Valley of the Dollars
"Sleep architecture," narcoleptic Dobermans, and new pills galore: The sedative industry has never been so perky.

(FORTUNE Magazine) - Oh, the agony of sleeplessness. "Last night she had only slept three hours with five red ones and two yellows," mourns Neely, a character in Valley of the Dolls, Jacqueline Susann's great work of pill- popping literature, and even those who haven't read Susann's novel may know the feeling she describes.

Susann's masterpiece of sex and sleeping pills was a twisted ode to Seconal--a.k.a. the red ones, or the dolls--but Seconal, which is technically a barbiturate, was just one in a long parade of pharmacological sleep aids. Long before it there was morphine (Morpheus was the Greek god of dreams), and after it there were benzodiazepines, which include Valium and Halcion--the benzos. All have delivered sleep, blessed sleep, but they've also come with unfortunate side effects, including addiction, tolerance (eventually, you can't sleep even with 'em), rebound insomnia (certainly can't sleep without 'em), and sometimes with Halcion, episodes of memory loss and violence.

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But we all crave a quick fix, and the pharmaceutical companies crave dollars, and so today there are more pills than ever before. (Forget sex and money -- this is the era of sleep and money.) In just the past 14 months, three new sleeping pills have been approved, and more are on the way. Turn on your TV set (but not before you try to go to sleep) or flip through the pages of a glossy magazine, and you can't escape an advertisement for one of the new dolls--Lunesta, Sonata, Rozerem. (There's an art to the soothing yet meaningless name.) Currently, about $2.5 billion of sleeping pills are sold in the U.S. each year; almost all of that is Ambien (the numbers are imprecise because older antidepressants like trazodone are often prescribed off-label for insomnia). Wall Street predicts that the market will mushroom to as much as $5 billion by 2009. "It's the ideal market, like depression before the SSRIs," says David Southwell, the CFO of Sepracor, which sells Lunesta.

Sleep has sold for a long time--in fact, Valium was the bestselling drug in America from 1969 to 1982. But today's market seems to be bigger than ever. The experts say that somewhere between 15% of the population and, well, everyone suffers from serious to at least intermittent insomnia. And then there's the anecdotal evidence: The 1,500-plus sleep centers that have sprouted up in the U.S.; the annual Night of a Thousand Dreams gala sponsored by the National Sleep Foundation to promote sleep awareness (which sounds like an oxymoron); the recognition by the American Board of Medical Specialties last spring of sleep as an official subspecialty. At a recent Wall Street conference, one executive even described insomnia as the "scourge of modern society." In a poll done by the NSF, nearly one-fourth of partnered adults said that they have sex less often or have lost interest in sex because they're too sleepy. Most of us don't need an official survey to tell us that.

Fixing this isn't easy, because for something so mundane, sleep is astoundingly mysterious. There are a multitude of possible causes of sleeplessness, from cardiac problems to depression to circadian-rhythm disorders to stress (hello, everyone) to caffeine. And there are different ways of not sleeping, from problems falling asleep ("sleep onset") to problems staying asleep ("sleep maintenance"). Experts recommend better "sleep hygiene," which doesn't mean taking a shower--although a warm bath before bedtime is recommended--but rather doing things that range from the common sense (skip the Starbucks) to the impossibly anal (exercise six hours before you plan to sleep, which should be at the same time every night). Could you practice good sleep hygiene even if you wanted to?

Which brings us back to the Valley of the Dollars. The latest proliferation of pills began back in 1993 with the introduction of Sanofi-Aventis's (Research) Ambien. Like the benzos, Ambien targets what are known as the GABAA receptors, which play a key role in sleep. But while the benzos put us to sleep in what David Schultz, a Pfizer scientist, describes as a "sledgehammer" fashion, Ambien works in a more targeted way. As a result we get sleep, but without the side effects, or so the theory goes. Ambien's success sparked a frenzy.

But sleeping pills have never been easy science, and it wasn't until late 2004 that the first challenger, Lunesta, which also targets the GABAA receptors, got past the FDA. (That news helped Sepracor's (Research) stock price increase almost 50%.) CFO Southwell likes to say that Ambien is "not optimal," because it has a shorter half-life than Lunesta, meaning that it shouldn't work as well in people who have trouble maintaining sleep, and because it is only supposed to be given in ten-day batches. Lunesta, on the other hand, has no recommended time limit. So far, Lunesta has claimed around 10% of the market. (Yet in a survey done by one Wall Street firm, some doctors said their patients preferred Ambien, even for sleep maintenance, which is another small piece of evidence that science has not yet conquered the mysteries of sleep.)

After Lunesta came Rozerem, which works on the same receptors that melatonin does, and Sonata, which works like Ambien except that it's supposed to wear off much faster. Next up is likely to be Silenor--silent night and normal, get it? Silenor is actually just a lower-dose version of an existing generic antidepressant, but the name is catchy. Giants like Pfizer (Research) and Merck (Research) also have pills on the way; Wall Street thinks that Pfizer may spend as much as $500 million in the first 12 months to promote its drug.

Indeed, if you don't think you need a pill, the onslaught from the pharmaceutical-advertising complex may be enough to make you change your mind. In a recent Merrill Lynch survey, doctors cited drug-company advertising as one of the major reasons they expect to increase their prescriptions of sleeping pills. (Other reasons doctors gave, like "bills due from shopping, people are going to ask for the pills," bordered on poetic.)

There will be more. Southwell says the focus is changing from putting you to sleep to keeping you asleep to what scientists call "sleep architecture." For instance, the deepest stage of sleep is called slow-wave sleep. What if a pill could increase the proportion of slow-wave sleep relative to other kinds? The next wave of pills may target something entirely different from the GABAA receptors.

"The real breakthroughs will be in a totally different category," says Pfizer's Schultz. He points to a 1999 breakthrough involving a colony of narcoleptic dogs (mostly Dobermans) that have lived at Stanford University since the 1970s. Scientists discovered that the dogs were narcoleptic due to a defect in a gene that is a receptor for hypocretin, a peptide that also influences appetite. Will a better understanding of what makes it impossible to stay awake help us understand what makes it impossible to sleep?

Of course, the history of sleeping pills is also a cautionary tale. Strange things can happen when you mess with the brain, and even today, treating insomnia is "more an art than a science," says Dr. Antonio Culebras, a professor of neurology at the Upstate Medical University in Syracuse, N.Y., and a consultant at the sleep center there. The mysteries range from the physical (those side effects) to the philosophical. Dr. Sydney Smith, a sleep specialist in Mississippi, says that in Eastern thought, the subtle body--the force that goes from lifetime to lifetime--is sustained during REM sleep. "If you tamper with that, who knows?" he asks. Susann's drug-addled heroines might have gotten off easily.

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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 LIBOR Warning: Neither BBA Enterprises Limited, nor the BBA LIBOR Contributor Banks, nor Reuters, can be held liable for any irregularity or inaccuracy of BBA LIBOR. 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.