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).
Proposals to make it available without prescription were, however, knocked back by U.S. experts in 2000 and again in 2005, prompting J&J to hand the product rights back to Merck.
Despite these setbacks, Glaxo is hopeful the medicine will yet win a recommendation when two U.S. Food and Drug Administration panels review it once more on Dec. 13.
Merck is seeking approval of OTC Mevacor 20 milligrams taken once daily to help lower cholesterol. The proposed use is for women age 55 and older and men age 45 and older with moderately raised cholesterol and one or more heart risk factors.
Nomura Code's Ward said he believed Mevacor had a better chance of winning a green light this time round, but Mevacor's exact status as a non-prescription medicine is likely to be a subject of considerable debate by regulators. The final outcome will determine the size of payments from Glaxo to Merck.
Allowing Mevacor to be sold OTC would be a major shift, since non-prescription drugs generally treat short-term conditions with easily recognised symptoms such as a headache, while high cholesterol can be detected only with a blood test.
Britain became the first country in the world to approve an OTC statin, or cholesterol-lowering, medicine in 2004. (Editing by David Cowell)
