July 25, 2006
Sepracor: removal of Indiplon to impact marketing costs
Sepracor is stepping up its marketing spend for Lunesta in an effort to boost wavering sales and take advantage of the disappearance of anticipated sleep-aid rival Indiplon.
The announcement came as Sepracor announced a second-quarter profit, a turnaround from last year’s loss. And Lunesta sales during the quarter reached $139 million, an increase of 66% over the same period last year.
Yet Lunesta was hurt by the negative publicity around side effects of Ambien—including reports of amnesia, sleep walking and binge eating—causing Sepracor to reduce its 2006 guidance for Lunesta sales to $620 million from a previous forecast of $650 million.
Another factor weighing on the company came with the regulatory difficulties of Indiplon and subsequent breakup of the Pfizer-Neurocrine Biosciences partnership. Without Pfizer, which packs considerable marketing muscle, Sepracor faces more of a burden to grow the insomnia market.
The removal of Indiplon “provided an opportunity for us to continue to develop this market,” said Timothy Barberich, Sepracor CEO, during an earnings conference call. “However, that requires sustained investment in both customer and professional communications programs. As a result, we will be guiding to a slightly higher SG&A [sales, general & administrative cost] for the balance of the year.”
Sepracor announced in February a 50%-upgrade in representatives to 1,350 primary care sales people, who were expected to start by May 1 [MM&M March 2006]. “The full impact of these actions will be felt as we progress in the second half of this year,” said David Southwell, Sepracor EVP/CFO.
Despite the disappointing sales picture for its sleeping pill, Sepracor shares rose nearly 2% Friday on speculation that the firm could be acquired by Pfizer to offset the loss of Indiplon sales.
Sepracor said it is shifting focus to differentiating Lunesta from the competition partly through studies confirming its safety in co-morbid conditions depression, anxiety, arthritis and menopause.