Schering, Merck fire drug-war salvo

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Upstart Vytorin, taking on giants Lipitor and Crestor in the world's largest pharmaceutical category, is the key to salvation for marketing partners Schering-Plough Corp. and Merck & Co.

Vytorin, the newest entry in the $20 billion cholesterol-lowering business, is a combination of Schering's Zetia and Merck's Zocor, a $5 billion drug that loses its patent protection-and sales-to generic competition in 2006. Both partners, beset by financial troubles and a stagnant pipeline, are in dire need of a blockbuster.

The stakes are high enough that although the drug won't be on pharmacy shelves until Labor Day, the partners have already produced an unbranded TV campaign breaking this week from Omnicom Group's DDB Worldwide, New York, and plan to spend an estimated $100 million on ads in 2005.

The informational spot highlights the two sources of cholesterol, food and genes, and informs viewers that patients need a medication that can treat cholesterol on both fronts. A branded campaign is expected within weeks.

"We plan to support Vytorin very competitively," said Adam Schechter, VP-general manager of the joint Merck/Schering-Plough venture.

How competitively? Mr. Schechter wouldn't elaborate, and DDB referred calls to the client. But executives close to the launch said they expect an ad outlay of at least $40 million for the last five months of this year.

That would be in line with the market leaders. Pfizer spent $110 million on Lipitor last year, according to TNS Media Intelligence/CMR, and is projected to spend $138 million this year. Merck spent $80.5 million on Zocor in 2003, and a projected $92 million this year. AstraZeneca has spent $30 million through the first four months of this year on its cholesterol drug Crestor, which launched late in 2003. Bristol-Myers Squibb's Pravachol is the fourth player in this competitive category.

According to NDC Health, Atlanta, Lipitor had almost $10 billion in sales last year, followed by $5.1 billion for Zocor.

The drug companies said Vytorin will have a wholesale cost of $2.34 per pill, regardless of dosage. Lipitor sells for $2.10 per pill in 10-milligram doses and nearly $3 per pill for an 80-milligram dose.

In addition to the consumer advertising, Merck/Schering-Plough plans a professional campaign to tout the benefits of Vytorin and persuade physicians to begin writing prescriptions for the drug.

volatile category

In both campaigns, industry observers said they expect Merck/Schering-Plough to highlight that Vytorin is less dangerous than its competitors.

"This category is volatile right now in that, while statins have been shown to work, there is still an anxiety about taking them in doses higher than 60 milligrams," said the president of one agency handling a cholesterol drug.

Sidney Wolf, director of Public Citizen Health Research Group, has petitioned the Food and Drug Administration to ban Crestor, saying the drug has been linked to kidney failure and muscle-weakening rhabdomyolysis.

In a clinical trial announced in March, a starting dose of Vytorin cut levels of LDL-also known as the "bad cholesterol"-by 50%, compared to Lipitor's 37%. Acting in unison, a limited dose of Zocor restricts the liver's production of LDL and Zetia prevents the absorption of cholesterol into the intestines.

Analysts are buoyed by the drug. Prudential Securities analyst Tim Anderson went so far as to call it a "megablockbuster."

Rivals, of course, have a different view. Spokespersons for Pfizer, AstraZeneca and BMS declined to comment on their marketing plans, but a VP-marketing at one of the drug makers said: "This is a patent ploy by Merck, plain and simple."

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