London Thursday November 10 2005 - It’s difficult to read a newspaper or watch the television news without finding some reference to the anticipated avian bird epidemic. Coupled with the pre-existing demand for human influenza prescriptions, sales of Roche’s Tamiflu are soaring. This is helping to drive the 13% annual growth the herpes and respiratory antivirals market has enjoyed since 2000- the market generating sales worth $2.2billion in 2004. However a new report from independent market analyst Datamonitor* (DTM.L) indicates that in the long-term, RSV antivirals and vaccines may emerge to challenge the current heavyweight class, the herpes simplex/varicella zoster virus (HSV/VZVs) and cytomegalovirus (CMVs).

A market dominated by GSK and Roche

The herpes and respiratory antiviral market has historically been dominated by European Pharma companies GSK, Roche and Novartis, whose combined sales accounted for 86% of this market in 2004. Competition between these players is limited, with GSK dominating the HSV/VZV, and Roche the CMV market. Novartis has a modest presence in the HSV/VZV market. However, Novartis could potentially pioneer the respiratory syncytial virus (RSV) antiviral market through the launch of A-60444, a small molecule inhibitor it is developing in collaboration with UK Biotech Arrow Pharmaceuticals.

GlaxoSmithKline, both infectious disease (ID) and herpes and respiratory antiviral market leader, first established itself in the HSV/VZV market through the launch of Zovirax (acyclovir) in the UK in 1981. The company suffered a major blow following the drug’s patent expiry in the 1990’s, as Zovirax had by then achieved blockbuster status and represented an important source of company revenue. However losses were partly offset by the UK launch of follow-up drug Valtrex (valacyclovir) in 1995. Due to its improved bioavailability Valtrex has a significantly more convenient dosing regime than its predecessor, as it is taken once or twice daily, while Zovirax is taken three to five times daily, says Datamonitor infectious diseases analyst Dr Brigitte de Lima. “Building on the Zovirax legacy and benefiting from GSK’s global presence, Valtrex rapidly ascended to market leadership. In 2004, Valtrex achieved blockbuster status, generating $1billion and accounting for 50% of total herpes and respiratory antiviral sales.”

The result of effective lifecycle management is also reflected by Roche’s achievement and maintenance of market leadership in the CMV market. Roche first gained access to this market when it acquired Syntex and concomitantly the company’s CMV antiviral Cytovene (ganciclovir) in 1994. Similar to GSK, Roche largely prevented sales erosion and generic incursion of ganciclovir following the drug’s patent expiries between 2002 and 2005** by launching follow-up product Valcyte (valganciclovir). While Valcyte benefits from oral availability for the entire course of treatment and is further associated with higher efficacy, a crucial factor underlying effective switching of patients from Cytovene to Valcyte was Roche’s heavy promotional expenditure for Valcyte in the months preceding launch. As a result, it has been growing at an average annual rate of 100% since its first launch in 2001, and accounted for an impressive 87% of CMV market share in 2004.

Long-term growth in herpes market driven by CMV antivirals

Generic incursion in the herpes and respiratory antiviral market has so far remained low, mainly as a consequence of few commercially attractive drugs having lost patent protection. In 2004, less than 10% of sales were due to unbranded drugs, 82% of which were accounted for by generic acyclovir, the drug that still enjoys the highest volume use.

In the near future, generic presence is bound to increase significantly with expected US patent expiries of key HSV/VZV products: Valtrex in 2009 and Famvir (famciclovir) in 2010. Valtrex’s US sales are expected to exceed $1.5 billion in 2008. Based on the effect patent expiry had on Zovirax sales, in the US Valtrex might lose as much as 85% of sales to generics over a three-year period, Dr de Lima says. “As a consequence, generic market share in the HSV/VZV market is expected to escalate from 10% in 2004 to over 50% in 2014. Novartis’s HSV/VZV product Famvir is expected to follow a similar fate.”

Tamiflu leads the way, but new challengers emerging

Significant growth is also expected in the respiratory antiviral market. In the short term, the respiratory market will enlarge due to soaring sales of Tamiflu (oseltamivir). While human influenza prescriptions alone might push Tamiflu sales close to the $1 billion barrier by 2014, significantly more sales may result from global stockpiling for the anticipated avian flu pandemic. Indeed, according to various estimates, the worldwide stockpiling market might be worth up to $4 billion, Dr de Lima says. “Since Tamiflu has been widely preferred to rival drug Relenza (zanamivir, Biota/GSK) by most governments based on its oral availability, Tamiflu sales due to stockpiling might potentially exceed $2 billion.”

In the long term, the respiratory antiviral market may witness the introduction of the first-in-class RSV antiviral A-60444, Arrow’s/Novartis’s small molecule RSV inhibitor currently undergoing Phase II clinical trials. RSV, a disease associated with a high medical unmet need, is currently managed through either prophylaxis with monoclonal antibody therapy or treatment with Valeant’s inhalable ribavirin, marketed as Virazole. However, due to cost and toxicity issues, pharmacological therapy is currently reserved for high risk groups. Given the high incidence of RSV, in particular in infants, the elderly and the immunocompromised, the market potential of an effective RSV antiviral might be vast.

“Datamonitor believes that A-60444 has potential to achieve blockbuster status, provided the pricing strategy encourages the drug’s widespread use in all RSV patients not just in those at high risk of severe complications,” Dr de Lima says.

A further factor that comes into the equation for the assessment of the herpes and respiratory antiviral market is the increasing shift of focus from post-infective to preventative therapy, most notably vaccines. Datamonitor has identified at least 17 vaccines in clinical development. Consistent with its already strong presence in the overall vaccines market, GSK is also one of the leading herpes and respiratory vaccines developers, with vaccines such as Simplirix for the prevention of genital herpes included in the company’s pipeline. Further reflecting GSKs growing presence in a market the company expects to triple or even quadruple by 2015, GSK recently purchased Corixa (a developer of vaccine adjuvants), agreed to acquire Canadian vaccine developer ID Biomedical, and bought Wyeth’s vaccine plant in Marietta (Pennsylvania) for the development of seasonal and pandemic flu vaccines. “A big question mark therefore remains over whether antivirals will be able to coexist alongside prophylactic vaccines in a market increasingly focused on disease prevention,” Dr de Lima says.

Ends

Notes to editors
*Commercial Insight: Herpes and Respiratory Antivirals - Leaders Rise and Fall

** in the seven major pharmaceutical markets: UK, US, France, Germany, Italy, Japan and Spain.

Datamonitor’s report: Commercial Insight: Herpes and Respiratory Antivirals - Leaders Rise and Fall provides and in-depth overview and future outlook of the current herpes and respiratory antiviral market (covers HSV/VZV, CMV, influenza and RSV), with a focus on both clinical and commercial factors driving product differentiation and uptake.