Alli Return In U.S. Fattens Glaxo’s Consumer Outlook

GSK Consumer Healthcare says alli would be available starting Feb. 25 in most stores in the U.S. and Puerto Rico in “improved tamper-evident packaging.” Despite the product’s checkered history, its return marks another boost for Glaxo’s consumer outlook.

GlaxoSmithKline PLC’s consumer business gets another shot in the arm following sales growth in its latest quarter and a recent OTC switch launch as alli returns nearly a year after the weight loss drug’s recall from U.S. stores.

GSK Consumer Healthcare said alli (orlistat 60 mg capsules) was available starting Feb. 25 in most stores in the U.S. and Puerto Rico. The Parsippany, N.J.-based Glaxo business said alli supplies now “feature improved tamper-evident packaging” – safety seals on the outer carton and a labeled bottle with an inner foil seal imprinted with: “Sealed for Your Protection.”

GlaxoSmithKline begins distributing alli in “improved tamper-evident packaging” – safety seals on the outer carton and a bottle with an inner foil seal imprinted with: “Sealed for Your Protection.”

Image courtesy of GSK Consumer Healthcare

Glaxo voluntary recalled all lots of alli from the retail level in the U.S. and Puerto Rico in March 2014 after it warned consumers that some packages of the product may not include the correct drug (Also see "Alli Recall Could Help Mitigate Reputation Damage In Face Of Tampering" - Pink Sheet, 27 Mar, 2014.).

The firm worked with FDA to investigate consumer reports that “authentic-looking” alli cartons purchased at retailers in seven states contained a range of tablets and capsules of various shapes and colors and not actual alli capsules, which are turquoise blue with a dark blue band imprinted with “60mg orlistat.”

In a Feb. 24 statement, Glaxo said its and FDA’s review concluded product tampering occurred after the affected product was shipped to retailers. The consumer business “continues to support the Food & Drug Administration’s Office of Criminal Investigations on their tampering investigation,” according to the statement.

Checkered Past

Glaxo has downplayed the impact the alli recall has had on its consumer business revenues, but the product has a checkered history that started with its launch as the anticipated leader for OTC market growth.

While the product launched in the U.S. with fanfare in 2007 as the only OTC indicated for weight loss, sales growth lost momentum within several quarters. And its 2008 launch in Europe, following the first successful centralized Rx-to-OTC switch process in the European Union, also has not been the robust OTC sales driver Glaxo anticipated (Also see "Alli Pioneers EU Centralized Process For Nonprescription Switch" - Pink Sheet, 27 Oct, 2008.).

Additionally, Glaxo in 2012 reported ingredient supply problems that essentially stopped the distribution of alli for an extended period.

No matter how alli is promoted – Glaxo has used advertising from spots featuring celebrities to a campaign presenting comments by users – its uptake is hampered by the risk of embarrassing anal leakage if too much fat is eaten in one meal. Glaxo previously has explained that the fat alli blocks the body from absorbing "is harmlessly passed through your bowels," but also emphasized users must change their eating habits (Also see "Alli Campaign Seeks To "Drive Behavior Change," Stresses Healthy Choices" - Pink Sheet, 17 Jan, 2011.).

GSK in 2011 and 2012 worked on improving its consumer business by divesting OTC brands, at one point planning to sell alli, to improve its consumer business (Also see "Glaxo Keeps Alli As Recently Pruned Consumer Division Thrives" - Pink Sheet, 30 Jul, 2012.).

However, Glaxo abandoned its attempt to sell alli and recommitted to promoting the beleaguered OTC weight loss aid, although it continued to drag down consumer health care product sales. The U.K. firm said it feared the brand would be undervalued due to an interruption in the supply of the active ingredient.

Notwithstanding alli’s sales history, the firm’s consumer business ended 2014 on a sales upswing, built on the momentum with the Flonase Allergy Relief (fluticasone propionate 50 mcg spray) launch and looks for still more OTC drug and nutritional product sales growth from the pending launch of its joint venture with Novartis AG (Also see "Glaxo Launches Flonase OTC, Banks On More Consumer Growth Drivers" - Pink Sheet, 5 Feb, 2015.).

The JV, announced in April 2014 and comprising both firms’ consumer portfolios, will include 19 brands generating more than $100 million in sales each, making the JV the global OTC leader.

[Editor's note: Each week, "The Pink Sheet" DAILY features a story from "The Tan Sheet," highlighting a current topic in the consumer medicines or nutritional supplements sectors.]