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Glaxo, Bayer plan challenge to Viagra

GlaxoSmithKline Plc and Bayer AG may gain U.S. approval this month to sell Levitra, an impotence pill that the two pharmaceutical companies forecast will generate $1.1 billion in annual revenue and challenge Pfizer Inc.'s Viagra.

A ruling from the U.S. Food and Drug Administration is due in August or September, Lehman Brothers analysts including Stewart Adkins said in a note Monday. Bayer, the inventor of aspirin, and GlaxoSmithKline, the world's second-biggest drugmaker, may spend as much as $100 million to advertise and market the drug, according to Credit Suisse First Boston analysts Andrew Stott and Neil Tyler.

"This will be the mother of all marketing wars," said Thomas Bucher, head of global health-care investment at DWS Investment GmbH in Frankfurt, who manages the equivalent of about $1.6 billion. He said Levitra "will probably sell at the expense of Viagra," which had $1.74 billion in sales last year.

Glaxo, of Brentford, England, and Bayer, of Leverkusen, Germany, are looking to Levitra as they face generic competition to some of their biggest products. Glaxo is losing sales of the antibiotic Augmentin, once its No. 2 product, to cheaper copies made by Novartis AG. Bayer has competition from U.S.-based Barr Laboratories Inc. for its top product, the antibiotic Cipro.

Levitra is the only major product that Bayer will be introducing in the next three years. Chief Executive Officer Werner Wenning has said the drug business faces a "dry spell" in terms of new products through 2006. Glaxo also is awaiting approval of Ariflo, a respiratory treatment that Lehman Brothers estimates may generate sales of $360 million.

Glaxo's second-quarter net income rose 13 percent to 1.3 billion pounds ($1.5 billion) as the company kept costs down. Bayer second-quarter net income fell 56 percent as sales declined, and it paid higher taxes.

The marketing of Levitra will try to persuade men who never considered using Viagra, or who tried it and weren't happy with the results, said Giovanni Fenu, Bayer Pharma's head of global strategic marketing, in an interview in his office at Bayer's Leverkusen headquarters.

About 152 million men worldwide suffer from erectile dysfunction, Fenu said.

"You need eyeglasses when you are over 40 or 45; something else can happen, it's nothing to be ashamed of," Fenu said.

To reach men who haven't sought treatment on their own, Bayer and Glaxo also will market Levitra to their wives and partners and their family doctors. The companies even plan TV sponsorship of National Football League games, a first for the pharmaceutical industry, the league said when the contract was announced in July.

Glaxo shares have risen 8 percent this year and Bayer's have dropped 4.5 percent. That compares with a decline of 0.9 percent in the Bloomberg Europe pharmaceutical index of 20 drugmaker stocks. Among the companies' biggest competitors, shares of Pfizer, the world's biggest drugmaker, have risen 2.8 percent this year while shares of No. 3 Merck & Co. have dropped 5.5 percent.

Viagra became one of the world's top-selling drugs within a month of its U.S. introduction in 1998. Sales growth slowed, though, and Viagra sales fell to $419 million in the second quarter, from $475 million in the first quarter, and $491 million in the fourth quarter of last year.

Eli Lilly & Co. is awaiting U.S. approval for its impotence treatment, Cialis.

European Union authorities approved Levitra in March and it's now sold in 16 countries. In France, Spain, Germany and Italy, it has more than 10 percent of sales of impotence medicines. Levitra sales rose to 14 million euros in the second quarter, from 9 million euros in the first.

Raising physician awareness is key to marketing, the companies say, and they also aim to target patients' partners.

"It's a question of making this almost a normal topic, so when you go to the doctor they check your cholesterol, your blood pressure, but also ask how your sex life is," Fenu said.