Sunday, April 1, 2007

Zelnorm: The financial hit and lingering doubts

Novartis recent announcement regarding the voluntary withdrawal of Zelnorm was widely covered in the media and the blogosphere. According to BrandweekNRx Zelnorm had annual sales of 541 million. The immediate financial hit to a company of the size of Novartis doesn't appear to be significant. However BrandweekNRx also reports that sales for this drug were growing at 30%. At that rate of growth, this brand could have achieved blockbuster status in slightly under 3 years. Could Zelnorn have continued to show that kind of growth? Pharmalyst thinks so. Given the range of symptoms associated with IBS & the heavy DTC spend, it is likely that in a few years the average Joe who really needs two Tums would actually end up "talking to his doctor about Zelnorm" (though to be sure for a smaller subset of the overall target market, Zelnorm will probably be greatly missed). The stock market too seems to be acknowledging the potential long-term financial hit. NVS ADRs were down $2.26 in NYSE trading, erasing over $4B in overall market cap.

Part of the market's fears surely concern litigation. Novartis press release indicated that while the risk was statistically significant, the actual numbers were small. They also noted that all impacted patients had existing CV risk factors...hinting that despite the statistical significance, Zelnorm may not be to blame (a type II (?) error). However some doubts linger. The press release also states that "A small (but not statistically significant) imbalance in cases of angina pectoris was recorded and included in the US label when Zelnorm was approved in 2002." the trend does appear to be somewhat consistent.

The press release also states that "Zelnorm received FDA approval for the short-term treatment of women with IBS in the US on July 24, 2002. Zelnorm also received FDA approval for the treatment of men and women less than 65 years of age with chronic idiopathic constipation in the US on August 20, 2004.".. Could anyone shed some light on why the initial approval was just for women? Were more women involved in the pre-approval trials or was there something different such that the initial approval was only for women? If so, could this have something to do with the statistically insignificant imbalance in cases of angina pectoris?
Any insights around this will be greatly appreciated.

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