Eli Lilly CEO Sidney Taurel said sales of his firm’s blockbuster psychiatric drug Zyprexa will be largely flat in 2007 due to lingering safety concerns, the Web site Marketwatch.com reported. Taurel said that while Lilly doesn’t anticipate a notable decline in Zyprexa sales, it also doesn’t see any substantial growth on the horizon for this year. “The positioning of the drug is for our sales reps to help physicians identify those patients for whom the efficacy of the drug offsets the potential concern for side effects, and those are, in particular, the urgent patients,” Taurel remarked during a meeting of the Boston College Chief Executive’s Club in Boston. Zyprexa, used to treat schizophrenia and bipolar disorder, has been linked with substantial weight gain in some patients and is suspected of triggering diabetes in others. “They (patients) can use it for a while, and if they find out there’s too much weight gain, they can switch to something else,” Taurel said. “I think the product has found its positioning that way and that’s why sales have stabilized.” Zyprexa was Lilly’s top-selling drug in 2006 with sales of $4.4 billion. But Taurel said that US sales of the drug have now “stabilized.” Lilly has not issued projections for Zyprexa beyond this year. Lilly is up against thousands of lawsuits from former Zyprexa users. The drugmaker settled about 18,000 of those cases in 2006. Lilly is also pushing to regain its dominance in the diabetes market and remains optimistic about its planned inhaled insulin product despite Pfizer’s perceived difficulties in launching its similar product, Exubera, Taurel said. Lilly’s product, which is being developed with Alkermes, is in Phase III clinical testing. “We’re very excited about inhaled insulin and our product with Alkermes,” Taurel said. “We’re watching, very closely, what’s happening with our competitor Pfizer, which has launched Exubera, and so far they haven’t done very well. We’ll be learning a lot from their experience. By the time we get to market, we’ll know what to do and what not to do,” Taurel added. Taurel also said that Lilly feels its inhaled insulin device, which is much smaller than Pfizer’s, will give it an edge in the marketplace. He added that Lilly’s experience in marketing diabetes products is also an advantage, as Pfizer is a relative newcomer to the field. When asked if the inhaled insulin market in big enough for “two major players,” Taurel replied, “Oh yes, very much so, especially if you come with a better mousetrap.” Meanwhile, Lilly told investors at a separate conference last Tuesday that the FDA has denied the drugmaker’s appeal of a ruling demanding more tests to prove whether its pipeline treatment Arxxant is effective in treating eye disease in diabetics. Diabetes is the leading cause of blindness. In 2006, the FDA said it wanted Lilly to conduct a new three-year clinical study on Arxxant, which would have cost millions of additional dollars. “While we’re obviously disappointed with the FDA’s decision, we will not pursue this appeal further,” a Lilly spokeswoman told The Indianapolis Star newspaper. Lilly said it would consider its options, including conducting new trials, seeking a partner to help pay for additional costs, or terminating the project. Lilly has already spent 10 years developing Arxxant, but clinical trials showed little proof of benefit, according to the FDA. Lilly also plans to withdraw its application for approval in the European Union, at least temporarily, because it won’t have time to submit new data demanded by the European Agency for the Evaluation of Medicinal Products under deadline. Unlike the FDA, the European agency is not asking for a new and expensive clinical trial. Lilly did not say if it would resubmit Arxxant for European approval in the future. Some observers had high hopes for Arxxant. Investment Bank Credit Suisse had predicted the treatment would become a blockbuster, slowly generating $1.1 billion in sales, by 2010.