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New pill won't put sedatives to sleep
Takeda's non-addictive sleeping pill won't steal sales from insomnia sedatives, analysts say.
August 9, 2005: 2:52 PM EDT
By Aaron Smith, CNN/Money staff writer

NEW YORK (CNN/Money) - A new pill from Japanese drug maker Takeda Pharmaceuticals promises to put you to sleep without knocking you out.

A miracle sleeping pill? Maybe. But Americans may just want to be sedated.

Takeda's drug, Rozerem, is the first sleeping drug approved by the Food and Drug Administration that isn't labeled as potentially addictive. Rozerem was approved on July 22 and is expected to hit pharmacies in late September.

Takeda is pushing the non-addictiveness as a selling point, but analysts say the drug will have trouble making inroads in the $2 billion U.S. market for sleeping medication.

The market is dominated by Sanofi-Aventis's (up $0.49 to $44.25, Research) Ambien, with $1.7 billion in annual sales. The No. 2 is Sepracor's (up $0.95 to $54.17, Research) Lunesta, which generated $240 million in sales in its first nine months on the market and has blockbuster potential.

"[Rozerem] is different from everything else that exists," said Louis Mini, Takeda Pharmaceutical N.A.'s medical director for neuroscience. "This is really a drug that promotes sleep without sedating. Essentially this is a break-through in sleep medicine."

Rozerem works by regulating a part of the brain called the suprachiasmatic nucleus, or master clock, said Mini. The master clock sends signals to the body that make it feel tired after a certain period of time without sleep. The master clock is influenced by various factors, including the amount of light that it receives through the retinas. Rozerem regulates the master clock when it fails to work properly in insomniacs.

Ambien and Lunestra are hypnotic-class drugs that work by sedating patients, and side effects can include addiction with withdrawal symptoms.

Tim Rudolphi, director of neuroscience marketing for Takeda, said the potential for Rozerem in the United States is wide-open, with up to 70 million Americans suffering from insomnia but only 3 million of them taking medication.

"We think there's a tremendous opportunity," said Rudolphi. "Sixty-seven million Americans who say they're suffering from insomnia aren't taking any drugs for it."

And in a liability-prone drug market, Mini sees the advantages of a drug with "no abuse potential."

Americans just want to be knocked out

Analysts aren't so sure, raising questions about the effectiveness of Rozerem.

The issue, analysts say, is that though trial data have shown Rozerem effective at putting insomniacs to sleep, it is not as effective as sedatives in helping patients sleep through the night.

Takeda disputes that take on the data.

"Rozerem looks like a fairly short-acting drug that's not super strong," said Jon LeCroy, analyst for Natexis Bleichroeder. "It's a relatively weak product. I think the sales are going to be limited."

Takeda would not provide sales estimates for Rozerem. Robert Hazlett, analyst for Suntrust Robinson Humphrey, estimated that Rozerem's annual sales will peak at $350 to $400 million and "will likely take some time to gain acceptance."

"Rozerem is a novel but weak product with some issues that has arrived a bit earlier than expected," wrote Hazlett, in a July 25 report titled, "Rozerem gets the nod, but is no major threat."

Aaron Reames, analyst for Stanford Financial Group, said that some patients might switch to Rozerem from an addictive sleeping pill, resulting in a "substantial launch" for the new drug.

One plus: It's relatively easy to pass out free samples for non-addictive drugs.

But it is questionable whether patients would remain with a drug that might not be as effective, said Reames.

Reames too has questions about efficacy. "If the drug doesn't work for you, you're not going to take it just because it's not a scheduled drug," said Reames.

Rudolphi, the Takeda marketing director, disagreed with reports that Rozerem has a weaker efficacy than its competitors. Rudolphi said that analysts have "seen the same data" as Takeda's scientists, and the clinical data shows that Rozerem "helps you go to sleep and helps you stay asleep."

"We're looking forward to getting it on the marketplace," said Rudolphi.

Though Rozerem's impact on other drugs could be limited, Hazlett said the anti-insomnia market could get shaken up late in 2006, when Pfizer Inc. (up $0.43 to $26.64, Research) is expected to release the sleeping drug Indiplon with Neurocrine Biosciences (Research). Hazlett said Indiplon "appears to have an attractive profile, somewhat comparable to both Ambien and Lunesta."

The analysts interviewed for this story do own stock in the companies mentioned here, but Suntrust might have a lending relationship some of with them.

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