ANALYSIS-Avandia row gives ammo to Glaxo litigants, rivals
* Consolidated Avandia action due to come to trial in summer
* Avandia sales already in decline after 2007 heart scare
* Glaxo woes a boost to rival drugs from Takeda, Merck
* Glaxo shares fall 2.2 pct, Takeda up 1.9 pct
By Ben Hirschler, European Pharmaceuticals Correspondent
LONDON, Feb 22 (Reuters) - New attacks on GlaxoSmithKline's (GSK.L) diabetes drug Avandia add to litigation risk for the medicine and will help rival drugmakers, including Takeda Pharmaceutical (4502.T) and Merck & Co (MRK.N).
The impact on overall Glaxo sales should be muted but the company is likely to see more claims as plaintiff lawyers seek new ammunition in a lengthy analysis from U.S lawmakers.
U.S. Senators published a critical report on Avandia at the weekend and revealed two drug safety reviewers recommended it be pulled from the market because of heart dangers.
Senators Max Baucus and Charles Grassley also said evidence suggested Glaxo knew of possible cardiac risks associated with Avandia years before the issue became public. [ID:nN20149014]
Glaxo said the scientific evidence simply did not establish that Avandia increased heart attack risks and added it had been open in providing information about the drug.
Jeffrey Holford, an analyst at stockbroker Jefferies, said early loss of Avandia from the U.S. market in mid-2010 would cut 2010 and 2011 earnings estimates by less than 1 percent. But he added Glaxo also faced an increased risk from litigation.
While accusations from the senators that Glaxo intimidated doctors over Avandia and did not warn early enough on the drug's risks may not be new, the charges will play into the hands of lawyers lining up product liability actions.
"It obviously adds fuel to the fire. As to whether it adds any new material facts, we not aware of that," Holford said.
Avandia is already in decline following controversy over the drug's heart risks in 2007 and the medicine is set to lose exclusivity in the United States in 2012. U.S. sales of Avandia accounted for only 1.5 percent of group sales in 2009.
But worries over Avandia still sent Glaxo shares 2.2 percent lower on Monday. It is the third blow in recent days, after U.S. moves to cut use of some asthma drugs, including its top seller Advair, and a decision to stop supplying denture creams containing zinc on safety grounds. [ID:nN18204697] [ID:nNLDE61H28]
Glaxo also faces a critical Advair patent case in Germany on Tuesday. [ID:nLDE61H0QF]
TAKEDA, MERCK MAY GAIN
Worldwide sales of Avandia topped $3 billion in 2006 but fell to $1.2 billion in 2009 -- with U.S. sales making up 55 percent -- and analysts expect revenue to go on sliding to $970 million in 2011, according to a consensus from Thomson Pharma.
The main beneficiary from Avandia's renewed problems will be Takeda's similar rival drug Actos, which has not been associated with the same heart risks. Shares in the Japanese drugmaker rose 1.9 percent on Monday.
Other diabetes drugs that may win some of Avandia's sales include Merck's Januvia, and possibly AstraZeneca (AZN.L) and Bristol-Myers Squibb's (BMY.N) Onglyza, analysts believe.
The prospect of the Avandia being pulled from sale in the world's top market will come into focus when the U.S. Food and Drug Administration asks an advisory panel to consider the risks of Avandia again in light of the latest allegations. But the spotlight is more on the legal risks.
Glaxo already faces lawsuits from people claiming damages, following initial concerns about Avandia which emerged in May 2007 when Cleveland Clinic researchers published a study saying there was a link between the drug and heart attacks.
U.S. federal cases on Avandia have been consolidated before Judge Cynthia Rufe in the Eastern District of Pennsylvania, with the first trial dates to be scheduled between June 1 and Sept. 30, 2010. There are also a number of separate state cases.
Glaxo declined to comment on the impact of the latest events on the forthcoming litigation but said it would defend its drug.
"We are confident that when the courts look at the data and the way in which we communicated with the FDA and doctors and our openness in posting information on our website, the facts will support our position," said spokeswoman Jo Revill.
Paul Diggle of Ambrian said the fresh allegations and the backing of two powerful U.S. lawmakers would inevitably encourage more lawsuits.
"It helps the background sentiment to be more in favour of the litigants than the company ... but I think Glaxo has a reasonable case," he said. On the surface, the Avandia lawsuits mirror those brought against Merck over its withdrawn pain drug Vioxx, which was also linked to heart attack risk. A big difference is that Avandia is still available, while Merck voluntarily took its drug off the market.
(Editing by Sitaraman Shankar)
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