Think Small Grow Big - Pharmaceutical Executive


Think Small Grow Big
After Adderall, what's next for Shire? CEO Matthew Emmens thinks the answer lies in a simple strategy.

Pharmaceutical Executive

But the launch didn't hurt Shire. In 2003, Adderall XR sales grew 49 percent over the previous year, while standard Adderall declined by 44 percent. As a whole, the franchise generated revenues of $536 million, an increase of 25 percent over the previous year. What's more, it retained 32 percent of the total ADHD market during 2003, compared with 36 percent in 2002, according to Wood Mackenzie.

Shire now must not only keep its eye on generic entrants, but new ADHD competitors. Most analysts believed that Eli Lilly's Strattera (atomoxetine) would overtake Adderall XR as the market leader as early as this year. (See "ADHD Shakedown," page 58.) That's because Strattera is the first nonstimulant ADHD medication and has a much lower potential for abuse.

"Strattera has this great marketing niche because they are not a controlled substance," says Decision Resources analyst Melissa Garland. "Adderall XR and Concerta have many logistical hurdles because they are regulated: Physicians can't do mail-in refills, can't call in a refill until it runs out, and it has to be administered at school in the presence of a nurse."

But David is battling Goliath. In August 2003, Strattera had 16 percent of US market share and Adderall XR had 22 percent, according to IMS Health. By May 2004, Strattera had only increased usage to 17.5 percent of the market, while Adderall XR rose to 24 percent. Behind the numbers: Shire's aggressive lifecycle management on several fronts.

Additional indications. The children's ADHD market was already exploding, with annual prescriptions increasing by 500 percent since 1991, according to Investor's Business Daily. But the adult ADHD market is seeing its own explosion. Sales of ADHD drugs to adults rose from $27.7 million in the third quarter of 2000 to $77.1 million in the second quarter of 2003, according to Datamonitor. By 2008, the forecast says, the number will be just under $700 million.

The surge is driven largely by Eli Lilly's marketing of Strattera, the first product to receive the adult indication for ADHD. Hot on Lilly's heels, Shire received an FDA approvable letter for the adult indication for Adderall XR last October and expects final approval this summer. Not only will that give Shire a piece of bigger pie, but it will extend the drug's patent life. If the company also receives a six-month extension for evaluating Adderall XR in adolescents, the product's market exclusivity can last until the end of 2007.

According to Bear Stearns, "Due to new adult dosage strengths and limited switching in controlled substances, low-price generic Adderall XR competition is expected to have little or no impact on adult sales. This indication could represent a several-hundred million dollar opportunity for Shire."

Efficacy. Many believe that psychostimulants are more efficacious than the newer ADHD drugs. A comparative trial released at the American Psychiatric Association in May showed that children with ADHD achieved significantly greater improvement in both behavior and attention with Adderall XR than with Strattera.

And that may affect reimbursement. "I would have said [payers] would go for Strattera," says Datamonitor analyst Alistair Sinclair. "But in light of recent clinical results, they will probably want more head-to-head trials before they make a final decision."

Marketing. Keeping sales forces small allows Shire to do what it does best-provide top-grade service to specialists. The company directs its small sales force to the highest-prescribing physicians-an effective strategy because, notes Flexter, "75 percent of the business comes out of 15 percent of the targets."

Shire's ADHD competitors have broader-based selling strategies. You can see that in the numbers; Eli Lilly has 2,440 Strattera reps compared with Shire's 360.

Yet Shire's targeted approach is still working. "The advantage Shire has is that they are more specialized," says Jim Hall. "They already have better relationships in the market."


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