Avandia study yields doubts about drug

Since publication of the New England Journal of Medicine report linking GlaxoSmithKline’s diabetes drug Avandia with an increased risk of heart attack and heart-related death, debate has centered on potential weaknesses of the study's 'meta-analysis', a view supported by GSK. However, the safety concerns still could damage sales of the drug, potentially dragging down the company's overall revenue performance.

The study pulled together data from 42 separate studies of Avandia in order to reach its conclusions, which have sparked a response from the FDA and widespread media coverage. British medical journal The Lancet has attempted to calm the storm by suggesting that "it would be premature to over-interpret a meta-analysis that the authors and NEJM editorialists all acknowledge contains important weaknesses."

 

Nevertheless, concerns remain for GSK and for the future market performance of Avandia, particularly in the post-Vioxx era. Global regulatory bodies are wary of a repeat performance as seen with Vioxx, while GSK will be aware that scrutiny of clinical trial data may not only result in a dampened sales performance for its blockbuster diabetes drug but the threat of legal action from patients who have been prescribed Avandia.

 

Avandia was GSK's second best-selling product in 2006, generating revenues of GBP1.4 billion, with a further GBP246 million generated from combination products Avandamet and Avandaryl.

 

At the corporate level, GSK's medium-term sales growth performance also remains under scrutiny. Not taking into account the latest news surrounding Avandia, Datamonitor forecasts that ethical drug sales for the company will decline by a compound annual growth rate (CAGR) of 0.1% over the period 2006-2012.

 

Deeper analysis of this flat revenue growth performance reveals substantial "tread milling" at the product level, whereby sales growth from newer versions of established therapies is expected to counter revenues losses caused by exposure to generic competition. There will also be some growth driven by new product launches, such as the targeted breast cancer treatment Tykerb and the cervical cancer vaccine Cervarix, but a forecast sales CAGR of -0.1% reflects the high level of generic exposure facing GSK over the period 2007-12.

 

The sales growth performance forecast for GSK out to 2012 heightens the significance of Avandia to the company's product portfolio. Although the diabetes treatment is not expected to act as one of the company's leading sales growth drivers out to 2012, a rapid decline in Avandia sales would lead to a flat sales outlook transforming into a declining sales performance.

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