Glaxo Becomes Master of Reinventing Drugs

Glaxo Becomes Master of Reinventing Drugs

By JEANNE WHALEN
April 17, 2008; Page B1

London -- GlaxoSmithKline PLC's vast research labs haven't been able to deliver many major innovations to the market in recent years, but they have become experts at another science: reinventing old drugs.
The approach has helped buttress the world's second-largest drug company during one of the industry's most difficult times. Glaxo says that modifying old drugs and finding new uses for them accounted for 27% of the company's sales growth over the last seven years.
The Brentford, England-based drug giant usually rolls out the modified drugs just as the originals lose patent protection and face generic competition. On Wednesday, for example, Glaxo said the U.S. Food and Drug Administration approved Treximet, a drug for migraines that combines Glaxo's older drug Imitrex with an over-the-counter pain killer. Imitrex is expected to face generic competition this year. Glaxo also has versions of existing medicines to treat epilepsy and Parkinson's disease awaiting FDA approval.
Glaxo says the modified drugs it markets, which it calls product-line extensions, represent real scientific advances and offer new benefits to patients, such as allowing them to take one pill a day instead of two. "If you have a line extension that can significantly aim to improve the quality of treatment for patients, you should do it," says Glaxo Chief Executive Jean-Pierre Garnier.
However, insurers and health systems are beginning to balk at covering the modified products. "In my judgment this is more an effort to extend the high revenue of a brand-name drug than it is anything to do with patient care," says Myron Winkelman, a West Bloomfield, Mich., consultant who advises employers on how to lower their health-care costs. Employers and insurers tend to prefer generics because they are significantly cheaper than the new modified drugs.
Glaxo is facing tough times. Its profits fell 10% in the fourth quarter, and the company says it expects earnings per share to fall this year because of stiff competition from generics and lower sales of the diabetes drug Avandia, which has faced safety concerns. Glaxo will report first-quarter earnings next Wednesday.
Glaxo's share price has dropped by 28% on the London Stock Exchange over the past year, compared to a 15% decline in the Dow Jones Wilshire Global Pharmaceuticals Index. These issues will fall to Andrew Witty, now head of Glaxo's drug business in Europe, who will take over as CEO when Dr. Garnier retires next month.
Other companies in the industry have similar problems. Despite billions of dollars of investment annually in research and development, the number of new drugs coming to the market in recent years has been declining. A combination of factors is to blame: a lack of productivity in research-and-development labs; companies' efforts to target more complex diseases; and regulators' tougher stance on approving new drugs.
Dr. Garnier says Glaxo is poised to break its R&D dry spell. He has overhauled the way its scientists are organized and says the changes will help the company bring innovative drugs to the market. "When we get around to 2011 and 2012, we'll be in a much stronger situation. We'll have fewer products going generic and more in terms of new products," he says. Drug modifications will be "less important than they have been in the past," he adds.
In some early signs of the R&D overhaul, Glaxo won FDA approval for a new breast-cancer drug last year and a new vaccine against rotavirus this month. Dr. Garnier says the company now has a full pipeline that can deliver a stream of new drugs to market over the next few years.
In the meantime, Glaxo's drug-development team has become one of the industry's biggest developers of product-line extensions, analysts say.
The approach recently breathed life into Requip, a little-used drug for Parkinson's disease that Glaxo repositioned to treat a little-known condition: restless-legs syndrome, or RLS. Glaxo's sales reps had noticed several years ago that some doctors were prescribing the company's drug for RLS, which causes creeping sensations in the legs and an uncontrollable urge to move.
In this case, Glaxo didn't change the drug, but carried out additional tests and in 2005 got FDA approval to market Requip for RLS. It started a TV and print advertising campaign, and drug sales soared.
Glaxo is also combining some medications for the same disease into one pill, a quick way to invent a new product. And it is creating new "controlled-release" versions of older drugs, which enter the bloodstream more gradually but otherwise don't differ much from the originals. Such drugs usually have suffixes such as "CR" or "XL" after their names.
Among the product-line extensions Glaxo plans to start selling this year are Lamictal XR for epilepsy and Requip XL for Parkinson's disease. The FDA is still reviewing both drugs, and last year delayed making its decisions, asking for more information. Both the original drugs, Lamictal and Requip, are expected to face generic competition this year.
In March 2007, Glaxo launched a controlled-release version of its cardiovascular drug Coreg several months before rivals were expected to introduce generic Coreg. Glaxo aimed to convert more than 60% of Coreg's £773 million, or $1.5 billion, in U.S. sales to the new drug, Coreg CR, to prevent those sales going to generic rivals. Coreg CR lets patients take just one pill a day instead of two.
However, some insurers, realizing a cheap, generic version of Coreg would soon be available, instituted a high co-pay for Coreg CR, says Mike Ward, a pharmaceutical analyst with Nomura Code Securities in London. A 30-day supply of Coreg CR costs $122.71 on www.drugstore.com, a popular online pharmacy, versus $29.98 for generic Coreg, which hit the U.S. market in September.
Stephen Siegel, a cardiologist at New York University, says Glaxo sales representatives have been calling on him twice a month to discuss Coreg CR and "have been pushing it hard." While he thinks Coreg CR can benefit some patients, many with heart problems already take several pills twice a day and for them, "there is little additional benefit to once a day," he says.
So far sales of Coreg CR are falling far short of Glaxo's expectations, at £88 million through the end of December.