UPDATE 2-Glaxo boosts OTC with Merck cholesterol drug deal
(Adds comment from analyst, Glaxo spokeswoman)
LONDON, Nov 26 (Reuters) - GlaxoSmithKline Plc (GSK.L) boosted its over-the-counter medicines business on Monday by signing a deal to sell a non-prescription version of Merck & Co Inc's (MRK.N) cholesterol-lowering drug Mevacor.
The move signals Glaxo's commitment to its consumer healthcare operation, despite calls by some investors for it to spin the unit off to focus on prescription treatments.
It should also lift the company's sagging U.S. sales line.
Under the agreement, Glaxo will have exclusive U.S. rights to sell a non-prescription version of Mevacor, which is currently awaiting regulatory approval, in return for making undisclosed milestone and royalty payments to Merck.
"This reinforces the commitment Glaxo has to this particular part of the business," said Mike Ward, an industry analyst at Nomura Code Securities.
"The over-the-counter usage of products that are switching from prescription to non-prescription use is a good area to be in. A lot of health authorities would like to switch more products, so that the costs fall on the patients."
The deal marks the second time recently that Glaxo has bought over-the-counter (OTC) rights to a medicine developed by another drugmaker.
Earlier this year it launched Alli, an OTC version of Roche Holding AG's (ROG.VX) Xenical obesity drug, and U.S. sales have proved more successful than some analysts expected.
A company spokeswoman said the success of Alli underpinned Glaxo's belief that OTC switching was an area to capitalise on.
The deal is also the second in less than a week designed to boost Glaxo's U.S. sales, following an agreement to buy heart drug specialist Reliant Pharmaceuticals for $1.65 billion.
Glaxo has been hit hard in recent months by slumping U.S. sales of blockbuster diabetes drug Avandia, following a report linking it to heart-attack risk.
FDA DECISION
Mevacor lost patent protection in the United States in 2001 and Merck has been trying to secure OTC status for the product for years, initially in conjunction with Johnson & Johnson (JNJ.N). Continued...
