Novartis: successes and setbacks in the USA

Although still slightly behind its main rivals, Novartis has been steadily increasing its proportion of sales from the US. In August 2001, it received US approval for Zometa, a treatment for hypercalcaemia of malignancy. Earlier in 2001, however, the expected US clearance of two other Novartis products - Zelmac, for the treatment of irritable bowel syndrome, and Xolair, for allergic asthma - was delayed. This is expected to slow the planned expansion of Novartis’ US sales force.

Over the last 18 months Novartis has been investing heavily in its US marketing and sales forces to improve the percentage of the company’s global drug sales that are generated by the rapidly growing US market.

Novartis has strengthened its US presence with the addition of more than 500 reps in the first six months of 2001. Expansions included Senior Care, Respiratory and Skin diseases, and Oncology specialty forces. Since the beginning of 2000, Novartis’ US sales force has increased by around 1,500 reps to a total of approximately 5,100.

Despite the company's increased US presence, the percentage of Novartis’ worldwide drug sales generated by the US market for the 12 months to June 2001 – 41% – was still around 15-20 percentage points behind its peers . Nevertheless, it is an improvement on the 35% share of sales that Novartis said it had in 1999.

For the first half of 2001, the group reported better than expected total sales results of $8.5 billion, up 12% in local currencies on the same period in the previous year. This sales growth was attributed to the pharmaceutical division and the sustained dynamism of the US business.

US drug sales as percentage of worldwide drug sales
- top five pharmaceutical companies worldwide*
12 months to June 2001

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*Retail pharmacy sales in the 13 major global markets: USA, UK, Canada, France, Germany, Italy, Spain, Argentina, Brazil, Mexico, Australia, New Zealand and Japan. The unique system in Japan reduces the importance of the pharmacy in the distribution chain, so for Japan only the sales include hospital data. Mail order sales are not included for the USA.
Source: IMS HEALTH MIDAS

Zometa gets US approval...

In August 2001, the US Food and Drug Administration (FDA) approved Novartis’ Zometa (zoledronate), for the treatment of hypercalcaemia of malignancy. This is the most common life-threatening metabolic complication of cancer. A few days later, Novartis filed Zometa for use in the treatment of bone metastases associated with a broad range of tumours.

The US approval of Zometa, a new-generation intravenous bisphosphonate that was already on sale in Europe, was important to Novartis because its sales can help offset an anticipated drop in revenues from Aredia (pamidronate), the current standard treatment, which is facing generic competition.

The inhaled asthma drug Foradil (formoterol fumarate), and Gleevec/Glivec (imatinib mesylate), for leukaemia, were also approved by the FDA during the first half of 2001.

...But delays for Zelnorm and Xolair

In June 2001, however, the FDA issued a 'not approvable' letter for the IBS product Zelnorm (tegaserod), Zelmac/Xavena outside the US, and requested additional data on abdominal surgery outcomes in women taking the drug. The only IBS therapy to reach the market, GlaxoSmithKline's Lotronex (alosetron), was withdrawn in November 2000, after being linked with the deaths of five women.

Then in July 2001, Novartis and partner Genentech received a Complete Response letter from the FDA regarding their IgE monoclonal antibody for allergic asthma, Xolair (omalizumab), co-developed with Tanox. The agency requested additional preclinical and clinical data analyses, as well as pharmacokinetic information. This may require the companies to run further clinical trials.

The US filing for the antipsychotic Zomaril (iloperidone) has also been delayed, because Novartis and its partner Titan want to carry out further dose-related trials prior to submitting the drug for FDA approval.

Updated new product launch schedule

As indicated in its launch plan, Novartis now expects the US launches of Zelmac, Xolair and Zomaril to be post-2003.

Major new Novartis products - launch schedule

2002	2003	Post-2003
Elidel (inflammatory skin disease)	COX189 (rheumatoid arthritis, osteoarthritis, pain)	Zelnorm/Zelmac (IBS)
Certican (transplantation)	ERL080 (transplantation)	Zomaril (schizophrenia)
		EPO906 (solid tumours)
		OctreoTher (somatostatin receptor-positive tumours)
		ICL670 (chronic iron overload)
		LAF237 (Type 2 diabetes)
		NKP608 (social phobia)
		NK104 (hypercholesterolaemia)
		Xolair (asthma/allergic rhinitis)

Source: Novartis Half Year report 2001

Commenting on these delays, Novartis CEO Daniel Vasella stated: "in the absence of these registrations, double-digit growth in pharmaceuticals next year and the year after will certainly be more difficult to attain than we had originally assumed although it is not wholly out of reach."

Zelmac’s regulatory approval application was subsequently withdrawn in Europe, and Novartis agreed to terminate its collaboration with Bristol-Myers Squibb on the drug. It also shelved plans to increase its US sales force by 10% in 2002, though it is believed that some of Novartis’ increased marketing and sales resources in the US will now be reassigned to Diovan (valsartan). This angiotensin II antagonist, already marketed for hypertension, has received priority review for use in the treatment of congestive heart failure.