The company's Alli is flying off store shelves, ironically fueled by buzz around an unpleasant side effect that has spawned a cottage industry for comedians and a controversial commercial from one of its competitors.
Of course, it's no surprise that Americans are willing to spend big to shed pounds. According to IMS Health, Americans already spend $23 billion a year on weight-loss products, including diet pills, shakes and food. And according to the National Center for Health Statistics, at least 30% of the public is considered morbidly obese, or 100 pounds overweight.
With that in mind, GSK paid $100 million to Roche for the rights to turn prescription medication Xenical into over-the-counter Alli (pronounced "ally"), the first FDA-approved OTC weight-loss product.
When GSK reported second-quarter earnings July 25, it said sales of Alli were a whopping $155 million in the U.S. since its June 14 launch. Analysts predicted Alli sales would be between $200 million and $500 million for the year -- and GSK's total OTC sales were up 29% compared with the same quarter a year ago.
"We continue to see very good progress across the rest of our portfolio with the successful launch of Alli and five [other] major pharmaceutical products," said Glaxo CEO J.P. Garnier, whose company managed to increase earnings by 1.4% overall in the quarter despite the FDA warning about diabetes drug Avandia, one of GSK's biggest sellers.
From the jaws of defeat
Alli's success is particularly stunning considering that the prescription version has largely been considered a flop. One reason may be the availability of Alli, which does not require a visit to the doctor. Another is timing: Xenical, like all diet drugs, was hit hard by news of the removal of Fen-Phen from the market in 1997 amid concerns it caused heart problems. From 2002 to 2006, sales of prescription drugs to treat obesity plunged to $222 million from $344 million. Xenical's sales fell to $93.3 million last year from $135 million in 2002, according to IMS Health.
In addition to seven commercials from Alli's agency, Havas' Arnold, New York; huge in-store displays; blogs at alliconnect.com; and a 152-page booklet, GSK is receiving even more exposure (a reported 2.4 million media mentions) by embracing something another marketer might consider unwanted buzz: anal leakage.
|All about Alli|
Alli is intended to be used in concert with a diet and exercise program, and GSK markets it as such. But users who consume too many grams of fat could experience loose stool, oily discharge and uncontrollable bowel movements, which GSK rather delicately calls "treatment effects."
GSK talks about the problem in its marketing. "It's part of the education of the brand," said Steven Burton, GSK Consumer Healthcare VP-weight control and an Alli user who openly admits he has experienced a "TE." The company has gone so far as to link to a controversial commercial created by a competitor, Generix Labs' Leptopril.
Unintended side effect
In the spot, three women are talking about Alli and its unintended side effect, and one says she needs to go to the bathroom. When she gets up and walks away, the back of her white dress is soiled.
It was rejected by ABC, CBS and NBC but can be seen on YouTube and Yahoo. Affectionately titled the "Poopy in Your Pants" video, it has been viewed about 32,000 times.
"I can't believe they all rejected our commercial," said Generix spokesperson Gina Gay. "The networks are willing to take GSK's money to run positive ads about Alli, [but] they seem disinclined to offer the public the other side of the story."
Ms. Gay said she received a letter from CBS that said: "We believe that the extended discussion and depiction of excrement fails to meet a premium standard of good taste and may offend a significant portion of our audience."
"At least our ad makes people laugh," Ms. Gay said.