
would be well placed for success in the market.
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GlaxoSmithKline: Augmentin
Product profile
Augmentin (coamoxiclav) is a beta-lactamase/broad-spectrum penicillin indicated for

infections of the respiratory tract, ear nose and throat, skin and soft tissue, bone and
joint, urinary tract and dental infections. It was launched in 1981 as a combination
product containing the penicillin antibiotic, amoxicillin, and the beta-lactamase
inhibitor, clavulanic acid. Augmentin’s success in the market is partly due to its low
resistance profile. For example, Augmentin is the only drug to have attained
blockbuster sales through addressing a resistance unmet need. This is because the
resistance profile of drugs is a particular problem for anti-infective products, due to the
development of drug resistant bacteria. Although Augmentin has addressed this unmet
need, it is expected that bacterial resistance to Augmentin will eventually increase, re-
establishing the unmet need and providing the opportunities for a new blockbuster
antibacterial agent.
Since its launch, Augmentin dominated the antibiotic market until the introduction of
Bayer’s Cipro in 1994. It now also faces further competition from other anti-infectives,
such as Pfizer’s Zithromax, which has good efficacy coupled with a comparable side-
effect profile. New indications and dosage forms of Zithromax will continue to drive
sales of this product and increase competition for Augmentin.
Despite the increasing competition, Augmentin still achieved sales of $1,845m in 2000,
a marginal increase on 1999 levels. Product sales are expected to grow steadily over the
next five years reaching sales of $2,150m by 2005 (Table 3.35).
Table 3.35: Global sales of Augmentin, 1998–2005
($m) 1998 1999 2000 2005
Sales 1,559 1,816 1,845 2,150
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Strategic review
In the US, the patent for Augmentin was due to expire in 2002 despite although patent
expiry started in Europe in 1999. Prior to the merger with Glaxo Wellcome, SmithKline
Beecham’s strategy to pre-empt generic erosion was realised through reformulation. For
example in March 1996, a new adult formulation of Augmentin with a twice-daily
dosing regimen was launched in the US for more severe infections of the respiratory
tract. A new paediatric dose was also launched in 1996 with an improved side-effect
profile (i.e. no diarrhoea). These new indications and formulations successfully
increased sales for Augmentin product line and helped increase market share
worldwide. The reformulations were also implemented to protect from generic
cannibalization after loss of patent protection from 2000 outside the US.
The Augmentin product range currently consists of the following formulations:
Augmentin powder for oral suspension;
Augmentin Chewable Tablets;
Augmentin Tablets (sustained-release and original versions).
However, the most important development in the product’s lifecycle occurred in

February 2000, when Augmentin was granted a new patent in the US, which should
extend protection from generic competition until 2017, 15 years after its forthcoming
original patent expiry date of 2002. SmithKline Beecham was awarded the patent
extension after filing a ‘submarine’ patent. This involved filing an additional patent for
elements of the drug not previously covered, including an acid that stops amoxycillin
degrading, before the original protection on amoxycillin, the active ingredient of
Augmentin, expired. The extended patent date is not expected to have a great impact on
sales of the drug, moreover it will sustain market leadership until innovative drugs
replace it or improved formulations supersede it. GSK does have the opportunity to add
further formulations to the Augmentin family of products, which might help to
strengthen the brand and maintain its market share.
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Pfizer: Zithromax
Product profile
Zithromax (azithromycin) is a broad spectrum macrolide antibiotic belonging to the

azolide class. It was launched in September 1991 and, according to Pfizer, has become
the most prescribed brand-name oral antibiotic in the US. The drug’s therapeutic
potency means that it can be given at lower than usual doses, which facilitates shorter
courses of treatment. The drug’s good side-effect profile coupled with its high potency
relative to competitors (e.g. Abbott’s Biaxin and Lilly’s Ceclor) enables it to sustain
blockbuster sales, which amounted to $1,382m in 2000 (Table 3.36).
Table 3.36: Global sales of Zithromax, 1998–2005
($m) 1998 1999 2000 2005
Sales 1,041 1,333 1,382 1,000
Sales are expected to decline steadily, however, owing to the introduction of generic
anti-infectives from 2002 and the expiry of Zithromax’s patent in France in 2002. The
US patent for Zithromax is due to expire in 2005.
Strategic review
The strong market position held by Zithromax is due in part to its range of indications
and dosage forms. For example, a suspension formulation for treating children’s middle
ear and streptococcal throat infections was launched in the US in November 1995 and
became the second-leading brand in this category. Other additional uses approved in the
US in 1996 and 1997 included prevention of Mycobacterium avium complex, one of the
most common types of infection in AIDS patients, and treatment of gonorrhoea and
lower respiratory tract infections in children. The product’s convenient once-daily
dosing regime is a particular asset when treating children.
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The FDA subsequently approved the Trovan/Zithromax Compliance Pac in December
1998. This product is a tablet containing the generic ingredients of both products for the
treatment of sexually transmitted diseases. Zithromax has also been approved in a
single one-gram dose for the treatment of chlamydia, a common sexually transmitted
disease. Chlamydia can cause some extremely unpleasant side-effects if left untreated,
such as pelvic inflammatory disease, infertility and ectopic pregnancy and the infection
is often badly diagnosed and treated with multiple-dose regimes, making it difficult to
control. Pfizer estimates that the cost of treating these complications exceeds $2bn each
year.
The Zithromax ‘Z Pack’ contains six tablets in a blister pack for once-daily treatment
for most approved infections. Zithromax improves compliance, due to the short
duration of the course and the single daily dose, which is a considerable market
advantage for Pfizer’s drug. A patient information leaflet accompanies the pack and this
is expected to improve the utilization of the drug, in addition to providing further
product differentiation.
Pfizer’s growth success for Zithromax is partly based on the company’s aggressive
promotion of new formulations and supplemental indications for the product. Although
erosion of sales from generics in European territories will affect total sales from 2002,
the larger US market is expected to maintain its market share to 2005, until the US
patent expires allowing generic erosion. The introduction of new drug delivery-based
formulations prior to patent expiry in the US may provide additional patent protection
for the drug beyond 2005. A supergeneric azithromycin formulation that is a cheaper
alternative to the brand but with improved modified-release capabilities will be an
attractive option for prescribing physicians and healthcare providers.
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Sankyo:Mevalotin
Mevalotin (pravastatin) is Sankyo’s HMG-CoA reductase inhibitor indicated for the

treatment of hyperlipidaemia. The drug was first launched in October 1989, being one
of the first statins to reach the market. It subsequently became Sankyo’s best selling
drug and achieved sales of $1,510m in 2000 (Table 3.37), of which roughly 70% is
derived from domestic sales in Japan. In addition, the drug is licensed to US and
European companies outside Japan (e.g. marketed as Pravachol by BMS in the US).
Strong competition in the lipid-lowering sector and growth of strong brands such as
Pfizer’s Lipitor and Merck’s Zocor, which collectively reached sales of $10.2bn in
2000, will reduce the market share of Mevalotin in the domestic and foreign markets
(excluding the US). By 2005, sales of Mevalotin are expected to decline to $880m.
Table 3.37: Global sales of Mevalotin, 1998–2005
($m) 1998 1999 2000 2005
Sales 1,626 1,725 1,510 880
Strategic review
With patent expiry of Mevalotin in Japan in 2002 and increased competition from drugs
such as Banyu’s Lipovas and Pfizer’s Lipitor, Mevalotin is expected to lose
approximately 40% of its domestic market share by 2005. In contrast, recently launched
drugs such as Bayer’s Baycol and Lipitor are gaining market share in Japan owing to
their efficacy at low doses – in Japan, low dose statin formulations are reimbursed over
high dose formulations, which is a significant sales threat for lipid-lowering drugs that
do not exhibit efficacy at low doses.
In February 1999, Sankyo took a step to help differentiate Mevalotin from other statins
by announcing that it had enrolled 5,000 patients in its hyperlipidaemia mega study in
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Japan to analyse the primary preventative effects of anti-hyperlipidaemia therapy on
ischaemic heart disease. Data from the study, which is scheduled to be completed in
March 2004, is hoped to re-establish Mevalotin’s position in the market and revive
sales. Although the study is too late to help Mevalotin significantly in the short-term, it
might help sustain declining sales post 2004. Moreover, Sankyo might be better
positioned to develop a new high efficacy low dose formulation that represents a
significant improvement over the original product. Integration of data from the
hyperlipidaemia mega study may also help with providing new indications for
reformulated pravastatin thereby differentiating it in the market. Extending the patent
would also enable Sankyo to protect revenue until it was able to introduce its powerful
next-generation HMG-CoA reductase inhibitor, Pitavastatin (NK-104), for the
treatment of hypercholesterolaemia.
Schering-Plough: Claritin
Product profile
Claritin (loratadine) was launched in 1993 for the treatment of rhinitis. It is an

histamine H1 receptor antagonist that provides safe and effective relief from seasonal
allergies and offers flexible and convenient dosing. The product is non-sedative once-
daily dosing formulation. Since 1993, Claritin has been reformulated consisting of a
family of four products (Claritin; Claritin D (12/24); Claritin RediTabs; and Claritin
Syrup)
In the long-term, Claritin’s growth prospects appear to be assured, based on the

extended reformulated family of products, strong brand, and patent protection of sister
compounds; for example, Claritin D is protected until 2004 in the US.
Competition comes mainly from a new product that has entered the market, namely
Aventis’ once-daily Allegra (fexofenadine HCL). Allegra is cheaper than Claritin and
has benefited from aggressive marketing by Aventis. The FDA’s approval of the new
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once-daily version of Allegra has strengthened Allegra’s position in the market,
enabling Aventis to challenge Claritin and gain market share after its launch in March
2000. Despite this strong competition, sales of the Claritin/Claritin D family are likely
to peak in 2000 at $3,011m and decrease to approximately $2,100m in 2005 (Table
3.38).
Table 3.38: Global sales of Claritin/Claritin D, 1998–2005
($m) 1998 1999 2000 2005
Sales 1,611 2,673 3,011 2,100
Strategic review
Since Claritin was launched, the brand has become the world’s best selling anti-
histamine with sales of the product line growing by 12.6% in 2000 to $2.7bn. Although
Claritin faces substance patent expiration in 2002, the product is protected by other
patents including desloratadine (the active metabolite of loratadine) which expires in
2004; fluoroloratadine’s which expires in 2008; Claritin-D 24 formulation patent which
expires in 2012; and patent rights covering certain uses of desloratadine (licensed from
Sepracornc Inc) that expire in 2014.
The four formulations that will help to extend the patent and protect revenue until 2014
include Claritin-D 12 hour (loratadine/peudoephedrine sulfate), a twice daily version of
the original; Claritin D 24 (loratadine/pseudoephedrine sulfate) a once-daily non-
sedative oral formulation combining the non-sedating anti-histamine action of
loratadine with the decongestant action of pseudoephedrine; Claritin RediTabs, which
are instantly soluble in the mouth; and Claritin syrup (loratadine 10mg per 10ml) the
first FDA approved non-drowsy anti-histamine syrup approved for children as young as
six years of age. Growth of Claritin RediTabs has been particularly impressive. The
product was reformulated to a more convenient administration by utilising fast
dissolving technology. RediTabs are instantly soluble on the tongue and do not require
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water to be administered. The product was given clearance in the US in December 1996
and subsequently launched in March 1997.
Schering-Plough was also granted six months of additional paediatric marketing

exclusivity for all five products. Furthermore, the company is also attempting to secure
a three-year patent extension under a bill that still needs to pass the US Congress. The
bill, HR 1598, proposes to grant additional patent protection and extensions to drugs
that have already been granted partial extensions under the Waxman-Hatch Act.
Claritin only received a two year extension under this law, while Schering-Plough is
arguing that delays in the regulatory review would justify an additional three years of
patent protection. The bill was postponed from 1999 to 2000, since Congress needed
more time to debate the law, which is strongly opposed by generics manufacturers and
consumer groups campaigning for access to cheaper drugs.
If Schering-Plough did lose patent exclusivity for loratadine in the US in 2002 then
declining sales due to generic competition should be offset by the reformulated Claritin
D/RediTabs and Claritin Syrup product line extensions. Also, to Schering-Plough’s
advantage, all Claritin products are supported by an extensive DTC advertising
campaign in the US, targeting over 45 million Americans who suffer from seasonal
allergies. Even before the FDA relaxed its DTC marketing guidelines in August 1997,
Schering-Plough’s $30m investment in DTC advertising for Claritin ranked the
company as a leader in terms of DTC expenditure on ethical drugs. Schering-Plough
was aware that consumers were confused as to the actual indication and beneficial
effects of its anti-histamine and used television advertising to provide patients with
more product-specific information and to help them make more informed choices
between anti-allergenic prescription medicines.
Despite strong sales forecasts for the Claritin family, a number of generics companies
submitted ANDAs in 1999, including Copley Pharmaceuticals, Teva Pharmaceuticals,
Andrx and Novex Pharma. In defence, Schering-Plough has filed lawsuits against these
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manufacturers in attempt to prevent the entry of any generic versions onto the market,
which could lead to a considerable decline in Claritin sales.
To further protect its lucrative anti-allergy franchise, Schering–Plough has also

embarked on a reformulation strategy to optimise a metabolite of loratidine. In 1999,
the company submitted a NDA seeking clearance to market desloratadine for the
treatment of seasonal allergic rhinitis (SAR). Similar to Claritin, desloratidine is a
nonsedating long-acting H1 receptor antagonist that blocks the effects of histamine
release in the body. Desloratadine was recently launched in the EU for the treatment of
SAR)under the brand names Aerius and Neoclarityn. In addition, in May 2001, the
product received a positive opinion from the EU EMEA recommending approval of
nonsedating antihistamine desloratadine 5mg tablets as a once-daily treatment of the
symptoms of chronic idiopathic urticaria (CIU) such as itching or hives.
Marketed as Clarinex in the US, desloratadine in 5mg tablet form has received tentative
approval from the FDA for the treatment of SAR. Separate marketing applications for
Clarinex tablets are pending with the FDA for the treatment of CIU and allergic rhinitis,
which encompasses SAR and perennial allergic rhinitis. In recognising the success of
the Claritin formulations, Schering-Plough has also issued marketing applications with
the FDA for reformulations of desloratidine including: Clarinex RediTabs, (a rapidly
disintegrating tablet formulation of desloratidne); Clarinex Syrup (for use in patients as
young as two years of age); and Clarinex-D 12 Hour (a fixed combination of Clarinex
and a decongestant). In addition, a separate marketing application for Clarinex tablets is
currently pending with the FDA for the treatment of chronic idiopathic urticaria (CIU),
or hives of unknown cause.
In summary, Schering-Plough’s reformulation strategies for Claritin and Clarinex

clearly exemplify the potential to sustain market dominance while simultaneously
extending patent protection through line extensions and new indications. The branded
family of products devised by Schering-Plough, which utilise improvements in
delivery, efficacy, and administration, have been shown to drive growth in the market
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and sustain market share despite penetration by new entrants in the market and
increasing opportunities to market generic equivalents.
Takeda/Tap: Takepron/Prevacid
Product profile
Takepron (lansoprazole) was launched in 1992 for the short-term treatment of duodenal
and gastric ulcers, and for the long-term treatment of hypersecretory conditions, as well
as for the maintenance treatment of healed erosive oesophagitis. Takepron is a second
generation proton pump inhibitor (PPI) which acts directly to inhibit the action of the
acid-producing pump within the stomach. It exhibits significant benefits over existing
therapies, principally by exerting a more profound effect on gastric pH.
Lansoprazole is structurally similar to AstraZeneca’s Losec, with which it competes

directly. Takeda lost a patent infringement case with AstraZeneca over the similarity
between the two products, and although lansoprazole is still marketed, AstraZeneca
now receives 10% royalties on total lansoprazole sales. In another patent litigation case
in April 2000, Takeda won the rights to a Spanish patent relating to the production of
lansoprazole. In an ongoing suit filed by Takeda in 1994 against Boral Quimica SA,
who offered a capsule version of lansoprazole, Takeda claimed that Boral was violating
its Spanish patent 546,152. The Barcelona Provincial Court ordered Boral to refrain
from the possession, manufacture and marketing of lansoprazole.
Marketed as Takepron in Japan by Takeda, lansoprazole has been introduced into

markets across Europe, South Africa, the UK, Latin America, Canada, and the US.
Takeda’s strategy has been to use local licensees in most of these countries. The major
exception is the US, where the drug is marketed by TAP, the joint venture with Abbott,
under the brand name Prevacid.
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Total Takepron sales amounted to an estimated $2,550m in 2000, largely derived from
the US market. The drug’s performance in Japan depends on the rate at which
physicians will switch from H2 blockers to PPIs, and also on the approval of Takepron
for new indications. Estimated total Takepron and Prevacid generated total sales of
$550m and $2,000m in 2000 (Table 3.39), respectively. However, contributions made
by Takepron and Prevacid are forecast to decline to $450m and $1,350m, respectively,
in 2005.
Table 3.39: Global sales of Takepron/Prevacid, 1998–2005
($m) 1998 1999 2000 2005
Sales 1,300 2,147 2,550 1,800
Strategic review
Lansoprazole was the second PPI to be launched in major markets worldwide after
AstraZeneca’s Losec (omeprazole). Takeda has succeeded in strengthening its market
share for lansoprazole primarily through expanded indications, although modified-
release capsule formulations were also developed to expand the product range. In
Japan, Takepron is registered for the treatment of postoperative invasive stress,
gastritis, H.pylori eradication and reflux oesophagitis; whereas in the US, lansoprazole
is registered for the treatment of non-ulcer dyspepsia, and ulcers resulting from the
administration of nonsteroidal anti-inflammatory drugs. In the latter indication, the drug
will compete directly with AstraZeneca’s Nexium (esomeprazole).
In June 1999, TAP announced that the FDA had approved new administration options
for Prevacid delayed-release capsules. The approval allows patients suffering from
acid-related disorders, such as GERD, and who have difficulty swallowing capsules, to
open the capsules and sprinkle the granules onto soft foods or into juices. The approval
of the non-capsular formulation of Prevacid helped to expand the patient population
considerably. The same year saw the approval of Prevpac – a specially packaged
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convenient treatment containing three drugs (lansoprazole/amoxicillin/clarithromycin)
to eliminate H.pylori and reduce the risk of duodenal ulcers returning. Individual
Prevpacs are packaged with the three different prescription drugs as a one-day
treatment.
Lansoprazole has limited sales in Japan because it is not approved for the maintenance
therapy of gastritis, which accounts for the majority of the total ulcer market in Japan.
Competition is also intense owing to the popularity of H2 blockers over PPIs in Japan.
Although patent expiry for lansoprazole globally is in 2002, generic erosion will be
minimised in part by Prevacid’s new non-capsular easy-to-swallow formulation and
expanded indications. However, Prevacid faces competition from new entrants: J&J’s
and Eisai’s Aciphex (rabeprazole), which received FDA marketing approval in August
1999, and AHP’s Protonix (pantoprazole), which received FDA approval in February
2000. The future performance of Prevacid in the US largely depends on the approval of
the drug for new indications, and increasing intensity of competition, both from novel
drugs and from generics.
In 2003, three leading drugs are scheduled to lose patent exclusivity in international
markets. They include:
Taxol (paclitaxel; Bristol-Myers Squibb);
Celebrex (celecoxib; Pharmacia/Pfizer);
Flixotide/Flovent (fluticonase propionate; GlaxoSmithKline).
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Bristol-Myers Squibb: Taxol
Product profile
Taxol (paclitaxel) was launced in 1993 as an anti-cancer drug indicated for a number of
tumour types including metastatic breast and ovarian cancer. It is administered either as
a monotherapy or in combination with other products. In Europe, Taxol is approved as
a first line treatment of ovarian cancer and in the US it is approved as a second-line
therapy for the treatment of AIDS-related Karposi’s sarcoma where it has been granted
orphan drug status in that indication until 2004. In 1998, it also received clearance from
the Japanese Ministry of Health and Welfare for the treatment for breast and non-small
cell lung cancers.
Taxol has consistently been a key revenue generator for BMS and sales have risen
steadily, amounting to $1,592m in 2000. Despite patent expiry, sales growth in the US
can be attributed to the FDA’s decision to disallow any generic manufacturer from
marketing any generic forms of Taxol. However, BMS is involved in a patent
infringement action against five drug companies over the validity of Taxol’s three-hour
infusion administration in the treatment of ovarian cancer. Taxol’s patent expires in
Europe in 2003 and the Taxol infusion expires in the US in 2012.
The looming patent expiries in Europe together with growing sales of Taxol’s direct
competitor Taxotere (Aventis), suggests a decline in sales over the coming years. By
2005, sales are forecast to have declined to $1,000m (Table 3.40).
Table 3.40: Global sales of Taxol, 1998–2005
($m) 1998 1999 2000 2005
Sales 1,206 1,481 1,592 1,000
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Strategic review
BMS’s strategy for Taxol focuses on expanding the indications and developing new
innovative products in preference to reformulation options. However, a combination
paclitaxel-cisplatin product was approved by the FDA in 1999, indicated for the first-
line treatment of non-small cell lung cancer in patients who are not candidates for
potentially curative surgery and/or radiation therapy. The combination product was
based on data from results of the the phase III EORTC (European Organization for
Research and Treatment of Cancer) trial showed that 40% of patients receiving a Taxol
and cisplatin combination experienced a 50% or greater reduction in tumour size
compared to 28% in patients receiving teniposide and cisplatin. As a result of these
trials, Taxol was approved, in 1998, as a first line treatment for advanced ovarian
cancer in the US in combination with cisplatin
Also during 1999, the FDA approved Taxol for the adjuvant treatment of node-positive
breast cancer.
In a new study conducted in 2000, results from the Cancer and Leukemia Group B trial
demonstrated the cost-effectiveness of Taxol as the standard chemotherapy treatment in
breast cancer. The trial demonstrated that the use of less active, older treatments for
breast cancer, though cheaper in absolute terms, may be far more expensive than newer
drugs when cost is related to effectiveness. According to the trial, the extra cost of
Taxol is partially offset by reduced expenditure in diagnosing and treating recurrent
disease, since Taxol helps avoid recurrences of the disease, and treating recurrence is
very expensive.
The continued positive trial data and protection from generic erosion in the US until
2005 will help to maintain sales of Taxol as a leading treatment for ovarian and breast
cancer. New indications to expand its use for other malignancies should also help to
revive declining sales in the competitive anti-cancer market. However, the development
of, for example, a transdermal or transmucosal reformulation of paclitaxel, which
provides non-invasive, easily self-administered sustained-release, might offer a more
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convenient administration over the standard intravenous infusion, which is time-
consuming, discomforting to the patient and requires hospitalisation and healthcare
staff to administer the drug. Resolving the administration unmet need in this case would
transfer treatment to an out-patient setting, with self-administration providing greater
control over treatment whilst also providing greater quality of care for the patient. A
reformulation strategy would also enable the BMS to extend its product range in the
anti-cancer market until it was timely to introduce next generation taxanes that are in
development for tumours unresponsive to Taxol.
Pharmacia/Pfizer: Celebrex
Product profile
Celebrex (celecoxib) was approved by the FDA for the treatment of osteoarthritis and
rheumatoid arthritis in December 1998. It was launched in the US in January 1999 and
was also approved in its second market, Brazil, in January 1999. It is a second
generation cyclo-oxygenase-2 (COX-2) inhibitor developed initially by Searle but
licensed to Pfizer as part of a co-development and co-promotion deal established in
March 1998.
Unlike traditional NSAIDs, Celebrex inhibits cyclo-oxygenase-2 enzyme, but has

minimal activity against cyclo-oxygenase-1 at therapeutic doses. COX-1 helps to
regulate normal cell function in the stomach and blood, while COX-2 plays a role in
causing arthritis pain and inflammation. Therefore, unlike traditional NSAIDs,
Celebrex causes a lower incidence in gastrointestinal (GI) ulcers, due to it lower effect
on the COX-1 enzyme.
Celebrex was launched prior to Merck’s Vioxx – a leading competitor - providing

Pharmacia with a short-term marketing advantage. This headstart helped to establish
Celebrex in the arthritis market before approval of its rival. However it also competes
with another COX-2 inhibitor, GSK’s Relafen (nabumetone), which is seen as a
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significant competitor and is cheaper than Celebrex. Other key threats to Celebrex and
Vioxx, however, will be the launch of the second generation COX-II inhibitors,
including Pharmacia’s valdecoxib and parecoxib, and Merck’s MK-663, all of which
are scheduled to be launched before the end of 2001.
Sales of the drug are forecast to increase significantly to an estimated $4,495m by 2005
(Table 3.41), based on Celebrex’s wide range of indications and the fact it is one of the
first second generation COX-II inhibitors on the market.
Table 3.41: Global sales of Celebrex, 1999–2005
($m) 1999 2000 2005
Sales 1,507 2,614 4,495
Strategic review
Pharmacia’s strategy for Celebrex appears to focus on promoting the product’s efficacy
and safety in preference to reformulating the drug which could protect revenue far
beyond 2003 when the patent on Celebrex expires in the US. For short-term patent
extension, Pharmacia did announce that in August 2000 its supplemental New Drug
Application (sNDA) for Celebrex, submitted in June 2000, had been accepted for filing
by the FDA. The sNDA is based on data from a long-term safety study involving
approximately 8,000 arthritis patients, half of whom received high doses of Celebrex.
The study, designed to obtain a rigorous assessment of the safety of Celebrex, as
demonstrated in all previous studies, compared four times the recommended
osteoarthritis dose of Celebrex to typical daily doses of two NSAIDs.
Pharmacia is also embarking on a strategy to maximise on the number of indications for

Celebrex: in December 1999, Celebrex was approved by the FDA for familial
adenomatous polyposis (FAP); and it is currently being investigated as a potential
treatment for cancer (colon, bladder and breast) and Alzheimer’s disease. Furthermore,
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data derived from a safety study in 2000, which directly compared Celebrex with
Vioxx, indicated that patients suffering from hypertensive osteoarthritis (OA) patients
and taking Vioxx, experienced statistically significantly more increases in oedema and
systolic blood pressure compared with those taking Celebrex. Other data have shown
Celebrex to have a favourable safety profile compared with Vioxx: the March 2001
American College of Cardiology meeting presented results of a head-to-head trial
showing Celebrex to have an advantage over Vioxx in terms of its cardiorenal safety
profile.
The opportunity to reformulate Celebrex into a more convenient sustained-release

formulation over the current twice-daily oral administration could be beneficial to the
product line and help to differentiate it from other second generation COX-II inhibitors
in the market. In addition, reformulated Celebrex could bridge the gap until
Pharmacia’s second-generation products – parecoxib, the first injectable COX-2
specific inhibitor, which is under regulatory review in the US for pain management in
acute care settings; and valdecoxib, which is a powerful oral medicine for osteoarthritis,
rheumatoid arthritis and acute pain – are approved for market entry. A regulatory filing
for valdecoxib will be completed in the US during 2001 according to Pharmacia.
GlaxoSmithKline: Flixotide
Product profile
In 1993, Glaxo launched two inhaleable formulations of the corticosteroid antiasthma

drug, fluticasone propionate (Flixotide/Flovent) for the maintenance therapy of asthma
patients above the age of 12. Prior to launch, fluticasone propionate was already used in
the US as a dermatological drug (Cutivate) and as an antiallergy nasal spray (Flonase).
Corticosteroids are advantageous in that they reduce tissue inflammation and limit the
long-term damage caused to the lungs by asthma. Oral corticosteroids, particularly
prednisolone, are very effective in rescue therapy, and inhaled corticosterioids represent
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a significant benefit due to the decreased likelihood of adverse systemic effects at high
doses. A sizeable body of opinion exists supporting the use of corticosteroids as
standard first line asthma drugs, to be used at practically all stages of the disease.
However, serious side effects affecting bone growth may result from prolonged
treatment with high doses of anti-inflammatory steroids, particularly in children.
Shortly after Flixotide was launched it became the world’s leading asthma product,
performing remarkably well and achieving sales of $1,077m, an increase of 34% over
1998. By 2005, sales of Flixotide are estimated to reach $2,100m (Table 3.42).
Table 3.42: Global sales of Flixotide/Flovent, 1998–2005
($m) 1998 1999 2000 2005
Sales 805 1,079 1,332 2,100
Strategic review
The Flixotode/Flovent family of products includes a number of formulatins including:
Flixotide Inhaler – pressurised metered-dose inhaler;
Flixotide Evohaler – non-CFC pressurised inhalation suspension;
Flixotide Accuhaler – multi-dose dry powder inhalation device.
In 1997, Glaxo Wellcome received marketing approval its non-CFC metered-dose

inhaler propellant formulations of Flixotide/Flovent (Evohaler) indicated for asthma
and chronic obstructive pulmonary disease. In addition to the Flovent inhalation aerosol
products, a dry powder formulation was developed – Flovent Inhalation
Rotadisks/Accuhaler – which are intended to counteract the recent success of
AstraZeneca’s Pulmicort, marketed with the Turbuhaler device. GSK’s two previous
dry powder devices, the Rotohaler and the Diskhaler, however, did not offer serious
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competition to the Turbuhaler as the mechanism in these devices use capsules of drugs
that have to be ground into powder four times a day before the inhaler can be used.
Therefore, it is not as convenient as the Turbuhaler. The delivery mechanism of the
Diskhaler has also had limited success, as it contains a similarly inconvenient
mechanism. Glaxo Wellcome subsequently made a breakthrough with the introduction
of a new delivery device, the Accuhaler, which has considerable advantages over both
previous Glaxo Wellcome designs and AstraZeneca’s Turbuhaler. However, what is
now GSK is not the only company to introduce a rival delivery mechanism to challenge
AstraZeneca’s ascendancy. Both companies will face increasing competition from other
major players who are working on dry powder inhalers. These include Forest
Laboratories, Schering-Plough and Aventis.
GSK has also been actively seeking new indications for its product line: in October
1999 it announced that it had received approval to market the inhaled corticosteroid,
Flixotide (fluticasone propionate), for the treatment of COPD in Germany. This
represented the first approval from a series of applications that were submitted by GW
to regulatory agencies in over 30 countries internationally.
The reformulation of Flixotode/Flovent into new devices and combination products that
allow convenience of delivery and expanded indication possibilities will help to sustain
market share of GSK’s anti-asthma products in the long-term. Additionally, the new
Accuhaler formulation of its new asthma drug, Advair in the US, has shown good
preliminary sales results following its launch in April 2001. Advair combines GSK's
existing bronchodilator Serevent with the corticosteroid Flovent in a single formulation,
which has proved highly effective in clinical trials. The product is expected to reach
blockbuster sales of over $1bn in the US market by 2002. Advair was launched in
Europe under the name Seretide in 2000.
The new formulations of Flixotide/Flovent and Advair will no doubt collectively incur
increased market share for GSK in the short- and long-term. The arrival of new
combination (beta-2 agonist/inhaled corticosterioid) paediatric and adult Accuhaler
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formulations that are expected to be introduced in 2002 or thereafter will also improve
GSK’s market presence in he highly competitive anti-asthma sector.
By 2004, three leading drugs are scheduled to lose their market exclusivity. They are as
follows:
Epogen (epoietin alfa; Amgen);
Procrit (epoietin alfa; Ortho Biotech/Johnson & Johnson);
Diflucan (fluconazole, Pfizer).
Amgen: Epogen
Product profile
Epogen (epoietin alfa) was approval on June 1989 as a recombinant version of naturally
occurring erythropoietin that stimulates erythrocyte (red blood cell) production. Epogen
has eliminated the need for repeated blood transfusions for dialysis patients and for
most patients undergoing dialysis and they receive Epogen as part of their treatment
regimen. Epogen acts by supplementing levels of erythropoietin in the blood following
kidney failure, helping to boost the production of red blood cells.
Epogen is indicated for the treatment of anaemia commonly associated with kidney
dialysis and in November 1999, the indication was broadened to allow Epogen to be
used for the treatment of anaemia in children suffering from chronic renal failure
caused by kidney dialysis.
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Epogen and its out-licensed equivalents – Procrit, Eprex and Espo – effectively
dominate the world market for anaemia products. Under a 1985 agreement, Amgen out-
licensed exclusive rights to Johnson & Johnson’s subsidiary, Ortho Biotech, to sell
Epogen (under the brand name Procrit) for non-dialysis indications in the US market,
leaving Amgen the rights to market Epogen for use in dialysis diagnostics and non-
human applications. Ortho also gained the right to market the product outside the US
and in Japan. The co-marketing collaboration between Amgen and Ortho Biotech, has
enabled both companies to gain significant revenue without competing directly, as for
example, Ortho markets the product for use in conjunction with AZT (for AIDS
patients) and anaemia associated with certain cancers, whereas Amgen markets the
product for dialysis and renal failure related conditions.
Epogen sales have displayed strong growth recently primarily due to the administration
of higher doses and to continuing growth in the US dialysis population. The use of
higher doses was a result of dialysis providers managing more patients into the
haemocrit range of 33–36% as recommended by the Dialysis Outcomes Quality
Initiative (DOQI) and by changes in reimbursement announced by the Health Care
Financing Administration (HCFA) in the US.
In 2000, sales of Epogen reached $1,962m, an increase of 11.5% from 1999 (see Table
3.43). The product will continue to show growth, reaching $2,200m by 2005, despite
losing patent protection in 2004.
Table 3.43: Global sales of Epogen, 1998–2005
($m) 1998 1999 2000 2001 2004 2005
Sales 1,380 1,760 1,962 2,150 2,300 2,200
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Strategic review
Amgen protects Epogen through five patents, the first of which is due to expire in 2004.
Prior to 2000, the company has been embroiled in patent litigation with Transkaryotic
Therapies (TKT) who claimed that Amgen’s Epogen patents, which prohibit the
production of erythropoietin in all vertebrates, were too broad, and should not extend to
all human cells since naturally occurring products cannot be patented, only methods
relating to their production or use.
TKT had developed a different method of producing erythropoietin (branded Dynepo)

to Amgen’s gene transfer system, which did not depend on animal cells, but instead
stimulates human cells to generate the substance themselves. However, the patent
dispute was resolved in favour of Amgen in January 2001 based on patent infringement
in four cases. This decision will no doubt ensure increasing sales of Epogen right up
until patent expiry in 2004. Furthermore, it should also enable the successful launch of
Epogen’s successor, Aranesp (darbepoetin alfa), without the concern of Dynepo getting
to market first and taking a significant portion of the market share.
To sustain market share in the haematology market, Amgen will introduce an improved
form of epoietin alfa under the brand Aranesp, which is expected to overtake Epogen in
sales owing to significant improvements in bioavailabilty. Aranesp has been shown to
have a serum half-life approximately threefold greater than the original. Preliminary
study data for Arenesp suggests that the product may be effective in treating chronic
anaemia of cancer in patients not receiving chemotherapy. In addition, the product may
be effective at wide ranging starting doses and further studies will continue to evaluate
patients in this setting with once every three to four week dosing of Arenesp. If data
continues to be positive, the product will satisfy both efficacy and dosing unmet needs
owing to the product’s high effiacy at reduced frequency of dosing. According to
Amgen, the possible benefits of less frequent dosing on patient management and
compliance, as well as administrative burden, are being evaluated in current and
planned clinical trials. The product has already been submitted for market approval in
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the US, EU, Canada, New Zealand and Australia for the treatment of anaemia
associated with chronic kidney disease.
Once Aranesp is launched, Amgen has the opportunity to command the whole of the
US anaemia market, including the non-dialysis indications for which Ortho currently
markets Procrit. This will undoubtedly enhance Amgen’s market share in the sector and
help stave off competition from TKT’s competitor which may be introduced post-patent
in 2004.
Johnson & Johnson: Procrit
Product profile
Procrit (epoietin alfa) is a recombinant form of erythropoietin (EPO) - the principal

hormone responsible for stimulating red blood cell production. Originally developed by
the alliance between Amgen and Kirin, erythropoietin was marketed under the name
Epogen for the US and Japanese markets. The drug was originally developed for the
treatment of anaemia associated with end-stage renal failure but has wide-ranging
indications for patients with chronic renal failure (prior to dialysis becoming
necessary); for AIDS patients being treated with the drug azidothymidine who
experience low red blood cell counts; in chemotherapy patients; and as an adjunct or
alternative to blood transfusions in preventing anaemia associated with surgery.
Johnson & Johnson acquired certain rights to Amgen’s drug through its Ortho Biotech
division in 1985. Whereas Amgen retained the rights to market EPO in the US for end-
stage renal failure, J&J was granted most of the worldwide rights to the compound for
other indications and territories. The main exceptions were in diagnostic applications
and in the Japanese market, where Kirin-Sankyo holds the marketing rights for all
indications. The agreement has however caused a number of legal disputes between
Amgen and J&J for sales where doctors have prescribed one product regardless of the
approved indication. Arbitration was ongoing since 1989. In 1998, the ongoing
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litigation was resolved in Amgen’s favour with J&J having to pay Amgen’s costs and
expenses, and one half of Amgen’s audit expenses, which Amgen estimated to be
$100m.
Sales of Procrit (marketed as Eprex outside the US) grew by 36% to $2,709m in 2000,
(Table 3.44) which was due to the relatively favourable terms on which J&J licensed
the rights to EPO (J&J paid a 10% royalty on net revenues in 1995). The drug is
supported by a DTC advertising campaign, expansion of the sales force and aggressive
marketing to physicians. Moreover, there is relatively little competition for the product,
although Roche markets a form of recombinant EPO, Recormon, developed by
Genetics Institute in some European markets.
Table 3.44: Global sales of Procrit, 1998–2005
($m) 1998 1999 2000 2005
Sales 1,400 1,988 2,709 2,100
Strategic review
With patent expiry for Amgen’s recombinant erythropoietin in 2004, J&J has utilised
reformulation and extended indication options to sustain market dominance for Procrit.
Although the licensing arrangement is unusual, the current situation allows both Amgen
and J&J to market the products without direct competition. However, on patent expiry
in 2004, Procrit will be competing in all anaemia market territories if Amgen introduces
its next generation erythropoesis stimulating protein Arenesp, which is currently in late-
stage development; and competitor generic products gain market entry
In favour of J&J’s Procrit, the FDA had approved the drug for the treatment of anaemic
patients scheduled to undergo elective, noncardiac, nonvascular surgery to reduce the
need for allogenic blood transfusions. However, it is not indicated for anaemic patients
who are willing to donate autologous blood. The company expects the product to be
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used in a variety of elective surgical procedures that involve blood loss to reduce
exposure to blood transfusions. This new indication is expected to drive continued
growth for Procrit.
In addition, to protect the long-term growth and extend patent protection J&J is
working alongside Alkermes on an injectable sustained-release form of Procrit, utilising
Alkermes’ ProLease drug delivery technology. Although studies are still in phase I
development, the emergence of Procrit reformulated to last from several days to several
weeks would confer more medical and patient benefits compared with the conventional
drug. However, the new formulation would be competing directly with Amgen’s
Arenesp, which requires a reduced dosing frequency owing to improved bioavailability.
Sales of Procrit are expected to grow at least until 2005. Although the markets for
AIDS patients and for pre-dialysis are relatively mature and have been well penetrated,
sales gains are expected as EPO becomes more widely used in cancer indications. The
introduction of J&J’s needle-free sustained-release version of Procrit and the launch of
Arenesp by Amgen, will reduce sales of the original formulations but will hopefully
sustain market share as the patient populations are switched to the new formulations.
New cancer indications earmarked by J&J are currently in phase II development but
will take longer to reach market. Until Procrit’s sustained-release formulation enters the
market, Amgen’s Arenesp will most likely gain market share over Procrit owing to its
once-weekly dosing as apposed to Procrit’s thrice weekly dosing.
Pfizer: Diflucan
Product profile
Diflucan (fluconazole) is the world’s leading prescription antifungal indicated for use in
a wide range of fungal infections, including opportunistic infections affecting AIDS and
immunosuppressed cancer patients. It is also the first oral medicine for the treatment of
vaginal yeast infections, which makes it unique in the market as the pill can be taken
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anywhere and at anytime. The systemic formulation also provides reassurance for
patients over creams or suppositories that can result in leakage or messiness. A single
dose of Diflucan has been shown to remain in the tissue effectively fighting infection
for three days.
Diflucan’s potency is a major advance on other currently available antifungals, and the
oral form has an excellent side effect profile. These characteristics differentiate Pfizer’s
drug from competing antifungal therapies, making it an extremely valuable product.
The high cost of fluconazole is offset by the fact that it needs be taken only once a day
due to its high bioavailability. Ketaconazole, another azole used in hospital treatments,
generally needs to be taken twice daily.
Although Diflucan has a wider spectrum of use, there are concerns that conazole-
resistant strains will impact on sales, particularly in the US and Germany. Second line
treatment is therefore becoming more of a necessity and, as Diflucan is considerably
more expensive than the alternatives, physicians are less willing to use it as a first line
treatment. Pfizer’s main competitors in the antifungals market are J&J’s Sporanox
(itraconazole) and Novartis’ Limas (terbinafine).
Sales of Diflucan peaked at $1,014m in 2000 and are expected to decrease to $300m by
2005 (Table 3.45).
Table 3.45: Global sales of Diflucan, 1998–2005
($m) 1998 1999 2000 2005
Sales 916 1,002 1,014 300
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Strategic review
The patent for Diflucan is due to expire in the US in 2004. Although there are no
indications that Pfizer plans to reformulate fluconazole, it has attempted to expand the
growth of the drug through new indications and OTC switching. Currently, Diflucan is
available in three formats:
Fluconazole Tablets;
Fluconazole Injection - for intravenous infusion only;
Fluconazole for Oral Suspension.
The availability of fluconazole in a variety of formulations has been favourable.

Hospital doctors generally prefer products with a variety of delivery methods because
they can address the needs of a variety of patients. Additionally, the high efficacy of
fluconazole against various candidal infections has been another important factor in its
success to date. HIV infected patients, who are particularly likely to contract a candidal
infection, have, in the past, commonly been treated with fluconazole. However, the
success of protease inhibitors in the treatment of AIDS patients, could have a negative
impact on Diflucan’s sales performance in the long term.
A further indication was approved by the FDA for Diflucan in 1994 for the treatment of
vaginal candidiasis. The convenience of Pfizer’s oral formulation has shown to be
effective and enhances compliance, and has helped Pfizer’s product to become the drug
of choice for this indication. Pfizer estimates that some 75% of women in the US will
suffer from a yeast infection, and many will have recurrent infections.
Pfizer now has the opportunity to revive sales and extend patent exclusivity through
novel formulations of the drug or through additional indications, which are an effective
way of extending a product’s life without incurring further expensive trial costs. An
extended-release formulation, for example, might confer advantages over the current
formulation providing additional benefits to the patients with infections. A sustained-
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release trandermal patch might also provide protection for a week or more eliminating
the need to take an oral medication.
A reformulation strategy for Diflucan should serve to sustain sales and lessen the
impact of any sales lost to protease inhibitors for the treatment of HIV patients.
Furthermore, Diflucan has been granted OTC status in the UK, where it is marketed
under the brand name, Diflucan One. This will generate additional revenues for Pfizer’s
Consumer Health Care division, and boost the overall brand imaging of the product.
Further OTC switching in other territories will help boost declining sales improving
market share.
Four blockbuster drug patents are schedules to expire in 2005, as follows:
Pravachol (pravastatin; BMS);
Zocor (simvastatin; Merck & Co.);
Zoloft (sertraline; Pfizer);
Seroxat (paroxetine; GlaxoSmithKline).
Bristol-Myers Squibb: Pravachol
Product profile
Pravastatin, an HMG CoA reductase inhibitor, was originally developed by Japan-based

Sankyo, who markets the drug as Mevalotin nationally and in the Far East. It was
licensed to BMS for marketing all other territories worldwide and was launched in 1990
under the brand name Pravachol. The drug has a wide range of indications including:
treatment for the reduction of elevated total and LDL cholesterol; reducing the risk of
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acute coronary events in patients with hypercholesterolaemia and established coronary
disease (secondary prevention); primary prevention of death and MI in
hypercholesterolaemic patients without clinically evident coronary disease; reducing the
progression of coronary atherosclerosis and the risk of acute coronary events; and
reducing the risk of stroke.
Pravachol has an extremely good efficacy and safety profile and promotion of the drug
based has been based on important studies such as the Prospective Pravastatin Pooling
project, which indicated that Pravachol consistently helped reduce the risk of recurrent
coronary events in women, older patients and patients with diabetes. This, and data
from other leading studies, has helped to strengthen the position of Pravachol in the
market despite already having the widest range of indications of any statin. BMS also
initiated the Pravastatin Evaluation and Infection Therapy trial in 1999 to compare the
effects of Pravachol to those of Lipitor in reducing the risk of heart attacks and other
cardiac events.
Pravachol’s main competitors include Zocor and Lipitor – leading drugs in the lipid-
lowering therapeutic class. Rather than compete directly with these blockbusters, BMS’
strategy has increasingly focused on mild to moderate hypercholesterolaemic patients,
thereby demonstrating benefit in specific patient subsets. A major threat to Pravachol
over the next two years could come from the loss of patent protection for Sankyo’s
Mevalotin in 2001. The two drugs have similar lipid-lowering efficacies and both have
been shown to reduce long-term cardiovascular morbidity and mortality. Pravachol has
suffered most from cost-effectiveness studies, and it may therefore find competition
from cheap generic lovastatin post-2001. Increasing competition also comes from other
statins and will undoubtedly find it difficult to compete with pipeline second generation
HMG CoA reductase inhibitor’s (e.g. Sankyo’s development-stage pitavastatin) and
extended-release generic lovastatin formulations (Andrx’s Lovastatin XL), which will
also impact on future sales.
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Pravachol’s sales growth which has risen steadily since 1998 is expected to peak
between 2000-2004 declining to an estimated $2,300m by 2005 (Table 3.46).
Table 3.46: Global sales of Pravachol, 1998–2005
($m) 1998 1999 2000 2005
Sales 1,643 1,704 1,817 2,300
Strategic review
The patent for Sankyo’s pravastatin in the US is due to expire in 2005, which poses a
significant threat to future sales of the drug, in addition to Pravachol’s relatively poor
potency compared with Lipitor, and the introduction of superior next generation and
generic hypolipidaemic drugs.
The potential to reformulate Pravachol thereby sustaining brand revenue and extending
patent protection is within reach if BMS chooses to take this approach. The
demonstration of similar potency to Lipitor, for example, or the addition of a
triglycerides indication would help to put the drug on a more sound footing for longer
term success. Another possibility is the combination of Pravachol with a nicotinic acid
– this compound has been found to be effective in reduced doses and combination
therapies with lipid-lowering drugs. Since there is a need for effective treatment for
patients suffering from side effects associated with higher dose statins, the therapeutic
benefit offered by combination therapy could provide BMS with a valuable patent
protected product to market as a follow-up to Pravachol. In view of the relatively small
potential patient population, this strategy could add an average $300m per year into
Pravachol’s sales.
In its favour, BMS has developed a broad range of indications for Pravachol that have
extended the product’s patent protection. Pravachol’s wide range of indications makes
promotion to physicians a more promising approach, particularly if BMS is to avoid
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direct competition with Lipitor or Zocor. As an example of this move, BMS signed a
three-year co-promotion agreement with Women First HealthCare, Inc., a speciality
healthcare company dedicated to improving the health of women in midlife, to market
Pravachol to obstetricians/gynecologists (Ob/Gyns). The company stated that this is an
important untapped market, since over 50% of the US women use an Ob/Gyn as their
primary care physician and that these physicians account for less than 1% of all
cholesterol lowering prescriptions.
Pravachol’s positioning on its wide range of indications and potential repositioning to

market through Ob/Gyns are likely to provide the drug’s best route to continued
revenue growth. The main potential problem with this as with any strategy in this
market at the moment, is that the assumption of a class effect may mean that other
statins benefit from a ‘free rider’ effect.
There are potentially three further options available to BMS to help protect its revenue
stream for Pravachol: through paediatric extension; new indications; or through
reformulation to develop either a combination therapy with nicotinic acid or a
‘superstatin’, which offers improvements in dosing frequency, efficacy and tolerability.
Despite current wide-ranging indications and intent to promote the product through trial
robust data, BMS has not yet implemented a particularly comprehensive patent
protection strategy for Pravachol. This may partly be due to the nature of the statin
market, which already offers great patient convenience together with high efficacy, thus
making further improvements, and patents on such improvements, difficult. The next
four years prior to patent expiry will be critical window for BMS to plan Pravachol’s
longer-term potential in the market.
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Merck & Co.: Zocor
Product profile
As an adjunct to diet and exercise, Zocor (simvastatin) was the first statin to receive
FDA approval to increase HDL-cholesterol (HDL-C) in patients with high LDL-
cholesterol (LDL-C), in addition to the drug’s significant and established ability to
lower LDL-C and triglycerides (TG). Zocor is an HMG CoA reductase inhibitor and
was launched in Europe in 1989 and the US in 1992. It the world’s best-selling anti-
dyslipidaemic drug closely followed by Pfizer’s Lipitor, which is more effective at
controlling levels of LDL-cholesterol, triglyceride and HDL levels than other statins
according to the Pfizer.
Positive study data has helped boost sales of Zocor: for example, a study presented at
the American College of Cardiology in March 2000, suggested that Zocor has benefits
over Lipitor in raising levels of high HDL cholesterol. The study also indicated that the
use of Zocor may result in fewer liver-related side-effects than Lipitor at high doses.
However, given that Lipitor is more potent than Zocor and, therefore, prescribed at
lower doses, it is unlikely that physicians will opt for Zocor over Lipitor simply because
Zocor possesses a more favourable HDL cholesterol raising profile at higher doses.
Further competition comes from AstraZeneca’s Crestor (ZD4522) which poses a

significant threat to Zocor. Crestor has been labelled a ‘super-statin’ with a profile
showing outstanding dose-related reductions in LDL-C, impressive effects across the
full lipid profile, no drug or food interactions, and no safety concerns up to 80mg/day.
The drug is scheduled to be launched in mid-2002.
In an attempt to counter increasing competition, Merck has launched a ‘Get-to-Goal

Guarantee’ scheme, which started in November 1998. This promises to refund patients
up to six months worth of their prescription costs if Zocor therapy, in addition to diet,
does not help them achieve their target LDL cholesterol level. Under the Get-to-Goal
scheme, insurers are also eligible for a refund.
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Zocor sales are expected to increase to 2004 reaching an estimated $7,107m then
declining to $6,000m in 2005 (Table 3.47) when the product loses patent exclusivity.
Table 3.47: Global sales of Zocor, 1998–2005
($m) 1998 1999 2000 2001 2004 2005
Sales 3,945 4,495 5,280 5,838 7,107 6,000
Strategic review
Despite increasing competition from Lipitor and Crestor, which are likely to reduce
Zocor’s share of the statin market, sales of Zocor are still expected to increase in the
next few years due to the expansion of the market for cholesterol reduction, which is
currently under-penetrated (only about 40% of Americans with heart disease are
currently on effective prescription cholesterol-lowering agents). However, a further
threat is the cost-effectiveness issue and, as other statins such as Merck’s Mevacor
(lovastatin) lose patent exclusivity in 2001, generic versions will become more
available eroding the market share of higher priced branded products.
Merck has a limited time in which to extend patent protection and sustain market
dominance for its highly lucrative lipid-lowering drug Zocor. In view of this, the
company has already begun to reformulate the drug through an alliance with Schering-
Plough to re-develop Zocor for use with ezetimibe – a cholesterol lowering drug that
Schering-Plough has in R&D. Zocor inhibits cholesterol through the HMG cascade,
while ezetimibe acts on a separate mechanism to control cholesterol by reducing the
uptake of dietary cholesterol at the liver. This once-daily combination formulation
would be indicated for the treatment of elevated cholesterol levels. As a cholesterol-
absorption inhibitor, ezetimibe lowers cholesterol by a different but complementary
action to Zocor and at therapeutic doses, Zocor with ezetimibe enables LDL-lowering
comparable with three titration steps of Zocor. Merck believes that the combination
will lower LDL-C to a greater extent than Zocor or other statins alone. The new
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formulation would help to protect the patent for Zocor beyond 2005 and would also
serve to sustain market leadership for the expanded simvastatin franchise.
Sales of Zocor could also be sustained and boosted if Merck exploits Zocor’s synergies
with other treatments of cardiovascular risk factors, such as hypertension, diabetes and
obesity. Using this strategy, Merck can increase the use of Zocor in patients whose
primary condition is not dyslipidaemia and who may not necessarily have been treated
with anti-dyslipidaemics in the past. Additional indications and new formulations such
as an oral once-weekly or a delayed-release transdermal patch might offer patients
freedom from dosing frequency thereby increasing compliance. For patients that require
a large reduction in LDL-C (more than 45%) a high dose formulation, for example,
might be more suitable with rapid-acting effects until the cholesterol profile was
stabilised.
Pfizer: Zoloft
Product profile
Zoloft (sertraline HCl) is a once-daily SSRI in the same therapeutic class as Lilly’s
Prozac. The drug was first launched under the Lustral brand in the UK in 1990, with
launch in the US following in 1992. Zoloft was subsequently launched in France and
Germany in February 1997 at a time when 80% of sales were generated in the US.
Furthermore, the drug received approval for a supplemental indication in the treatment
of obsessive compulsive disorder (OCD) and by March 1997, it had been launched for
this disorder in 18 countries including the US.
Zoloft has a number of indications to its advantage, including US approval for the
treatment of depression, panic disorder, eating disorders and post-traumatic stress
disorder. In addition, Pfizer is preparing an application for the approval of sertraline in
Japan for the treatment of depression, panic disorder and bulimia.
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On the back of Prozac’s success and the vast publicity surrounding it, the whole SSRI
class has outperformed even the most optimistic predictions of the industry. In terms of
sales, Zoloft currently lies in third place however, after Prozac and GSK’s Seroxat,
which had 2000 sales of $2,559m and $2,345m, respectively. The main reason why
sertraline has been unable to compete with the top ranking SSRIs is a lack of efficacy
data that demonstrates significant improvement over Prozac.
Zoloft sales are expected to peak between 2000-2004 and are expected to decline to
$1,700m by 2005 (Table 3.48) based on patent expiry, and future launches of more
efficacious products.
Table 3.48: Global sales of Zoloft, 1998–2005
($m) 1998 1999 2000 2005
Sales 1,836 2,034 2,140 1,700
Strategic review
Pfizer’s US patents for Zoloft expire in December 2005 and although the product is
protected for a few years the market is set to become increasingly competitive. Pfizer
continues to market Zoloft aggressively in an effort to increase its share of this
expanding market. Promotional activities included ‘Rhythms’ – a 28 week DTC
education program designed to provide patient compliance support and reinforce
physicians’ treatment instructions.
Pfizer also assisted in the development of ‘PRIME-MD’ – a user-friendly diagnostic

tool designed to improve the diagnosis of depression and other mental health disorders,
which can be used by physicians. Another initiative that Pfizer is involved with is
known as ‘Signs, Symptoms & Care’, which is aimed at raising awareness of the
condition and treatments for it in hospitals and other institutions.
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Although Pfizer’s strategy to maintain market share is based on aggressive promotion
through medical education, the product is competing with equivalently efficacious
drugs, which also rely on aggressive promotional campaigns to reinforce the brand.
When Prozac, Seroxat and Zoloft were launched, none was significantly more
efficacious than previous depression treatments. Moreover, each showed improvements
in side-effect profile for some patients over previous therapies, which induced higher
levels of patient compliance.
Pfizer has also been able to successfully expand the number of indications for Zoloft
despite being small sub-sectors of the market such as panic disorders and OCD. While
these additional indications will contribute some additional sales, they will also serve to
drive PR and marketing for the brand. According to the company, Zoloft has now
become the number one prescribed SSRI antidepressant in the US and the number one
SSRI in eight other countries around the world following new studies that show it
provides unique treatment benefits to patients with anxious depression.
New indications and aggressive publicity will help to sustain short-term growth but a
longer term strategy to help sustain revenue far beyond 2005 could be found in
reformulation. Pfizer is currently investigating four mechanistically distinct
antidepressants in early stages of development, and is beginning phase III trials in 2001
for CP-122,721, an NK-1 antagonist that has demonstrated robust antidepressive effects
in a phase II trial, although it will be a number of years before a new drug reaches the
market. Therefore an immediate-release or extended-release oral or transmucosal
formulation of Zoloft might offer a convenient extension of the product line until the
new drugs are available. There are companies already developing new formulations of
antidepressants to meet unmet clinical needs such as in acute depression where patients
would benefit from urgent medical therapy through a rapid-acting tablet or a
transmucosal spray, for example. Alternatively, the chronically depressed individual
may benefit from an extended-release formulation as seen in Prozac Weekly. Several
new formulations of Zoloft may help to protect market share and extend patent
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protection far beyond 2005 until superior drugs take it over in the competitive
antidepressant market.
GlaxoSmithKline: Seroxat/Paxil/Deroxat
Product profile
GlaxoSmithKline’s SSRI paroxetine is marketed under the brand names Seroxat, Paxil
and Deroxat. It was the third SSRI launched, following Lilly’s Prozac and Pfizer’s
Zoloft. Seroxat is approved for the treatment of depression, OCD, and panic disorder.
In addition, in October 1998, Seroxat/Paxil was approved in the UK for a new
indication, social anxiety disorder (SAD) or social phobia. The product was already
available for this indication in Portugal and Romania, and SB also submitted approval
applications in the US and most of the EC.
Paroxetine has good effiacy and safety data with an average half-life of about 24 hours,
which may actually range from 3–60 hours. Several comparative studies with fluoxetine
(Prozac) show a slightly faster action in paroxetine. One study demonstrated a faster
onset of action in paroxetine for relief of depression and anxiety symptoms. Adverse
effects have also been reported to be a little higher in fluoxetine than in paroxetine.
Seroxat’s product line sales increased by 23% between 1999 and 2000, to $1.3bn
(Table 3.49). Sales for the drug have been estimated to peak at over $2.1bn by 2005,
although this might be an overestimation as 2005 is the year that the patent expires and
a drug with such a large market share will be a prime target for generic competition.
Table 3.49: Global sales of Seroxat/Paxil/Deroxat, 1998–2005
($m) 1998 1999 2000 2005
Sales 805 1,079 1,332 2,100
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Strategic review
The market for SSRIs is expected to continue to grow as there are still a large number
of patients being treated with tricyclics in the US and SSRIs have yet to be widely
prescribed in the European and Japanese markets. In the US, the widespread use of
SSRIs and increased competition in the market will result in increased price pressures.
Given the optimistic outlook for volume growth in the market, Seroxat should also
benefit from strong value growth. To sustain market share and protect revenue GSK has
filed applications for the additional indication of obsessive compulsive disorder in most
of the world’s major markets. Additionally, Seroxat is in registration in the UK and the
US as an oral modified-release formulation – Paxil CR - following patent expiry in
1999. GSK’s reformulation of paroxetine utilises SkyePharma’s Geomatrix drug
delivery technology, which can offer benefits such as less frequent dosing, an improved
side-effect profile, targeted release and customised controlled delivery of the drug.
Paxil CR was filed for US approval in December 1997 and was finally approved by the
FDA on 16 February 1999. However, the reformulated Paxil was not launched possibly
due to a rethink of its strategy for the product based on two new US patents being
granted covering the anhydrous form of paroxetine five days after it lost US market
exclusivity on 7 May 1999. The new patents would have reduced the risk of generic
paroxetine and would help sustain the product’s share in the market. Interestingly, GSK
has now revisited reformulations and indications for Paxil and the product is now in
phase III trials for a dispersible tablet indicated for depression, and Paxil CR is in phase
III trials for premenstrual dysphoric disorder. Neither drug is expected to gain approval
for marketing authorisation before 2002.
Prior to the merger of with Glaxo Wellcome in 1998, SmithKline Beecham also sought
to maximise sales of Seroxat by entering into an agreement with Scios. Under the
agreement, Scios would co-promote Seroxat in the US with the intention that
SmithKline Beecham, Scios and Janssen (which also co-promotes the product) would
each target specific and predefined groups of psychiatrists and physicians to gain as
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much exposure for the product as possible. Such a deal takes advantage of Scios’
experience in detailing with psychiatric care professionals
Together with pending approval of additional formulations and additional indications,

the future growth for GSK’s paroxetine franchise looks robust, particularly with
aggressive co-promotion and marketing efforts from GSK and Scios. Seroxat could
potentially become the top selling antidepressant by 2005. However, the growth
expectation and favourable position of line extensions will be challenged by the
increased competition essentially in the form of generic fluoxetine following Prozac’s
patent expiries in 1999 in the EU, and in 2001 in the US.
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Chapter 4 Marketing and Branding for
Pharmaceutical
Reformulations
Summary
Marketing budgets allocated to the 31 ethical drugs losing patent exclusivity

between 2000 and 2005 must increase over 15% of total marketing expenditure to
sustain aggressive promotion post-patent.
The marketing function for a reformulation should focus on medical and patient
education, whereby the functional value of the product is reinforced through
effectiveness, safety, ease of use, and compliance benefits.
Promoting branded reformulations in the company pipeline or existing portfolio

as a therapeutic substitute to the product coming off patent is a successful method
of inhibiting generic competition and sustaining customer loyalty.
With the combined elements of packaging, design, trademark, and logo together
with the perceived promise of medical benefits and psychological wellbeing, the
brand can become a tangible force that extends beyond the realms of a simple
supply and demand transaction.
Marketing directly to the consumer can result in high drug sales, which is
particularly true if the drug and media surrounding it is groundbreaking, or
revolutionary.
A pre-existing brand’s strength will play a significant role in helping a physician

or patient opt for a reformulated product simply due to its long-standing success
in the market.
To assist in product differentiation, a newly launched reformulated product must

be aggressively promoted by the manufacturer as a strong, visible, and
fashionable line extension of the existing brand.
To maximize on product switching, companies need sufficient time to convince

physicians of the benefits to prescribing a reformulated branded version over the
original and competing products.
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Branded reformulations are well positioned to succeed in the marketplace if the
marketing strategy is focused, well planned, and maximises on both the existing
brand, targets prescribers and dispensing pharmacists, and utilises all media
resources available.
Although a pre-existing brand can be used to help establish a drug in the OTC
market, the manufacturer should not rely solely on the brand to achieve this goal.
The brand may help, but success will depend on the positioning of the product in
the market, influence of prescribing and dispensing professionals and the uptake
from consumers based on public available information and advertising.
With 50% of the world’s leading drugs coming off-patent by 2005, online
advertising expenditure is expected to exceed $10bn as companies gear up on
their marketing ploys to stave off generic competition and attempt to sustain
market share.
It is essential that online marketing for a reformulated is executed and product

maximises on the pre-existing brand. This can help to increase the value of the
reformulation by association and also adds credibility to the new formulation.
Introduction
Marketing is an extremely important and necessary tool that enables pharmaceutical

companies to communicate and effectively promote new and established products in the
highly competitive global pharmaceutical market. There is a great need for
pharmaceutical firms to maximise media exposure for their products before, during,
and after product launch to elicit sales and retain a consistent market penetration. A
drug company’s sales team is perhaps the most important marketing force; as front-line
marketers, sales representatives establish direct personal contact with physicians and
pharmacists, which is vital in the uptake of products by prescribers and drug
purchasers. In addition, marketing media is abundantly introduced as part of an
integrated marketing campaign and has traditionally included print publications (e.g.
patient packs, medical leaflets), seminars, conferences, advertising, television and
radio, computer-based programmes (e.g. CD-ROM; floppy disks) and more recently
Internet and interactive approaches. Sales promotion strategies might also include the
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provision of gifts, samples, or coupons, and activities such as competitions or
sponsored events. Most pharmaceutical companies will target their marketing to the
three major audiences, namely industry professionals, prescribers, and consumers.
Advertising plays a key role in the marketing of prescription products to healthcare

professionals and also to consumers, particularly in the US where direct advertising to
the consumer was permitted since August 1997. Approximately $1bn is spent on DTC
advertising of prescription medicines annually in the US alone with average DTC
advertising expenditure between $50-60m per drug. Reaching the consumer directly
promises huge benefits to multinationals and DTC advertising enables the individual to
request medicines from prescribers and pharmacies and can strengthen a brand through
familiarity. DTC advertising for prescription drugs in the US generally takes the form
of television, radio, print media, exhibits, sponsorship events, or Internet sites. In the
EU direct-to-consumer advertising for prescription-only drugs is prohibited in many
countries, for example in the UK, the promotion of medicines is controlled by a
Directive of the 1968 Medicines Act and the 1992 EU Directive on the Advertising of
Medicines for Human Use (92/28/EEC).
On average, 15% of a product’s revenue is spent on the sales and marketing function.
Of this 15%, on average 70–75% is spent on sales force representatives and the
remaining 25–30% on marketing activities, such as advertising campaigns. It is these
promotional campaigns that are important for targeting the healthcare professionals
(e.g. specialist, hospital clinician, GP) or drug purchasing managers – essentially those
have influence in stocking and prescribing drugs. For products that are off-patent, it is
estimated that less than 10% of the marketing budget is currently allocated to their
promotion, although this figure is likely to increase with 31 drug patents scheduled to
expire between 2000 and 2005.
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Target audiences
Marketing and promotion has a universal practical purpose for pharmaceutical industry
as it allows each company to reach, communicate, and interact with a large and varied
audience, as shown in Table 4.50.
Table 4.50: Main marketing targets for pharmaceutical companies
Industry sector Medical/healthcare Consumers Organisations/

personnel Institutions
Wholesalers Physicians Patients Centers for Disease

Distributors Specialists General public Control
Subsidiaries GPs Consumer groups Medical societies
Importers Nurses Patient groups & organisations
Retail pharmacies Dentists Medical libraries
Hospital pharmacies Surgeons Medical publishers
Co-marketers Purchasing managers News agencies
Private healthcare Public health professionals Pharmacy/Pharmaceutical
companies organisations
PR agencies
On a business-to-business level, marketing material is important to allow the

pharmaceutical firm to target the wholesaler, distributor, or healthcare organisation –
establishments who would buy direct from the manufacturer in large quantities. For
these, comprehensive up-to-date information on the drug is crucial to allow them to
consider repeatedly purchasing the drug.
The medical/healthcare sector requires supplementary marketing, which is usually

conducted on a personal basis through sales representatives. Advertising and all other
forms of media, which are relevant to the marketing campaign, are also normally
utilised to maximise marketing opportunities for this important sector.
The consumer audience has widened in recent years owing to the general increase in
consumerism and consumer power. Relative to healthcare and pharmaceuticals, the
consumer has increased levels of medical knowledge, which has prompted a need for
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quality medical education and disease awareness programmes. The opportunity to
provide disease- and drug-specific information resources for consumers was taken up
rapidly by many multinationals who viewed the move as a way to foster positive
attitudes towards their companies through the dissemination of free accurate and
medically appropriate literature – coverage which is often lacking for patients after
consulting a GP or physician. In this way, companies hope to encourage loyalty for the
company and the branded medicines they sell. This is particularly true in the Internet
domain for US citizens, where patient-friendly information resources confer many
benefits of a drug and provide not only essential drug information but disease
management and supplementary interactive facilities designed to encourage disease
awareness and patient education. Such a strategy is aimed to ultimately increase the
credibility of the company.
Marketing capabilities
Successful marketing relies on the capabilities of the marketing team and the financial
ability to support promotional activities through a product’s lifecycle. Consistent
promotion will be required during pre-launch, launch, and post-launch of a new product
to sustain peak sales. The large-scale operation of marketing a new drug includes its
global branding, packaging, promotion, and medical education and patient information
provision. The capabilities to market a reformulated product would be significantly
less, however, owing to the established brand and the available knowledge of the pre-
existing drug’s medical benefits and safety profile in the medical and pharmacy
communities. Moreover, the marketing function for a reformulation should focus on
medical and patient education whereby the functional value of the product is reinforced
through effectiveness, safety and ease of use.
Where they lack in-house expertise or financial support to market a product, certain
companies opt to use external sources to co-market their products based on, for
example, greater expertise in a therapeutic area or a well-connected sales team with
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established in-roads to prescribers and drug purchasers. Although co-marketing will
generally incur higher costs and decreased sales revenue for the manufacturer, there is
the benefit of exposure for the product, which will serve to increase branding awareness
in the long-term.
In general, effective marketing will result in good sales return, but there are an
increasing number of factors that can influence consumers' buying decisions, such as
cost-benefit analysis or recommendation from healthcare organisations (e.g. NICE).
This has meant companies have had to resort to new tactics and gimmicks to boost
sales uptake and reach peak sales in a shorter time. A recent example would be with
Bristol-Myers Squibb’s off-patent oral hypoglycaemic, Glucophage (metformin).
Despite patent expiry for Glucophage in 2000 sales of the drug increased 31.5% to
$1,732m. To maintain dominance in the market, Bristol-Myers Squibb’s patent
extension strategy was to introduce a once-daily extended-release formulation in 2001,
which could take over from Glucophage and preserve market share. To raise the profile
of the new formulation and encourage patient switching, BMS announced in February
2001 the introduction of a ‘Free Glucophage XR in March’ program – described as a
unique patient and provider awareness program for the company’s new treatment for
type II diabetes. The marketing and promotion for the drug was aggressive and included
advertisements that ran through the whole of March in addition to a website promotion
– Error! Hyperlink reference not valid. – that allowed patients to obtain a
redeemable coupon for the product by logging onto the website. The coupon offer
entitled patients to a free 30-day supply of the drug at participating pharmacies.
Coupons for the program were also made available to patients in print advertisements
appearing in major national newspapers. Although it is possibly too early to establish
the success of the marketing ploy, the clever use of advertising for the pre-existing
brand and promotion of the formulation as a new treatment option with improved
benefits to patients, in addition to the perception that the company aims to offer its
healthcare program to both healthcare professionals and patients alike, will do no harm
in establishing Glucophage XR as a major focus of attention. Furthermore, the tactic of
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providing a free sample of the drug will also help to switch patient groups from
traditional Glucophage to Glucophage XR and encourage long-term use of the drug.
In general, a strategy of promoting branded reformulations in the company pipeline or

portfolio as a therapeutic alternative to the product coming off patent, can be a
relatively successful method of inhibiting generic competition and sustaining customer
loyalty. However, it is critical that the substitution process is initiated at the correct
point in the declining sales curve of the product nearing patent expiry, to ensure that the
reformulated product does not cannibalise the existing product’s market share before
maximum returns on investment have been attained.
The importance of branding
Branding is a powerful marketing method whereby the ‘name’ of a product and

subsequent media exposure for it will evoke almost instant and universal recognition of
the drug and its function. For example, for many, the mention of Prozac is synonymous
with depression, Losec is synonymous with ulcers, and Viagra with erectile
dysfunction. Such impressive branding strength has served to improve a drug’s position
in a saturated market and sustain sales because of the media hype surrounding it. The
power of the brand is also exemplified in the retail sector: for example, the Adidas
brand is an extremely credible ‘must have’ sportswear range, and, due to its enormous
popularity through publicity, retail outlets are pressurised to stock the range or lose out.
This ‘must have’ influence is also observed in the drugs sector such as with off-patent
aciclovir, which was given OTC status for treating cold sores under the brand Zovirax.
Despite the launch of competitor products such as Bayer’s topical aciclovir (Soothelip)
in 1997, the established association of Zovirax as the prescribed product for treating
cold sores made the impact of Bayer’s Soothelip negligible on sales compared with
Zovirax.
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Today, the brand is as valuable as the patent, and is regarded as the most important
corporate asset in many instances. The trademarked brand name is a visible
representation for a company and its portfolio. Schering-Plough’s Claritin brand is one
of the most successful in the field of allergy and the company has vehemently protected
its position in the market by adding value to the brand with a number of reformulated
line extensions. Additionally, it seized the opportunity to market its antihistamine
brands within days of the US DTC advertising ban being lifted in 1997. The family of
products achieved global sales of over $3bn in 2000.
The evolution of brand management has added techniques and rationale to the process
of marketing, sales and promotion. With the combining elements of packaging, design,
and logo together with the perceived promise of medical benefits and psychological
wellbeing, the brand can become a tangible force that extends beyond the realms of
simple supply and demand transaction. Additionally, drug brands also play an important
socioeconomic role for many prescribers and consumers who chose them owing to the
drug’s perceived status among me-too products. For example, private healthcare
physicians will be more inclined to prescribe branded drugs over generics or less well
known brands owing to superior quality and reputation. Private patients who are
familiar with publicised brands will also be more inclined to request them.
Pharmaceutical brands are usually promoted on the basis of their functional values,
which may include uniqueness, efficacy, safety, convenience, and cost-effectiveness.
Losec, for example, is heavily promoted on the basis that it was the first proton pump
inhibitor indicated for the treatment of gastric ulcers; it showed efficacy in healing
ulcers at a faster rate than conventional medicines; it has minimal side-effects; and a
short treatment duration time. However, not all drugs like Losec are unique in their
class and might not be so easily differentiated. The marketing of drugs in a saturated
market therefore poses a significant problem for pharmaceutical companies and creative
marketing is crucial to help differentiate a product in this case.
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Blockbuster drugs such as Losec, Claritin, and Zocor have been extremely successful
partly because of the companies’ aggressive marketing campaigns for the brand. Clever
and aggressive marketing essentially drove explosive growth for Losec in the US
market, and in 2000, sales of the drug exceeded $4bn. It is well known that marketing
directly to the consumer can result in high drug sales, which is particularly true if the
drug and media surrounding it is groundbreaking, or revolutionary. In addition, Pfizer’s
Viagra (sildenafil) promotion typified this through aggressive marketing of its blue-
coloured pill, which was promoted as the only oral medication on the market to
successfully treat male erectile dysfunction. This promotion was also unique in that it
opened up the subject of impotence, which was hitherto fairly taboo, and sparked
almost ubiquitous interest in the drug for both medical and illicit recreational purposes.
By 2000, sales of Viagra reached $1.3bn indicating, not only many satisfied consumers,
but widespread recognition of the brand. Well-established blockbuster brands such as
Viagra also facilitate penetration of product line extensions. For example, an easier to
administer intranasal spray or topical cream formulation of sildenafil that improves
onset of action allowing spontaneity would be favoured more by patients under the
strong Viagra brand than an identical unknown brand. The issue of customer loyalty
and previous use of a drug plays an important part. In the case of Viagra and the strong
publicity it has received, the introduction of several product line extensions or
reformulations should be extremely successful, particularly if the female Viagra
counterpart is launched.
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In general, branded drugs are extremely effective for several economic and commercial
reasons. They help to:
Build a platform to reach the consumer and cement buyer-seller relationships;
differentiate a product in the market through instant recognition;
span international territories and extend into new sectors and markets;
influence social attitudes and behaviours;
attract customer loyalty;
expand revenue streams through product extensions;
add value to company performance and increase shareholder stake;
enhance the corporate brand.
Figure 4.12: Economic and commercial advantages of branded drugs
Enhance the
corporate brand
Differentiate a product Span international
in the market through territories & extend into
instant recognition new sectors and markets
Attract customer Advantages of a Influence social

loyalty
strong drug brand attitudes & behaviours
Build a platform to reach Add value to company

the consumer & cement performance & increase
buyer-seller relationships Expand revenue streams shareholder stake
through product extensions
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Branding reformulated products
The decision-making process for a physician to prescribe a product is generally based

on the rational understanding of a drug’s effects and consideration of its price. In the all
too familiar scenario of an overcrowded market with many products to chose from at
similar prices, the brand can play an important role in deciding whether the product will
be chosen. For the reformulated product, the pre-existing brand’s strength could trigger
one of many favourable cognitive events such as a company’s reputation in the industry
for drug discovery and innovation, R&D focus, support for the medical community or
helpfulness from sales representatives. The overall positive or negative mental picture
that manifests from the company’s corporate image and associated branded product
portfolio might play a decisive role in whether a branded reformulated product is
chosen. This is of course based on the assumption that the product has improved and
superior characteristics over the original product.
Nevertheless, a pre-existing brand might play a significant role in helping a physician

or patient opt for a reformulated product simply due to its long-standing success in the
market. However, to help differentiate a newly launched reformulated product in the
market it must be promoted by the manufacturer as a strong, visible, and fashionable
line extension of the existing brand.
Reformulation switching
Switching to an ethical reformulation
Switching from the original to a reformulated product requires a fair degree of

marketing and promotion to bring to the attention of the physicians and consumers the
greater benefits of the drug over the original. Established branded drugs should enable a
smooth transition for new formulations based on pre-existing physician knowledge
about the drug and patient loyalty; however, pharmacoeconomic analysis of the drug is
becoming an increasingly important decision-making factor in whether or not a drug
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will be prescribed, particularly in public and private healthcare environments. The
marketing and promotion for these products therefore needs to be aggressive and
consistent to ensure that they are differentiated from other me-too and generic products.
One effective method to make the drug stand out in the crowd is to use clinical study
data that shows the drug’s efficacy and benefits over competitors. This strategy has
become a standard feature in most marketing and promotional programmes to
effectively communicate positive information for the product. The strategy is frequently
extended throughout the lifecycle of the drug particularly if the drug is approved for
new indications or reformulated to reduce dosage or serious side-effects.
Case study – Succesful product switching: Aventis’/Biovails’s Cardizem
A classic example of successful product switching to new formulations is with the

Cardizem (diltiazem) franchise. Marion Laboratories (now Aventis) was able to
influence physicians to switch to a new sustained-release dosage formulation, Cardizem
SR, prior to patent expiry through the use of aggressive marketing campaigns. The
strategy allowed Cardizem SR to serve the diltiazem market even at the time the
original patent expired and generic diltiazem was available. The company has repeated
this marketing strategy several times to switch the patient population to a once-daily
formulation, Cardizem CD, which achieved annual sales of over $800m following
launch. Product switching has now been carried out several times since the launch of
the original product and further product switches will be sought following the
introduction of new high-strength Cardizem CD and Cardizem XL formulations. The
branded Cardizem franchise, now licensed to Biovail from Aventis, is potentially worth
$140–160m in incremental revenues to Biovail, but the additional formulations
(Cardizem 360mg and Cardizem XL) are likely to improve these figures post 2002.
Cardizem CD was the leading diltiazem product with over 13 million prescriptions in
the US during 2000.
With regard to marketing and promotion of its new franchise, Biovail plans to step up
promotion of the branded family by adding up to 500 sales representatives to its
existing 300 person sales force, and extend arrangements with strategic and/or financial
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partners to co-promote the franchise. Throughout 2001, Biovail's US sales force will
focus its promotions on switching to the existing Cardizem products, as well as
implementing pre-launch activities with respect to Cardizem XL and other products in
Biovail's development pipeline. Because the Cardizem family of products has been a
leading pharmaceutical brand for hypertension and angina in the US for many years,
Biovail will be well positioned to capitalise on the improved formulations that will be
introduced to the market. The new branded Cardizem entrants will undoubtedly help
sustain market share for Biovail/Aventis in the $3.5bn calcium channel blocker market.
Switching in good time
Generally speaking, to maximize on product switching, companies also need sufficient

time to convince physicians of the benefits of prescribing a reformulated branded
version over the original and competing products. For drugs nearing patent expiry, this
vital window of transition is not always available, although there are a number of
strategies open to companies to extend the time needed to persuade physicians and
patients to switch to the new formulation. These include:
Withdrawing the product from the market so that generic companies will be
required to do compulsory safety and efficacy testing which could take up to 12–18
months;
applying for regulatory patent extensions in the form of SPCs;
applying for peadiatric extensions;
applying for orphan drug status.
In each case, these strategies may extend the marketing exclusivity to buy time,
effectively, at which point the marketing and promotional activities for the new
formulation can be planned and deployed.
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Switching to an OTC formulation
Switching a prescription-only drug to an OTC formulation is another strategy employed

by pharmaceutical companies to protect value in a brand and enhance sales potential in
other sectors. The strategy also offers great benefits to the company, especially if the
drug is close to patent expiry. Successful prescription to OTC brand switches include
Canesten, Diflucan, Zantac, Zovirax, Claritin, Neurofen, Pepcid AC, Beconase, Zirtek
and Tagamet. To successfully compete in the OTC market, however, companies need to
increase the sales and marketing spend pre-switching on physician education to
convince them to prescribe the branded OTC version rather than competing cheaper
products. This promotion must also include considerable advertising costs, which
constitute a large proportion of the costs of an OTC switch. For OTC switching, the
marketing costs also vary across different countries, depending on the degree to which
OTC advertising is allowed. The average costs of OTC switching is the region of $5–
50m, with $50m being a realistic number for blockbuster products that are switched to
OTC status.
A drug that is switched from the ethical pharmaceutical market must exhibit an
exceptional safety record, but will usually be formulated at the lowest effective doses.
For example, the OTC formulation of Zantac is available at a dose of 75mg with a
limited indication for dyspepsia compared with the prescription formulation of 300mg –
a high-dose preparation for ulcers that is prescribed under medical supervision.
Although a pre-existing brand can be used to help establish a drug in the OTC market,
the manufacturer should not solely rely on its strength to achieve this goal. The brand-
name may help, but success will depend on the positioning of the product in the market,
influence of prescribing and dispensing professionals, and the uptake from consumers
based on public available information and advertising. The success of Boots’ switched
Rx-to-OTC ibuprofen (Nurofen) was based on several factors, including the product
being the first new analgesic to hit the OTC market for a number of years; association
of the Ibuprofen brand; and support from in-store pharmacists who influenced
consumers to switch to the new formulation.
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Similarly, Merck/Johnson & Johnson’s OTC switch of the anti-ulcer drug Pepcid to
Pepcid AC – indicated for heartburn and acid dyspepsia – achieved an estimated 15%
share of the indigestion market in North America when it was launched. In Canada,
Pepcid AC was introduced in a new dosage with a new indication, claiming that it
could cure heartburn. Aggressive marketing to differentiate it from other antacids came
in the forms of consumer information, pharmacist consultation, a free telephone
information line, exhibitions, consumer advice, pharmacy visits and educational
programmes. This intense marketing for the new formulation was successful in raising
the profile of Pepcid AC and encouraged rapid sales uptake. However, the promotional
campaign was less well accepted in Europe, such as in the UK and France. Reasons for
the low uptake included more resistance to OTC remedies, slow market development,
and restrictions to pharmacy involvement. In contrast, Pepcid AC was extremely
successful in Sweden, achieving significant market share through strong consumer
messages, which differentiated the product from rivals. Clearly, although a strong brand
and concomitant heavy promotion helps to establish successful OTC switches, it is not
a guaranteed formula. Moreover, success will come from additional support from
pharmacists and dispensing doctors who can convey a clear message to the consumer.
One significant benefit of OTC switching is the possibility of reaching international

markets with one brand in a relatively short time. For example, the improved mutual
recognition procedures in the EU allow for the registration of new products in 15
member countries over a few weeks as opposed to a number of years. The development
of international brands will provide the manufacturer with greater opportunities for
penetration in overseas and emerging markets. The evolution of new recognition
procedures in other parts of the world such as in Asia under the auspices of the
Association of South East Asian Nations (ASEAN), for example, will also help to
expand the Rx-to-OTC switched products for many multinationals.
However, there are many barriers to successful OTC switching including saturation in
the market, regulatory and political obstacles, prescription dependency, consumer
apathy, market instability, and low profit margins. Notably, less than 10% of all new
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OTC brands are successful in the global market, therefore it is imperative that a newly
switched OTC reformulation is armed with competitive advantages, marketed with
discernible understanding of consumer needs, and targeted at dispensing pharmacists
who can influence purchasing.
Marketing strategies for reformulated products
By 2006, reformulated products of leading blockbuster brands are expected to account

for an estimated $33bn in annual sales value. Of the brands that achieve sales in excess
of $1bn in revenue, it is estimated that for each 24-hours that they maintain their
dominance post patent, they generate an estimated additional $3m for the company.
Although the strength of a brand can be maintained through marketing and promotion,
sales will eventually be eroded over time. Therefore, to maintain lucrative market share
and compete in saturated markets, manufacturers need to rely on their powerful
marketing strategies to sustain penetration in the markets.
Cast study – Marketing a reformulated product: Bayer’s Adalat
In the past, marketing campaigns for reformulated products have shown impressive
results. For example, when Bayer’s Adalat was launched in Germany in 1975, it was
received well as a novel treatment for hypertension, but, following a period of limited
marketing over a two-year period post launch, the initial enthusiasm for the product
among the medical community quickly disappeared. The drug manufacturer then
decided to reposition the drug based on scientific rationale exploiting the drug’s
therapeutic efficacy. Although the advertising helped to increase sales marginally,
growth was not as high as expected for the superior product. A market review of the
promotional and advertising campaign for Adalat established that Bayer’s calcium
antagonist was perceived to be associated with side-effects that inhibited doctors from
prescribing it. In view of this, Bayer introduced Adalat Retard in 1981 – a new twice-
daily formulation with reduced side-effects – which was marketed as a first-line therapy
to treat hypertension. The marketing campaign included advertising that identified
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Adalat as preventive coronary therapy in addition to an anti-hypertensive, which
attracted a larger group of patients with high blood pressure. This campaign was
successful in reviving sales for the product line in the interim until the patent expired in
1985.
Despite generic competition, new product line extensions were introduced (e.g. fast-
acting tablet; once-daily formulation) with concomitant media to inform patients and
physicians about hypertension and cardiovascular diseases with the objective to
increase awareness and recognition of reformulated Adalat products.
Today, the Adalat product range continues to be one of the most widely prescribed. By
1998 the Adalat franchise reached sales if $883m, and by 2000 global sales reached
$1,065m. The success of the product franchise can be partly attributed to the products
exponential reach that resulted from re-marketing the drug as a treatment with
secondary therapeutic value with associated reduction in side-effects.
Generally speaking, a marketing and promotion strategy for reformulation should

consider the following:
Utilisation of the pre-existing brand - marketing should include positive factual

information related to the branded family of products to maximise exposure for the
reformulation;
consumer message – establish a clear consumer message aimed at physicians and

pharmacists (particularly for OTC switches);
establishment of a product rating – ensure the reformulation is marked as a superior

product to position it above its predecessor and competitors;
convey effectiveness - utilise clinical data to promote exceptional efficacy;
highlight product benefits - include beneficial product reviews from patients and
physicians;
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communicate cost-effectiveness – disclose the cost-benefit analysis for the
reformulation;
provide education – maintain a forum to educate patients and physicians on new

research information about the reformulation product;
integration of new media – utilise new media (e.g. interactive Internet facilities) to
gain as much exposure for the product;
marketing innovation – use of gimmicks and ploys to stimulate awareness and

encourage interest in product use (e.g. free sample, coupon, free newsletter, gratis
subscription to community Internet site).
Branded reformulations are well positioned to succeed in the marketplace if the

marketing strategy is focused, well planned, and maximises on both the existing brand,
targets prescribers and dispensing pharmacists, and utilises all media resources
available. In addition, the skills of the sales representatives in communicating the
profile of the drug are equally important, as is the emphasis on targeting select
physician groups and opinion leaders who can endorse the product and influence peer
groups to prescribe the reformulation.
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The role of the Internet
Unquestionably, the Internet has evolved as one of the major technological advances of
the late 20th century. With so many applications to business and lifestyle it has
revolutionised the way we live in the 21st century. At the time of writing, almost 500
million people across the globe have access to the Internet, with a high proportion of
them in North America, and approximately 40% in Europe. By 2003, ambitious
estimates put almost 50% of the global population online.
The growth of the Internet has been astounding – Internet traffic doubles every 100
days; and by 2002 there will be more than 8 billion web pages available. The Internet
therefore represents an extremely unique and powerful marketing medium with
staggering potential to reach millions of consumers. It is also an unrivalled means of
communication for direct contact with healthcare and industry professionals, trade
associations, the press, colleagues and competitors. With regard to healthcare, it is
estimated that of all adults who regularly use the Internet, over half use it to retrieve
health information, and one-third of these will seek specific data on medicines. In is not
surprising therefore that eCommerce in the pharmaceutical industry has exploded with
every major company developing sophisticated websites for business and consumer
platforms.
Although the Internet is embroiled in regulatory issues relating to advertising and the
quality of healthcare information made available, legitimate websites maintained by
multinationals are generally informative, high quality and keep within restrictions
imposed by national laws. A disclaimer is usually imposed on non-resident citizens
when they enter a site that is not intended for them.
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Global reach
The Internet is a very useful marketing tool to reach consumers globally and is probably
the most efficient way to reach new consumers. It can be used to promote the benefits
of pharmaceuticals and provide relevant health information to the public. The two-way
nature of the Internet also allows customers and interested members of the public to ask
questions and receive answers from those most qualified to provide them. Most
multinationals have now maximised their web presence to communicate to consumers
through country-specific sites, but this has partly been a necessity owing to differing
national regulatory laws relating to the advertising and promotion of prescription-only
products.
Benefits of reaching the online consumer
Pharmaceutical companies have invested millions of dollars to engineer websites that

are sophisticated and interactive, allowing them to track consumer usage patterns
related to information on their sites and provide statistical and demographic data from
online discussions, email groups, and virtual communities. They are able to assess who
visited the site, what the individual was interested in viewing, and whether successive
visits were made. Additionally, if the person filled out an online response form they
will submit specific data on an individual’s personal details such that products can be
tailored to individual needs or used as a basis for further research investment. Many
pharmaceutical websites successfully attract many visitors through the use of gimmicks,
free products, coupons, referrals, information updates and newsletters. A central point
of contact also reduces marketing costs – Internet marketing is cheaper than print/TV.
Other benefits of the Internet for marketing purposes are that it widens the product list
to the general public; allows for greater sales potential; and potentially strengthens the
company profile and brands.
Pharmaceutical companies are increasingly using the Internet as a valuable promotion

tool as a medium to contact consumers – doctors, patients, and the general public. By
opening new channels of direct communication, the Internet platform can be shown to
enhance marketing campaigns generate brand loyalty, raise product awareness and
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company profiles, allow for a greater understanding of consumer behaviours and the
needs of patients, and influence the consumer’s purchasing decision. In this way, the
Internet is a valuable asset in promoting product growth.
Reformulation and Internet opportunities
There are a number of benefits to marketing a reformulated product on the Internet.

They include:
Global online consumer attention;
enables large amount of product-related information to be presented in one space;
allows customisation of information for specific groups;
central communication platform;
economically viable;
generates product awareness on a global level;
brand reinforcement;
product family awareness;
low risk;
enhanced corporate profile.
Medical education and patient information are essential elements of an Internet

marketing strategy. The integration of healthcare information for the professional and
consumer conveys much credence to the pharmaceutical company. For example, the
busy doctor can benefit from accessing up-to-date study data and obtaining full
prescribing details in minutes; and patients, for example, can be presented with simple
diagrams and self-diagnosis tests, which prompt the user to seek advice from their
doctor. Through education, consumers may become more aware of illnesses and
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conditions that they were not aware of allowing a preventive approach to their health,
and might learn of treatments that they thought did not exist. In effect, larger patient
pools are potentially uncovered with medical information posted on the web.
It is essential that any online marketing for a reformulated product maximises on the
pre-existing brand. This helps to increase the value of the reformulation by association
and also adds credibility to the new formulation. Currently, there are over 500 product-
specific websites, which are aimed at consumers and healthcare professionals. Some
popular sites include Merck’s Error! Hyperlink reference not valid. Pfizer’s Error!
Hyperlink reference not valid. Eli Lilly’s Error! Hyperlink reference not valid.,
and Parke-Davis’ Error! Hyperlink reference not valid.. Surprisingly very few
websites are dedicated solely to a reformulated product. Moreover, reformulations are
promoted in conjunction with the existing branded products such as with the family of
claritin line extensions (Error! Hyperlink reference not valid.) or they are promoted
as part of disease awareness programmes (e.g. Error! Hyperlink reference not
valid.). As competition increases and stronger marketing is required, more companies
will be utilising product domain names for individual reformulations to strengthen the
brand and promote the drug above predecessors to encourage switching. This is
exemplified by Bristol-Myers Squibb’s recent launch of Error! Hyperlink reference
not valid., which aims to differentiate the product from standard Glucophage. Other
reformulated products directing this trend include Error! Hyperlink reference not
valid. and Error! Hyperlink reference not valid..
For reformulated products that require maximum exposure to encourage patient and
physician switching and attract new consumers, the Internet is an ideal platform,
particularly in the US, to offer a complete platform of information, benefits, and
gimmickry at low cost. Companies that fail to expose their products in this way will
inevitably lose out to companies that do market their new formulations through the
ever-evolving Internet medium.
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Advertising on the Internet
Approximately 80% of Internet users have at some time searched for information
related to healthcare. Patients and consumers can readily access information pertaining
to personal medical problems in a discrete environment, and potentially exchange
information with experts and other healthcare professionals in the comfort of their own
homes. Trends suggest that the average consumer is better educated about healthcare
than at any other time in history; is skeptical about the quality of current healthcare; is
more proactive in seeking quality information related to health problems; and is eager
to help family members or friends find more about certain diseases and illnesses.
With these points in mind, it is extremely important for pharmaceutical companies to

consider advertising on the Internet to elicit traffic to their products (within their
national regulatory boundaries). In the US, online advertising is estimated to reach to
$7.7bn by 2002. With 50% of the world’s leading drugs coming off patent by 2005, this
figure might exceed $10bn as companies gear up on their marketing ploys to stave off
generic competition and attempt to sustain market share.
The advertising of reformulated products online can be viewed as a valuable strategy to

capture the attention of millions of online users who seek improved treatments for their
conditions. For drugs that are successful and command a large market share, or those
that are facing patent expiry with new formulations to take over, advertising for the
product online should be regarded as an essential marketing and promotion tool in the
current competitive climate.
Undoubtedly the Internet will continue to present huge marketing opportunities for the
pharmaceutical industry particularly at times of vulnerability during patent loss or
introduction of new products. New formulations should benefit from constant exposure
on the Internet through independent website presence or advertising at little cost to the
pharmaceutical company.
202
203
Chapter 5 Strategic Reformulation
Alliances
Introduction
The market success of established reformulated products and the opportunities to

reinvent pre-existing drugs with innovative delivery routes has driven growth in the
drug delivery sector. More importantly, the alliances to create these products, such as
those between Pfizer and Alza to develop Procardia XL, and the former Hoechst
Marion Roussel (now Aventis) and Elan to develop Cardizem SR have, by example,
been instrumental in expanding the sector, forging new strategic partnerships world-
wide.
Pharmaceutical companies whose leading blockbuster drugs are close to patent expiry
can fully exploit their molecules for optimal gains through reformulations, as shown in
Chapter 3. This can add significant value to the product line and extend the revenue
stream beyond the average 10-year window, enabling the company to recoup R&D
costs and generate significant profit. A recent Datamonitor pharmaceutical industry
survey indicated that over 90% of respondents gave favourable indications towards
partnerships with drug delivery companies. Reformulation-based strategic alliances
enable companies to collaborate on a number of levels including feasibility studies,
R&D, manufacturing, marketing, and/or licensing. Despite these possibilities and the
positive inclination of the industry towards alliances, only 20% of reformulation
collaborations are a direct result from alliances with multinationals, the remainder
being developed between drug delivery companies themselves and biotechnology and
specialty pharmaceutical firms such as generics companies.
The opportunities for multinationals to reformulate drugs are vast, with over 250
proprietary drug delivery technologies available offering wide-ranging delivery routes
including oral, pulmonary, transdermal, transmucosal, injectable, needleless, and ocular
204
delivery. As a leading pharmaceutical company looks to reformulate or develop a
product utilising drug delivery technology, those biotechnology firms that are able to
offer a range of solutions to a formulation challenge will be more likely to succeed in
partnering with a multinational than a company who offers limited choice. Such variety
has led to a ‘one-stop shopping’ platform for the multinational, which is particularly
advantageous owing to risk reduction from the availability of multiple formulation
solutions. Companies such as Novartis and Aventis have struck up numerous alliances
to this end, as indicated below.
For some multinationals, the utility of reformulation ranks high on their business
development strategies, but for others the reformulation is considered not so important;
moreover the redesign of the molecule is the preferred strategem or a focus on NCE
discovery. Nevertheless, reformulations of drugs that are scheduled to expire between
2000 and 2005 are expected to generate an estimated $33bn in revenue until the
introduction of innovative ethical substitutes. In such a scenario, reformulation is an
opportunity not to be overlooked.
This chapter details the strategic collaborations of a selected group of leading

multinationals that have embarked on strategic alliances with drug delivery or
biotechnology companies.
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Reformulation strategies of leading multinationals
There are five leading pharmaceutical companies that have been identified with a
significant reformulation focus, based on their strategic alliances with drug delivery
and/or biotechnology firms. They are as follows:
Novartis;
Aventis;
GlaxoSmithKline;
Johnson & Johnson;
Abbott.
The companies are reviewed below based on their reformulation alliances for existing
marketed products, co-development of new products, and agreements for R&D or the
licensing of proprietary technologies. This review, however, is not exhaustive owing to
limitations on publicly available information at the time of preparation of this report.
Novartis
Reformulation alliance portfolio
Novartis has a broad ethical and generics reformulation focus that includes alliances
with companies such as Alza, Andrx, Applied Pharma Research, Cima Labs, Eurand,
Elan, and SkyePharma. Currently, the company has the largest reformulation
development programme based on existing products, drugs in development, R&D
programmes and licensing deals.
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Alza
Novartis and Alza have a long-standing collaboration that has led to the
commercialisation of seven products that utilise Alza’s modified-release oral osmotic
(OROS) and transdermal patch technologies (D-TRANS). The marketed products
include:
DynaCirc CR (isradipine) and Metoros (Metoprolol) - indicated for hypertension;
Estracombi/Estracomb/Estraderm (oestradiol and norethisterone) – hormone

replacement patches indicated for postmenopausal symptoms;
Transderm Scop (scopolamine) – indicated for nausea and motion sickness;
Transderm-Nitro (Nitroglycerin) – transdermal patch for angina.
Following its 1979 launch, the scopolamine patch formulation was one of the first
transdermal patches to achieve success in the market.
Andrx Corporation
Through its generics subsidiary Geneva Pharmaceuticals, Novartis entered an

agreement with Andrx in 1999 for the marketing and development of undisclosed
branded generic products. The products will utilise Andrx’s drug delivery technologies
to create controlled-release dosage forms of existing products that Andrx is developing
for submission as NDAs.
The agreement is expected to help build Novartis’ branded generics portfolio both in
the US and in Europe and Andrx will receive royalties from the sales of these products.
The company has also committed to continuing to sell generic products marketed by
Geneva.
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Applied Pharma Research
Novartis and Applied Pharma Research have developed an immediate-release

diclofenac product (Voltfast) indicated for the short-term treatment of post-traumatic
pain, post-surgery inflammation and dysmenorrhoea. The product was launched in Italy
in January 2000. The diclofenac salt technology enables drugs to have a very fast onset
of action with normal absorption.
Novartis has also entered into agreements with APR in 2000 to develop immediate-
release formulations of diclofenac sodium for pain relief and for the development of
OTC diclofenac products.
Cephalon Inc (formerly Anesta)
In 1999, Novartis entered an option agreement to acquire Anesta’s oral transmucosal

system for use with undisclosed compounds. The agreement includes a collaboration
that combines the delivery system with undisclosed compounds that may lead to new
product candidates. Under the terms of the agreement, Novartis and Anesta will assess
the global commercial potential for these potential products, with the aim of entering an
exclusive licensing agreement.
CIMA Labs
Novartis and CIMA Labs entered into a development and licensing option agreement
utilising CIMA Labs’ OraSolv technology with Novartis’ Triaminic non-prescription
paediatric cough, cold and allergy product line. Under the agreement initiated in 1998,
CIMA has an option to a second exclusive license covering additional products. The
company receives product development and payments on achieving specific milestones
under the agreement, and will receive royalties on any sales of Triaminic products that
incorporate CIMA technologies. Novartis launched three Triaminic products in 1999
and launched a fourth Triaminic product in the second half of 2000.
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Elan
In 1998, Novartis partnered with Elan for the development of an undisclosed oral
extended-release formulation compound from Novartis. Under the agreement Elan had
responsibility for R&D and whereas Novartis takes responsibility for the safety and
efficacy of the product generated. The deal is worth $18m in development, milestone
and licencing payments.
Eurand
Novartis and Eurand partnered for the launch of the OTC ibuprofen fast-melting
ibuprofen tablets in Italy and Germany in 1997 under the brand Cibalgina Due Fast.
This product utilises Eurand’s Microcaps technology, which has numerous applications
including controlled release, improved stability, taste-masking and gastro-protection of
drugs. The tablets rapidly melt in the mouth and thus can be easily administered
without water.
Emisphere Technologies
In 1997, Novartis entered into a partnership with Emisphere to develop an oral salmon
calcitonin product for the treatment of osteoporosis. Salmon calcitonin is currently
administered as an injection or nasal spray. In 1999, research data indicated that
therapeutic blood levels of salmon calcitonin were achieved using the solid dosage
formulation and, in February 2000, Novartis decided to execute its option to acquire an
exclusive license to develop and commercialize an oral calcitonin product. In March
2000, Novartis agreed to extend its collaboration with Emisphere to develop a second
compound using the company’s drug delivery technology. Under the agreement, which
is valued at $35m plus royalties, Emisphere receives royalties on sales, an upfront fee
and potential milestone payments; Novartis receives exclusive worldwide rights to
develop and commercialise the product in partnership with Emisphere and will be
responsible for clinical development, marketing and commercialisation.
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LecTec Corporation
In September 2000, Novartis and LecTec signed a multi-year supply agreement with to
manufacture two vapour patch products under the cough/cold brand Triaminic, which
will utilise LecTec’s proprietary skin interface technologies. Under the agreement,
Novartis has exclusive rights to distribute the vapour patch products for paediatric use
in the US, with the exception of LecTec’s distribution of its own vapour patch products
marketed under the TheraPatch brand.
SkyePharma
Novartis and SkyePharma entered into an agreement to develop a new formulation of

the bronchodilator formoterol (Foradil) indicated for asthma. The product is currently in
phase II trials and utilises SkyePharma’s patented multi-dose dry powder inhaler
(MDPI). Formoterol is a fast-onset, long-acting bronchodilator, which takes effect
within one to three minutes, and with which bronchodilation lasts 12 hours. These
properties differentiate formoterol in the market by providing the patient with
protection from the first dose and throughout the day. It is currently marketed in over
60 countries in a single-dose powder inhalation device, the Aerolizer. The new multi-
dose dry powder device formulation is hoped to provide improved convenience for
millions of asthma sufferers. SkyePharma has received a £6m milestone payment from
Novartis based on development of the new version of Foradil.
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Aventis
Aventis has a strong reformulation focus that includes alliances with companies such as
Elan, Ethypharm, Eurand, Guildford Pharmaceuticals, and Inhale Therapeutics.
Elan
In 1986, the former Hoechst Marion Roussel entered an agreement with Elan to develop
a twice-daily formulation of diltiazem (Cardizem SR) utilising the company’s
controlled-release oral SODAS (Spheroidal Oral Drug Absorption System) system. The
product was the first calcium channel blocker indicated for the treatment of
hypertension and angina in the US and had improved compliance and efficacy over the
original compound, which had a short half-life and required administration three to four
times daily. Following the success of Cardizem SR, Elan developed a once-daily
formulation of diltiazem, Cardizem CD. The new formulation was launched to succeed
Cardizem SR and entered the US market in 1991. It subsequently achieved peak sales
in excess of $800m per annum for Aventis.
Ethypharm
Aventis and Ethypharm entered into agreement to develop and market a new extra
strength Cardizem CD 360mg product, which was launched in January 2000. The
alliance enabled Aventis to expand its diltiazem franchise with the new formulation,
which utilises Ethypharm’s high density Multicaps SR technology. The time from
initial development to market was completed in three years, exemplifying an efficient
collaboration between a major pharmaceutical company and a drug delivery specialist.
The new high-strength product required development with a partner whose technology
could overcome the pharmacokinetic challenges that were not possible through
reformulation of the older products. Ethypharm’s Multicaps SR HD system platform
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was capable of ensuring efficient therapeutic coverage of patients over a period of 24
hours in a convenient capsule size.
Eurand
Aventis and Eurand collaborated to launch a modified-release formulation of the

antibiotic roxithromycin (Rulid) utilising Eurand’s Microcaps technology. The system
allows for controlled release, improved stability, enhanced gastro-protection, and taste-
masking. Following the success of the alliance to develop the dispersible tablet
formulation of Rulid, Eurand announced in March 2000 that it has signed a second
agreement with Aventis for the development of a taste-masked formulation of an
undisclosed Aventis compound.
Inhale Therapeutics
Aventis and Inhale Therapeutics are collaborating on two products:
Inhaleable insulin;
inhaleable alpha-1 proteinase inhibitor.
Inhaleable insulin
In November 1998, Aventis and Pfizer entered into an agreement with Inhale
Therapeutics to co-develop and manufacture an inhaleable insulin product indicated for
types I and II diabetes. Under the agreement, Aventis will supply biosynthetic
recombinant insulin to Inhale for powder processing while Inhale will be responsible
for manufacturing powders and reformulating into its Inhance device. Inhale will
receive a royalty on inhaled insulin products marketed by Pfizer and Aventis. Product
development is currently at phase III studies.
Inhaleable alpha-1 proteinase inhibitor
The alliance to develop an inhaleable alpha-1 proteinase inhibitor for genetic

emphysema caused by alpha-1 antitrypsin deficiency is currently in phase I trials. In
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April 2001, Inhale and Aventis announced successful completion of a phase IB clinical
trial of its novel inhaleable form of alpha-1 proteinase inhibitor product utilising
Inhale’s Inhale delivery system. If further studies are successful, the alliance is expected
to offer a revolutionary treatment for those who suffer from the disorder. The dry
powder inhaleable formulation is expected to increase the efficiency of drug dosing
compared with conventional infusion therapy of alpha-1 proteinase inhibitor, which
involves weekly intravenous infusions that may take up to two hours. The product’s
shorter dosing time and more patient-friendly delivery mode will also potentially
improve patients’ quality of life.
The product has been granted orphan drug designation by the FDA, which could
provide market exclusivity for seven years if it gains marketing approval. Under the
agreement between the two companies, Aventis manufactures the active substance,
whereas Inhale produces the dry powder formulation for use with its proprietary
inhalation system. Aventis will be responsible for the clinical development and
worldwide commercialization of any products that are approved under the alliance.
GlaxoSmithKline
The recent merger of Glaxo Wellcome and SmithKline Beecham brought together a
wide-ranging reformulation portfolio comprised of alliances between companies such
as Alkermes, Aradigm, CeNeS, PowderJect, Quadrant, SkyePharma, Watson, and
Yamanouchi.
Alkermes
In 1999, Glaxo Wellcome entered an R&D agreement with Alkermes to develop

multiple product candidates for respiratory diseases utilising Alkermes’ Advanced
Inhalation Research (AIR) technology. In February 2000, after successful completion of
a nine-month feasibility study, the companies extended the agreement to include
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clinical trials, regulatory approvals and manufacturing, Under the agreement, GSK will
provide Alkermes with development funding, milestone payments and royalties based
on sales of marketed products. In addition, GSK has licensed worldwide rights to
Alkermes’ AIR system for use in developing products in up to four respiratory disease
categories following completion of feasibility studies.
Aradigm Corporation
In 1997, SmithKline Beecham and Aradigm agreed to collaborate on an opioid

(morphine sulphate) formulation for breakthrough and acute pain. The product utilises
Aradigm’s AERx Pain Management system, which delivers small-particle aerosols
deep into the peripheral lung through a hand-held device. The product is currently in
phase II trials.
Under the terms of the agreement Aradigm will receive royalties on product sales of the
AERx hand-held devices and drug formulations by GSK and could also receive
approximately $30m in milestone and product development payments. In addition, up
to $10m in equity investments could be placed by GSK if the first product from the
collaboration is commercialised. There is a possibility that Aradigm and GSK may
decide to jointly develop additional AERx products that incorporate other narcotic
analgesics.
PowderJect
Glaxo Wellcome and PowderJect entered into a collaborative agreement in 1998 to

develop, licence and commercialise up to 11 DNA vaccine candidates utilising
PowderJect’s technologies. The agreement, estimated to generate $300m, excluding
royalties, has been extended twice since the initial announcement. The initial research
programme involves a vaccine development for hepatitis B virus (HBV) which is in
phase I trials. Other vaccine options utilising PowderJect technology include
development of a HIV vaccine; two therapeutic vaccines for undisclosed infectious
disease; cancer vaccines using two undisclosed antigens; four additional vaccine
products to be selected at a later date by GW.
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In January 1999, Glaxo exercised options on one of the four additional DNA vaccine
products. It also took out a licence to develop one of the seven vaccines over which it
already held an option. PowderJect received a $1.5m fee for the licence, and also
received a further $1m following successful clinical trial results in December 1999 for
the HBV vaccine licence. In addition, Glaxo obtained a further licence in March 2000
for an additional DNA vaccine and agreed to pay $1.75m in licence and option fees for
the vaccine in an undisclosed therapeutic area.
Quadrant Healthcare
In March 1997, Glaxo Wellcome entered into a licence agreement with Quadrant to
develop inhaled steroids and beta-agonists for pulmonary diseases. In June 2000, the
agreement was reviewed and maintained with GSK continuing to pay Quadrant
milestone payments and royalties on sales of commercial products incorporating
Quadrant's controlled-release technology.
SkyePharma
SmithKline Beecham and SkyePharma entered into a development and

commercialisation agreement for two products: Paxil CR and Requip:
Paxil CR
Paxil CR (paroxetine) was developed originally for treating depression and anxiety
disorders and was approved for marketing in February 1999. This oral formulation of
paroxetine utilised SkyePharma’s Geomatrix controlled-release technology. Although
Paxil CR was not launched for the original indication it is now in phase III trials for
premenstrual dysphoric disorder. Royalties on Paxil CR are estimated to be worth up to
$40m.
Requip
A new once-daily formulation of SmithKline Beecham’s Requip (ropinerole) indicated

for Parkinson’s disease is in Phase II trials. The drug also utilises SkyePharma’s
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Geomatrix technology that will overcome the problem of repeated dosing – the
conventional form of Requip has to be administered three times a day. SkyePharma has
responsibility for development and management of clinical trials and will receive
development fees, milestone payments, and royalties estimated at over $20m. As part of
the agreement SkyePharma received an equity investment of $8m.
Watson Consumer Health
SmithKline Beecham entered into an agreement with Watson to develop an oral

transmucosal smoking cessation lozenge. The product is currently in phase III trials.
Weston Medical Group
In 1999, Glaxo Wellcome and Weston entered a global licensing agreement to develop
a needle-free injection formulation of the serotonin agonist sumatriptan
(Imigran/Imitrex) indicated for acute migraine attacks. The product, in phase II trials,
will utilise Weston’s needle-free Intraject technology, which is described as the world’s
first pre-filled disposable low cost needleless device for the delivery of liquid drugs.
Yamanouchi
In 1998, Glaxo Wellcome entered an agreement with Yamanouchi to investigate the

development and commercialisation of prescription drugs for migraine therapy utilising
the company’s WOWATB quick-dissolving tablet technology. The agreement will
focus on Glaxo’s currently marketed compounds, as well as investigational compounds
that have potential as future therapies for migraine.
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Johnson & Johnson/Janssen
Johnson & Johnson acquired a broad reformulation platform based on the activities of
its subsidiaries Ortho Dermatological and Janssen. The collaborations involve
companies such as AP Pharma, Alkermes, Alza, Ethypharm, Lectec, and Yamanouchi.
Alkermes
There are three agreements between Alkermes and Johnson & Johnson relating to the
development of injectable sustained release products.
In May 1996, Alkermes and Janssen agreed to develop a new formulation of the
schizophrenia drug risperidone (Risperdal) based on Alkermes' Medisorb drug delivery
system. The new formulation encapsulates Risperdal in tiny microspheres made of a
biodegradable polymer, which gradually degrade when they are injected to provide
constant drug concentrations in the blood. This product is currently in phase III clinical
trials and will be the first long-acting formulation of a newer atypical antipsychotic.
Data presented at a psychiatric research meeting in 2001 suggested that the long-acting,
injectable formulation of Risperdal provides consistent, reliable symptom relief for
schizophrenia, without the need to take daily medication. The drug is regarded as the
first atypical antipsychotic medication for which safety and efficacy data has been
presented for a long-acting injectable formulation.
In December 1996, Alkermes announced a collaboration with Johnson & Johnson to

develop a ProLease formulation of a proprietary compound for the treatment of
hormone mediated disorders.
In 1997, Johnson & Johnson entered into a feasibility collaboration with Alkermes to
develop an injectable sustained-release formulation of erythropoietin utilising the
company’s ProLease technology – an encapsulation system that is designed for fragile
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and complex bioactive molecules. The aim of the alliance is to apply Alkermes'
ProLease drug delivery system to erythropoietin, enabling single injections of the
compound to last for several weeks. In 1998, the agreement was extended for the
development of the product candidate. Under the agreement, milestone payments and
development funding to Alkermes are expected to be in excess of $30m.
Alza
In March 2001, Johnson & Johnson and Alza announced that they had entered into a
merger agreement. The merger is viewed as a pooling of interests and will involve a
stock-for-stock exchange. The transaction has an estimated net equity value of $10.5bn.
Alza and Johnson & Johnson previously collaborated on two reformulation products as
detailed below:
In 1998, the companies entered an agreement to develop and market fentanyl

products for chronic pain delivered using Alza’s transdermal D-TRANS and E-
TRANS technologies;
Duragesic, which incorporates the D-TRANS system, is marketed for the

management of chronic pain in patients who require continuous opioid analgesia.
Development of the E-TRANS formulation of fentanyl was suspended in March
1999 by Janssen because of technical difficulties.
AP Pharma (formerly Advanced Polymer Systems)
In 1992, Ortho-Dermatological (Ortho-McNeil Pharmaceutical) collaborated with

Advanced Polymer Systems to develop a tretinoin (Retin-A Micro) product that utilised
Advanced Polymer’s Microsponge technology. The system consists of polymeric
porous microspheres that allow a prolonged rate of release of active ingredients. The
new formulation is an improved formula of Ortho-Dermatological’s leading acne
product, Retin-A, which reduced tretinoin’s potential for skin irritation, while
maintaining its therapeutic efficacy. An NDA was approved in February 1997 with
Canadian filing in 1999. A European phase III trial has been completed.
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Ethypharma
Sporanox (itraconazole) was launched in 1992 treat the fungal infections histoplasmosis
and blastomycosis and in 1994, the drug was approved to treat refractory aspergillosis.
In 1995,the drug received FDA approval for the treatment of fungal nail infection
(onychomycosis). In collaboration with Ethypharm, a new pulse dosing formulation
was developed, allowing patients reduce dosage and dosing frequency. Instead of
continuous daily dosing for 30 days, the new formulation requires twice-daily dosing
for one week then no medication for three weeks (i.e. one pulse). The technology is
unique as it allows the active ingredient to concentrate in the body's tissues and not in
the blood.
LecTec
In May 1999, LecTec and Johnson & Johnson entered into a global agreement to
develop and manufacture skincare products utilising LecTec’s skin interface
technologies. A new topical patch product for acne was launched in 2000. Johnson &
Johnson has exclusive worldwide distribution rights for the product.
Yamanouchi
In 1998, Yamanouchi entered into an agreement with Johnson & Johnson-Merck

Consumer Pharmaceuticals for utilization of its rapid-dissolving WOWTAB without-
water tablet technology in the development and commercialization of an undisclosed
OTC product.
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Abbott/Knoll
Abbott’s reformulation portfolio has been enhanced owing to the recent acquisition of
BASF Knoll’s Pharmaceutical division in 2000, which was reportedly worth $6.9bn.
Collaborative agreements have been made with companies such as Alza, Aronex,
Cephalon, Ethypharm, and SkyePharma.
Alza
In February 1997, Knoll entered a worldwide development and commercialisation

agreement with Alza to develop reduced dosing long-acting oral osmotic (OROS)
formulations of hydromorphone for the management of chronic pain. The OROS
hydromorphine formulation aims to improve the quality of life for patients with chronic
pain, particularly patients in the advanced stages of cancer or AIDS. Under the terms of
the agreement, Knoll will be responsible for ongoing development costs and has
worldwide commercialization rights to the OROS hydromorphone formulation. Alza
will receive an upfront payment and milestone payments related to key development
objectives and will secure rights to co-promote the product in the US. Alza also has
additional rights to co-promote the product outside the US after Knoll has marketed the
product on an exclusive basis for a specified period. An NDA has been filed.
Aronex Pharmaceuticals
In 1998, Abbott entered into a licence and development agreement with Aronex to
develop an injectable liposome formulation of nystatin (Nyotran) for the treatment of
systemic fungal infection. In 1999, Aronex received a $6.3m milestone payment from
Abbott for the ongoing clinical development of Nyotran. The payment was received as
part of the original 1998 agreement, whereby Abbott had the worldwide marketing
rights to the product. Aronex has also received $14.7m in payments under this license
agreement, and $3.0m related to a stock purchase agreement. The deal is worth $40m
220
for funding the continuing clinical development and milestone payments until NDA is
approved. In September 2000, Aronex announced that the company anticipates
submission of a NDA for Nyotran with the US FDA in 2001.
Cephalon Inc (formerly Anesta)
In 1989, Abbott entered into an agreement with Anesta to develop fentanyl citrate
products for pain relief. The Fentanyl Oralet product was launched in the US in 1994
and was indicated as a pre-medication prior to painful medical and surgical procedures.
In 1999, a second fentanyl product (Actiq) was launched in the US. Both products
utilise Anesta’s Oral Transmucosal System (OTS), which is designed to achieve rapid
absorption of potent drugs through oral mucosae.
Ethypharm
Knoll enetered into an agrrement with Ethypharm to develop a naftidrofuryl product

indicated for cardiovascular disorders. The marketed product, Artocoron, utilises
Ethypharm’s slow-release multiparticulate technology.
SkyePharma
In 1997, Abbott entered into a development and licensing agreement with SkyePharma
for a slow-release formulation of Zileuton (Zyflo), a drug indicated for the prevention
and chronic treatment of asthma in patients aged 12 years and older. The new
formulation is currently in phase III trials and will utilise SkyePharma’s oral Geomatrix
technology, which can reduce dosing frequency, improve tolerability, and allow
customised release.
221
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H E A LT H C A R E

Achieving Market Dominance Through

The report author is Tim Atkinson, BSc. (Hons), an independent pharmaceutical

He can be contacted at tja@btinternet.com.

Copyright © 2001 Business Insights Ltd

Chapter 1 Introduction to Reformulation 15

Chapter 3 Reformulation for Leading Drugs:

Chapter 4 Marketing and Branding for

Pharmaceutical reformulation represents an important defence strategy allowing

Achieving Market Dominance Through Reformulation: A Strategic Insight aims to

In Chapter 1, the application of drug reformulation to industry is detailed, in addition to

The implementation and development of a reformulation strategy is discussed in

Finally, Chapter 5 provides an overview of a selection of leading multinationals with a

 Reformulation represents a major defence strategy that multinationals are

 By 2005, 24 blockbuster drugs in the US that collectively generate more than

 Approximately 56% of marketed reformulated products and 40% of

 Multinational pharmaceutical companies are increasingly using oral modified-

 Current applications for needleless delivery include vaccines, anaesthetics and

 Transmucosal nasal and rectal reformulations are under-developed and unrealised

Pharmaceutical reformulation – application to industry

Pharmaceutical reformulation is the modification of a drug to optimise its

Multinational industry executive

Reformulation strategies are clearly advantageous to pharmaceutical companies. Not

Table 1.1: Benefits of pharmaceutical reformulation

Pharmacological benefits Clinical benefits Economic benefits

Improved solubility Improved therapy Reduced R&D cost

Improved bioavailability Ease of administration Reduced R&D time

Improved chemical stability Decreased dosing frequency Reduced R&D administration

Reduced toxicity Targeted delivery Faster time to market

Pathophysiological mimicry Improved safety profile Extended patent protection for

Reduced side-effects Lower risk compared with drug

Source: Author’s research & analysis

Route Delivery system

Oral Controlled release

Needleless Dry powder

Transdermal Patch system

Pulmonary Inhalational dry powder

Reformulation to protect and extend patents

Only 50% of a patented drug’s lifespan is useful commercially: of a 20-year patented

Table 1.3: Patent expiry of leading branded drugs, 2000-2005

Brand Generic Company

Key: * Patent expiry in the US ** Patent expiry in international country/countries

‘Reformulation will continue to be an attractive option for pharmaceutical

Drug delivery industry executive

Source: Author’s research & analysis, company reports

Pharmaceutical reformulation systems

Source: Author’s research & analysis

Table 1.4: Advantages and disadvantages of orally delivered formulations

Ease of administration Systemic effects

Source: Author’s research & analysis

Biological barriers to oral formulation

If a drug succeeds in entering the bloodstream it is challenged by the body’s immune

All orally administered reformulation pharmaceuticals must adequately challenge these

Oral reformulation systems

Controlled-release Regulated drug release via osmostic mechanisms

Source: Author’s research & analysis

Multinational pharmaceutical companies are increasingly using oral modified-release

 a novel oral parathyroid hormone and human growth hormone product in

 an orally delivered axokine to treat obesity in collaboration with Regeneron

A delayed-release oral formulation can be developed with chronopharmacological

Oral chronopharmacological reformulations, which are developed to fit in with the

Injectable reformulation systems

Parenteral administration or delivery of drugs via intramuscular, intravenous, intra-

Table 1.6: Main advantages and disadvantages for injectable formulations

Reformulation represents a major defence strategy that multinationals are

By 2005, 24 blockbuster drugs in the US that collectively generate more than

Approximately 56% of marketed reformulated products and 40% of

Multinational pharmaceutical companies are increasingly using oral modified-

Current applications for needleless delivery include vaccines, anaesthetics and

Transmucosal nasal and rectal reformulations are under-developed and unrealised

a novel oral parathyroid hormone and human growth hormone product in

an orally delivered axokine to treat obesity in collaboration with Regeneron

More than $165bn in ethical revenues may be cannibalised as a consequence of

The exploitation of a molecule through reformulation will help to sustain pre-

Reformulation adds value to compounds that are abandoned because of poor

Reformulating a drug can reduce NCE development costs by up to 90% and

A robust pharmaceutical development strategy should include the funding

Implementing reformulation is recommended as early as possible in the

Partnering companies offering a comprehensive product development plan for

A successful reformulation must clearly exhibit superior advantages over the

A novel reformulation of an established key drug appears to offer the greatest

To maintain market leadership, reformulations should simultaneously protect