INDIANAPOLIS -- Eli Lilly & Co. said yesterday that it bought the rights from Sepracor Inc. for a successor to Lilly's best-selling drug Prozac, moving to hold on to its market leadership after Prozac loses patent protection.
Lilly, the world's 10th-largest drugmaker, will pay as much as $90 million and royalties for Sepracor's R-fluoxetine, a version of the world's best-selling antidepressant that could have fewer side effects such as impotence.
Sepracor's compound has patent protection until 2015 and may help Lilly stave off generic competition for Prozac, which accounted for about 30 percent of Lilly's 1997 sales of $8.52 billion. Patents on the nearly 11-year-old antidepressant begin expiring after 2001.
"It's a silver bullet for Lilly's Prozac problem," said Erick Lucera, an analyst with Independence Investment Associates.
Shares in Indianapolis-based Lilly rose 75 cents, to $86.875. Marlborough, Mass.-based Sepracor fell $3.125 to close at $84.875 as investors sold the stock to make money after an initial rise, a common occurrence with money-losing biotechnology companies, according to Sergio Traversa, an analyst with Mehta Partners LLC.
Lilly will pay Sepracor an initial $20 million and as much as $70 million in additional payments depending on the antidepressant drug's progress in development, and will pay an undisclosed royalty on sales of the product.
If the new drug is an improvement on Prozac and lower-priced versions, the new drug would justify a continued high price, said Sidney Wolfe, director of Public Citizen's Health Research Group, a Washington-based consumer watchdog group.
"Otherwise, they are doing something that is going to keep the price inflated in this country to the detriment of people who may need the drug and may not be able to afford" the brand-name version, Wolfe said.
Lilly said it expects to submit a marketing application to the Food and Drug Administration for the new version of the antidepressant drug by 2001. Sepracor has said it expects Lilly's patents to hold until June 2004, and is aiming to get the new version of the drug on the market by 2002.
Sepracor, founded in 1984, has discovered how to strip the side effects from drugs, including Prozac, by separating active compounds from those that cause unwanted side effects.
Sepracor has an agreement with Johnson & Johnson to develop safer versions of J&J;'s Propulsid heartburn drug and Hismanal allergy drug. Sepracor also is nearing approval for its Xopenex asthma drug.
Pub Date: 12/08/98