Hoffmann-La Roche and the Lowe Group have parted ways on the marketer's hefty Xenical account. The account for the weight-loss drug includes an estimated $80 million direct-to-consumer business as well as physician-targeted advertising.
Industry observers speculate that Roche has been dissatisfied with Xenical sales in the U.S. since the product hit the market in April 1999, prompting the decision to look beyond Lowe.
"They thought they had a Viagra on their hands," said one industry executive who's worked with Roche.
Lowe referred calls to the client. "This decision reflects a shift in strategy to sustain the momentum achieved for the brand," a Roche spokesman told Advertising Age.
REVIEW WILL BEGIN SOON
Agencies last week were salivating over the prospect of a review. The Roche spokesman said a review will begin soon and the marketer hopes to have an agency selected within the next few months.
It was unclear whether the DTC and professional assignments would be housed at the same agency.
The DTC business, which generated more than $76 million in spending in only three months last year, according to Competitive Media Reporting, was handled by Lowe Consumer Healthcare, New York. The unit specializing in DTC work was jointly established in September by then-Lowe & Partners/SMS and Lowe Healthcare Worldwide.
Lowe McAdams Healthcare handled the Xenical professional business.
One hurdle Xenical's marketer faces is that the drug may be best known among consumers for its alarming list of potential side effects. A DTC spot that ran on national TV starting in October warned consumers that Xenical may cause "gas or oil with discharge [and] increased bowel movements--an urgent need to have them and an inability to control them."
The U.S. Food & Drug Administration requires that marketers include fair balance information about a drug's potential negatives in any DTC ads that tout a drug's specific benefits. In the case of Xenical, one industry observer termed the fair balance "just ungodly."
Roche could have avoided making side effects the subject of water cooler discussions by launching the drug with unbranded ads, but that strategy might have benefited its competition, Knoll Pharmaceuticals Co.'s Meridia.
Industry observers speculated that Xenical's side-effect profile has scared consumers away, particularly in the wake of reports that users of the diet drug combination fen-phen may have suffered heart valve damage.
Perhaps bowing to the growing notoriety of Xenical's side effects, Roche eventually switched to unbranded ads that avoided mention of the pronounced negatives.
Xenical generated $146 million in U.S. sales in nine months last year, according to consultancy IMS Health. Pfizer's Viagra, by comparison, posted sales of more than $581 million in nine months in its launch year in 1998.
Last week, Roche released first-quarter 2000 sales figures that showed Xenical had about $153 million in worldwide sales, down slightly from the previous quarter. Company CEO Franz Humer told Reuters: "With the programs we have in place, you would expect things to accelerate. It is a market that we are building, that we are developing. . . . I would expect the pace of Xenical over the year to accelerate."
'FAR BETTER THAN MERIDIA'
Analysts concede the drug hasn't raced out of the gate, but remain optimistic that it will gain steam over time.
"It's not going to be a huge blockbuster as once expected, but it's doing reasonably well," said Hemant Shah, industry analyst at HKS & Co. "It's doing far better than Meridia."
Xenical sales have consistently been more than double Meridia's. The latest monthly IMS Health figures show Xenical had sales of $18.2 million in February, compared to $6.8 million for Meridia.
Xenical is billed as a revolution in weight-loss drugs because it can block up to one-third of the fat a person digests, while predecessor drugs such as Meridia worked more as appetite suppressants, altering brain chemistry.
Contributing: Beth Snyder Bulik
Copyright April 2000, Crain Communications Inc.