Japan's Taisho Falters Under NHI Price Cuts; Eisai Squeezing Sales Out Of Aricept - Japanese Earnings Week

TOKYO - Taisho Pharmaceutical Co. said it operated in a difficult business environment in 2010, attributing weak sales to National Health Insurance price cuts and decreased demand for cold remedies.

The company noted "the huge impact" NHI price cuts had on some leading products. While Taisho increased the number of units sold of macrolide antibiotic Clarith (clarithromycin), the drug's sales fell 7.9% to ¥16.6 billion. Similarly, peripheral vasodilator Palux (alprostadil) sales were down 7.8% to ¥7.8 billion and the antibacterial Geninax (garenoxacin) dropped 31.8% to ¥3.2 billion.

Japan's largest OTC manufacturer saw a "sharp drop in sales of cold prevention-related products" due to the relatively low demand for such products after the previous year's influenza scare. The company's Pabron series of cold remedies were also hurt by low qualities of airborne pollens in spring 2010. Pabron products slipped 1.2% year-on-year to ¥18.3 billion for the first nine months of the fiscal year.

Natural events also played to the company's advantage. The massive heat wave throughout Asia helped steady sales for the Lipovitan series of energy drinks, the company's main sales contributor. Analysts at Bank of America Merrill Lynch and Credit Suisse were optimistic about Lipovitan's future prospects despite flat sales.

Taisho gained some global recognition two years ago by acquiring Bristol-Myers Squibb's ex-China, ex-Japan OTC assets as well as BMS' facilities in Indonesia (Also see "Taisho Acquires BMS Indonesia, OTC Assets; Price Tag Too High, Say Japanese Analysts" - Scrip, 17 Sep, 2009.).

At the time of the acquisitions, analysts questioned the ¥28 billion price tag. The company's regional expansion appears to be on-track, but perhaps not at the pace it was expecting. "Operating income for the OTC drug business in Asia as a whole is projected to move modestly into positive territory," Taisho General Manager Masaki Tsuboi said in a Q3 presentation Jan. 31. The company forecasts the Asian OTC business to contribute full year net sales of ¥4.7 billion.

Eisai's Aricept Damage Control

During Eisai's Q3 earnings call, U.S. CEO Lonnel Coats laid out the company's plans to generate sales for Aricept (donepezil) 23 mg in a market now challenged with Aricept 10mg generics.

At the launch of Aricept 23 mg, Coats had promised a substantial marketing campaign to switch patients to the higher-dose drug (Also see "Eisai And Pfizer Begin Undertaking To Switch Appropriate Patients To High-dose Aricept" - Scrip, 27 Jul, 2010.).

To some extent, the company was successful. Soon after launch, the company experienced a swift uptake in sales of the higher dose, but it soon leveled off.

The company discovered that physicians were waiting for a trigger, "an event that would determine when they should move from 10 mg to Aricept 23 mg ... they were waiting for patients to decline before they made the decision to intervene," Coats said.

Two weeks ago, Eisai retrained its sales force to alert doctors that patients could be moved to the 23 mg dosage three months after being on the 10 mg dosage, and that doctors did not have to wait for a decline in a patient's condition. Rather, the company is urging doctors to pursue aggressive therapy because Alzheimer's is a progressive disease.

Educated Approach For Moving Patients To Higher Dose

The company is also not taking a traditional approach of using medical reps to distribute information. Because a large portion of patients are in long-term care centers - 40 percent, according to Eisai - the company is using nurse educators to go into these centers and talk to nurses about moving patients from 10 mg to 23 mg. In addition, the company increased its outreach program for family caregivers, including a 30-day free trial for 23 mg donepezil for patients on 10 mg donepezil.

The company ran 50 nurse education seminars in January, and the program's early success led the company to double the size of its nurse educator staff.

In the next few months, the company will also roll out new web, print, and television campaigns.

"So where we are right now, and we are slightly behind, but I believe we have identified what the problems are and hopefully we're going to catch up fairly quickly," Coats said.

The company is tinkering with its message for Aricept 23 mg, which should benefit the firm as it rolls out the product in new markets. The higher dose formulation will be launched in South Korea and India this year and will likely be introduced in Japan by 2014.

There is an added pressure to squeezing dollars out of the expiring Aricept franchise. The company recently had a major setback with the discontinuation of a Phase III trial for sepsis drug eritoran. Severe sepsis causes a quarter million deaths in the U.S. each year, according to Eisai, and it hoped the drug would pad the revenue loss from generic donepezil 10 mg, but eritoran failed to meet its primary endpoint of 28-day all-cause mortality (Also see "Approval Highs And Lows For Leading Japanese Pharma; Dogged By Competitors And Nagging Supply Issues" - Scrip, 28 Jan, 2011.).

The company still hopes to develop eritoran but will now focus on sub-populations - gender, age, race, region, and location of organ failure - in the hopes of finding responsive patients. Eisai CEO Haruo Naito said during the call that the company is conducting a sub-analysis and will launch new trials in the latter half of 2012.

More development setbacks rolled in this week, as U.S. FDA sent Eisai a Complete Response Letter for Aciphex (rabeprazole) extended-release capsules.

- Daniel Poppy ([email protected])