Shoring up Strattera
With market share slumping, Lilly faces uphill climb to revitalize ADHD drug
When it hit pharmacy shelves five years ago this month, Strattera was hailed as a breakthrough drug for hyperactivity and inattentiveness -- and a future blockbuster for drugmaker Eli Lilly and Co.
Doctors and analysts saw Strattera as a worthy competitor to Ritalin, Adderall and Concerta, which dominated the attention deficit/hyperactivity disorder market. Some analysts predicted Strattera could ring up annual sales of up to $1.4 billion within a few years, making it one of Lilly's best sellers.
But after a strong launch and high hopes, Strattera has stalled, dragging Lilly's revenues and disappointing investors.
Sales peaked at $667.7 million in 2004, far short of expectations. Strattera's U.S. market share has skidded from 25 percent of the ADHD drug market in 2004 to less than 15 percent in the first six months of 2007, according to IMS Health.
Catherine Arnold, a drug analyst at Credit Suisse in New York, predicted Strattera sales will decline each year through 2011, the only major Lilly drug to do so. Other analysts also have bleak expectations.
"Strattera is probably going to be flat to eroding over the next several years, and it's unfortunate," said Robert Hazlett, a drug analyst with BMO Capital Markets in New York. "It appears to be a good franchise that has run into trouble."
But Lilly says it stands behind Strattera, and hints it will roll out a major campaign this year in an effort to revitalize it.
But some analysts wonder if Strattera can snap back. The ADHD market is competitive. Other drug makers, including Novartis and Shire, are fighting hard for market share.
Meanwhile, critics are sharpening their attacks on doctors and drug companies, saying ADHD is an invented disease, or that physicians are over-medicating children without considering other options.
Lilly says ADHD is a legitimate, serious disease and is actually under-diagnosed around the world
"Lots of people don't feel this is a real condition, even though we have lots of data and a huge scientific base," said Dr. A.J. Allen, Lilly's medical director for Strattera. "But parents whose kids have ADHD know it's real."
Strattera faces other hurdles. It carries a black-box warning to alert doctors to reports of suicidal thinking in children taking Strattera, as well as a bold warning about the potential for severe liver injury.
And unlike other ADHD drugs, which start working within days, Strattera usually requires four to six weeks to take full effect -- too long for some parents, who sometimes need to treat a crisis immediately.
"All in all, I think it's a very tough situation for Lilly," said Les Funtleyder, a drug analyst at Miller Tabak & Co. in New York. "It's a difficult challenge to restart a brand that's stalled out. They're fighting an uphill battle."
Much is at stake for Lilly. The company has invested more than a decade of research, and hundreds of millions of dollars, to test and develop Strattera.
Like most of its competitors, Lilly is facing the toughest business
conditions in decades, including a coming wave of patent expirations, increasing pressure from insurers to control prices and slowing industry growth. Analysts say Lilly and its competitors need to get more bang from every product.
"This is a tough business, and certainly not getting any easier," Hazlett said.
Lilly declined to provide details on its turnaround plan for Strattera, including whether it will launch a major direct- to-consumer advertising campaign. In 2005, Lilly spent $45 million to advertise Strattera, making it the 38th- most-advertised drug in the U.S., but cut back sharply the next year, spending just $71,355. Figures for last year are unavailable.
Whatever form the marketing push takes, Lilly said it will focus on a few key messages:
ADHD is a "serious and chronic disease," affecting up to 7 percent of U.S. school-age children, and about 4 percent of adults. The condition is marked by poor concentration, inappropriate activity, distractibility and impulsivity. The impairments affect not only school and work, but also a person's relationships with friends and family.
Strattera is the only Food and Drug Administration- approved treatment that works for 24 hours with a single dose (unlike competing products, which work for about eight hours) and is a nonstimulant with no potential for abuse.
Although Strattera works more gradually than rival products, it doesn't wear off as abruptly.
The big challenge, Lilly said, is that stimulant drugs, such as Ritalin, have been around for decades, and doctors are used to how they work.
"The paradigm that's out there is one that's difficult to change," said Steve Schaefer, brand director for Strattera. "Strattera works differently than the stimulants. Clearly, there's room for greater education on our part."
That's a message that investors want to hear.
"If Lilly was able to put some marketing muscle behind Strattera and get it moving again, that would be great," said Linda Bannister, a drug analyst at Edward Jones in St. Louis. "Otherwise, we have very modest expectations for Strattera."
Strattera was developed in the 1980s by the same Indianapolis- based Lilly neuroscience group that discovered Prozac. In fact, Strattera originally was developed as an antidepressant, but was put on a shelf when Prozac rose to prominence.
In 1993, Lilly scientist Dr. John Heiligenstein proposed testing Strattera as an ADHD treatment. The first study was done on adults at Massachusetts General Hospital in 1995, followed two years later by a study on children. Over the years, Lilly has sponsored at least nine major studies on Strattera.
In the meantime, Lilly is continuing to study which types of patients are best suited for Strattera. Symptoms of ADHD often surface during childhood, and by the time the patients become adults, they often have other medical problems, such as anxiety, depression, alcoholism or drug abuse.
But most of the research for ADHD has been conducted on children, not in adults with multiple medical problems. Lilly said it has been studying the drug intensively lately, trying to target it to the right set of patients with multiple conditions.
"When we launched the drug, we didn't have a clear enough picture of who the right patient was," Allen said. "Now we've got a much better sense."