- Good news for GlaxoSmithKline (GSK) and Roche (RHHBY.PK): They now have monopolies on the only drug currently available to reduce weight: Orlistat. GSK sells the non-prescription version, Alli, and Roche sells the stronger, doctor-ordered brand called Xenical. Patients who want to take a diet pill must now go to them.
- Good news for Allergan (AGN): The company's Lap-Band now becomes the main medical alternative for patients who don't do well on Alli or Xenical.
- Good news for diabetes drugs marketers: Novo Nordisk (NVO), Sanofi-Aventis (SNY), Merck (MRK), Eli Lilly (LLY) and Amylin (AMLN). One of their products -- Lilly/Amylin's Byetta -- has weight loss as a side effect. Merck's Januvia is weight neutral but Merck has nonetheless suggested in the past that it might also contribute to weight loss.* Non-diabetics shouldn't take these drugs, obviously, but given that obese patients now have fewer options they're more likely to end up with diabetes anyway, and thus require those meds.
- Bad news for Orexigen (OREX) and Takeda: Takeda just paid $50 million to license Contrave, Orexigen's in-development obesity drug. On its face that would appear to be an advantage for the two companies -- they may be about to enter a market with fewer competitors. But the FDA has sent strong signals recently, with advisory panels giving a split vote on Meridia and rejecting two other new obesity drugs, Arena (ARNA)'s Lorqess and Vivus (VVUS)'s Qnexa. The FDA just isn't happy with diet drugs these days and it will be a miracle if it gives a thumbs up to Contrave.
Here's two more wildly optimistic revenue projections for drugs that will likely not see the light of day:
- Arena's Lorqess
Random dude on Seeking Alpha: $300 -$400 million
- Vivus' Qnexa
Michael King of Merriman Curhan Ford & Co.: $3 billion
Yet the deals keep coming. In addition to Takeda's $50 million bet on Orexigen, the Japanese company also entered a $50 million partnership with Amylin to develop an injectable product called leptin. That deal followed Eisai's $50 million stake on Arena's Lorqess, which now looks like money down the drain.
*Correction: This item previously stated incorrectly that Januvia has weight loss as a side effect. That's incorrect. Officially, Januvia does not lead to weight gain.