Contraceptive unlikely to boost Wyeth

Competition from generics likely to limit sales of menstruation-preventing drug Lybrel if FDA approves the pill.

By Aaron Smith, CNNMoney.com staff writer

NEW YORK (CNNMoney.com) -- The FDA will decide Tuesday whether Wyeth's experimental birth control pill Lybrel gets a green light for the U.S. market.

Lybrel would be the first oral contraceptive to completely stop the menstrual cycle, assuming it merits approval. Unlike other birth control pills, it would remain active every day without the use of placebos.

"If approved Lybrel would be the first and only continuous oral contraceptive," said Wyeth spokeswoman Danielle Halstrom. "Lybrel is intended for women who are seeking contraception and who are seeking to put their menstrual cycle on hold."

But competition against low-cost generic birth control pills will prevent Lybrel from getting anywhere near blockbuster status, even if the Food and Drug Administration approves it, analysts said.

Jon LeCroy, analyst for Natexis Bleichroeder, estimates that annual Lybrel sales will peak at $150 million in 2011. This isn't likely to make an impact on Wyeth's (up $1.67 to $58.05, Charts, Fortune 500) total sales, which exceeded $20 billion in 2006. It also pales in comparison to the company's top-selling drug, the antidepressant Effexor, with $3.7 billion in 2006 sales.

"It's a small product for them so either way I don't think it's going to move the stock," said LeCroy. But he qualified this in declaring Lybrel a worthwhile product for Wyeth because because of its strong profit margin. Wyeth does not have to assemble a new sales force for Lybrel but can add it to the roster of products sold by sales reps in the women's health division, reducing overhead costs.

Lybrel, a potential name-brand prescription drug, could have a tough time competing against low-cost generics produced by Barr Laboratories (down $0.45 to $54.25, Charts) and other drugmakers, said LeCroy.

"Oral contraceptives are a tough market because they're generally generic," said LeCroy, noting that many of the women using them are young, and therefore less affluent, than the baby boomers who serve as the backbone of health care spending. "Money matters, and generics are a lot cheaper."

Wyeth has had a difficult time trying to get Lybrel approved. In June 2006, the FDA sent Wyeth an "approvable" letter, saying that the company had to resolve issues with its manufacturing facilities before the drug could be cleared. A month prior, the FDA sent Wyeth a warning letter about its plant in Guayama, Puerto Rico, where Lybrel is manufactured.

On May 6, Wyeth said the manufacturing issues with the FDA have been resolved.

Wyeth, based in Madison, N.J., is the No. 5 U.S. drugmaker in terms of sales, behind Johnson & Johnson (Charts, Fortune 500), Pfizer (Charts, Fortune 500), Merck (Charts, Fortune 500) and Abbott Laboratories (Charts, Fortune 500). Top of page

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Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.