Glaxo readies challenge to Merck monopoly

NEW YORK (CNNMoney.com) -- GlaxoSmithKline is getting closer to launching its challenge against Merck's monopoly on cervical cancer vaccines.

The British drugmaker GlaxoSmithKline (down $0.42 to $54.83, Charts) is just weeks away from filing an application for its experimental cervical cancer vaccine Cervarix to the Food and Drug Administration.

"This is the ultimate insurance for cervical cancer," said Glaxo chief executive JP Garnier on Wednesday, in an interview with CNNMoney.com.

Merck's Gardasil is widely considered one of the best new Big Pharma products to hit the market in years. But Merck could soon be splitting the market with Glaxo.

If approved, Cervarix would challenge Merck's (down $0.10 to $43.27, Charts) Gardasil, a vaccine approved by the FDA in 2006. If the FDA decides to give Cervarix fast-track review status - a six-month review target that the agency typically reserves for life-saving drugs - then the vaccine could be on the market by the end of the year, according to Garnier.

Gardasil and Cervarix are both seen as potential blockbusters, and have been hailed by analysts as a ray of light in a drug industry plagued by outgoing blockbusters and anemic pipelines.

Garnier said the Glaxo and Merck vaccines are similar, with only "a couple of points of difference." The biggest difference, according to analysts, is that Gardasil has the advantage of being first-to-market, which could lead to greater sales. Gbola Amusa, analyst for Sanford C. Bernstein, projects annual peak sales of $2.5 billion for Gardasil and $1.5 billion for Cervarix.

But Glaxo launched a head-to-head study in January comparing its vaccine to Merck's. The results of the study could help or hinder Glaxo trying to prove its product is superior.

"At some point, people buying the vaccine will have to decide: 'Do I buy Merck or Glaxo?'" said Michael Leacock, analyst for ABN AMRO. "When that [head-to-head] study comes out, Glaxo will have to live by the results, and they must be fairly confident to launch a study like that."

(Leacock projects $2.3 billion in annual Cervarix sales by 2011. He doesn't have a Gardasil projection because he doesn't cover Merck.)

Gardasil and Cervarix were both developed as inoculations against the sexually-transmitted human papillomavirus, which is blamed for most cases of cervical cancer. About 10,000 women are diagnosed with cervical cancer every year in the U.S., and 4,000 die, according to the Mayo Clinic, an esteemed cancer research center.

The vaccines have been tested in a wide age range, from teenage girls to middle-aged women. To assure greater effectiveness, Glaxo and Merck urge the inoculation of girls before they become sexually active. The FDA has approved Gardasil for girls as young as 9, and Cervarix has been tested in girls as young as 10.

Initially, this raised the ire of some religious groups, but Merck effectively doused much of the controversy by promoting the vaccine's benefits to public health. Nonetheless, Merck recently dropped its lobbying efforts to have Gardasil inoculation mandated in schools because of "issues raised in various states about mandating the vaccine," said Merck spokeswoman Janet Skidmore.

Garnier of Glaxo, who spends much of his time jetting between corporate offices in London and Philadelphia, said he is not concerned about opposition from conservative groups to Cervarix.

"I think the reality is that you want the best for your children," said Garnier, who emphasized that even women who save sex for marriage might be at risk. "I think the alternative is not to have sex with anybody your entire life and I think most parents will agree that's not an alternative."

Merck is the No. 4 U.S. drugmaker in terms of sales, behind Pfizer (down $0.08 to $24.86, Charts), Johnson & Johnson (down $0.06 to $60.71, Charts) and Abbot Laboratories (down $0.34 to $53.77, Charts). Glaxo is one of the biggest drugmakers in Europe, along with Sanofi-Aventis (down $0.24 to $41.90, Charts).

For more on GlaxoSmithKline, see CNN senior business correspondent Ali Velshi's interview Garnier on In the Money, which airs Saturday at 1 p.m.

The analysts quoted in this story do not own stock in company shares mentioned here, though ABN AMRO has acted as corporate advisor for Glaxo.