Clarinex OTC Option “Valuable” In Face Of Competition – Schering-Plough

The option to file an OTC switch application for Rx Clarinex (desloratadine) is an important part of Schering-Plough's strategy for growth, CEO Fred Hassan said during the firm's fiscal 2006 fourth-quarter earnings call Jan. 29.

An Rx-to-OTC switch option for Clarinex is "a very valuable part of our strategy," Hassan said in response to a question concerning the possible approval of an OTC version of Pfizer's Rx allergy medication Zyrtec (cetirizine HCl) in December 2007.

Hassan said it is significant for Schering-Plough to have the option to switch Clarinex to OTC status and combat generic competition before the product's exclusivity expiration date.

An OTC application would also be in line with the firm's recent expansion of its switch program.

However, "at this point, we are going forward with Clarinex as a prescription product," Hassan said.

GlaxoSmithKline faced a similar situation when FDA approval in February 2006 for a generic equivalent to its Flonase nasal spray led the firm to sue to block the generic (¹ (Also see "Flonase Generic Launch Blocked; Glaxo Drops Switch Plan" - Pink Sheet, 27 Feb, 2006.), p. 4). The firm later dropped the lawsuit in March 2006.

GSK had considered a switch for the fluticasone propionate nasal spray as exclusivity loss neared (² (Also see "GSK Flonase Switch Application Coming? Actual-Use Study Underway" - Pink Sheet, 22 Sep, 2003.), p. 5).

The first patent for Clarinex oral tablets expired Dec. 21, 2006, according to FDA's Orange Book. The patent for the oral tablet form was granted in December 2001. Pediatric exclusivity for the drug is slated to expire in June of this year.

The firm reported global Clarinex sales increased 18 percent for the 2006 fourth quarter to $164 million.

Johnson & Johnson, which acquired Zyrtec OTC marketing rights as part of its recent purchase of Pfizer Consumer Healthcare, hopes to launch a nonprescription form of Zyrtec before its patent expiration in December.

J&J is optimistic about the potential impact an OTC Zyrtec would have on its consumer healthcare business, J&J said during an earnings call Jan. 23 (³ (Also see "Zyrtec OTC, New Segments Picked Up From Pfizer Will Be Key Drivers – J&J" - Pink Sheet, 29 Jan, 2007.), p. 11).

Combined annual sales for Clarinex and OTC Claritin (loratadine) products exceed $1 billion and are "still growing," Hassan said during the call.

Sales for Schering-Plough's consumer health care division rose 4 percent during the quarter to $205 million, "due primarily to increased sales of OTC Claritin," which grew 35 percent, the company states in its earnings release.

However, the impact of the Claritin gains were "partially offset by sales declines in other consumer businesses," the firm says. For example the firm's sunscreens, including Coppertone and Bain de Soleil declined 31% to $14 million.

Other consumer brands from Schering-Plough include the Coricidin cough/cold line and Lotrimin antifungal foot care products.

Other Q4 results for Schering-Plough include total net sales increasing 14 percent to $2.7 billion over the previous October-December period.

Earnings for the firm included expenses and special charges related to streamlining manufacturing operations as well as an "upfront payment of $15 million" to license an OTC version of Santarus' immediate-release proton pump inhibitor, Zegerid (omeprazole/sodium bicarbonate). Full-year EPS increased to 71 cents for 2006 compared to 12 cents in 2005.

Schering-Plough and Santarus announced the licensing agreement in October 2006, when Schering-Plough said it was interested in meeting with FDA to discuss Zegerid's switch potential (⁴ (Also see "Zegerid May Bring Quick Heartburn Relief To Market Under Santarus/S-P deal" - Pink Sheet, 23 Oct, 2006.), p. 3).

The firm also entered into a licensing agreement with Braintree Laboratories in December for marketing rights to the company's OTC version of its MiraLAX (polyethylene glycol 3350) laxative product (⁵ (Also see "S-P Brings New Laxative Class To OTC Market Under Braintree Licensing Deal" - Pink Sheet, 11 Dec, 2006.), p. 7).

Schering-Plough will market the powder that dissolves into a beverage to treat occasional constipation as an OTC "pioneer" in a laxative class called hyperosmotics, which are new to the OTC market.

In 2007, the firm plans to continue its "build the base" strategy, the third stage of its five-part Action Agenda, which was introduced in 2003 under the newly appointed Hassan.

- Jessica Lake