The antidepressants to watch in '06
Wyeth, Lilly, Forest Labs lead sluggish antidepressant market.
By Aaron Smith, staff writer

NEW YORK ( - If you're depressed, at least you're not lonely; about 19 million adult Americans suffer from clinical depression, according to the National Institutes of Health.

So there are clearly plenty of patients in need of antidepressants. But the market for these drugs grew sluggish in 2005, following the Food and Drug Administration's adoption in 2004 of warning labels indicating that these drugs may cause suicidal thoughts in children and adolescents. The agency is also studying these side effects in adults.

Sales have been slowing ever since the 2004 warning went into effect. On Tuesday, Deutsche Bank analyst Barbara Ryan wrote that "the antidepressants market remains flattish following suicide relabeling."

Where to invest

Should investors forget about the antidepressants? Perhaps the market -- estimated at $10 billion -- has reached capacity. But how can 19 million depressed Americans possibly be wrong?

"Any antidepressant drug ends up being a $2 billion drug at least, but we've seen the depression market really slow down," said Jon LeCroy, analyst for Natexis Bleichroeder. Antidepressant sales grew just 3 percent in 2005, said LeCroy, down from 4 percent growth in 2004 and 5.5 percent in 2003. "It's a big, [but] lackluster market," he said.

Here's the 2006 outlook for four antidepressants that really matter for this market:

  • Zoloft, an antidepressant from Pfizer (up $0.77 to $24.55, Research), the world's biggest drug maker, has strong name recognition. Just about everybody has heard of Zoloft. The drug totaled $2.5 billion in sales in the first three quarters of 2005, out of Pfizer's $38 billion sales total for that period. But there's a serious downside to the renowned antidepressant: Zoloft is expected to lose patent protection in June, 2006, joining Eli Lilly & Co.'s Prozac as a big-name generic. Sales generally plummet after a drug goes generic, so Pfizer will soon bid adieu to its multi-billion dollar cash cow.
  • Wyeth (up $0.02 to $46.52, Research) bills its drug Effexor XR as the world's top selling antidepressant. The numbers bear this out, but they're slipping. Wyeth sold $861 million worth of the drug in the third quarter of 2005, a 4 percent decline from the same period the year before. Robert Hazlett, analyst for Suntrust Robinson Humphrey, said Effexor sales totaled $3.5 billion in 2005 worldwide. In its most recent financial report, Wyeth attributed the Effexor sales decline to a slowdown in the overall antidepressants market.

But for Wyeth, analysts see hope in an experimental antidepressant called desvenlafaxine. Wyeth filed a new drug application for desvenlafaxine to the FDA on Dec. 22 of last year. Bear Stearns analyst John Boris projects the drug will enter the market in 2007, reaching $1 billion in annual sales by 2010. He adds that Wyeth is well-positioned to "maximize [its] franchise" for antidepressants before Effexor loses patent exclusivity in 2010.

  • Projections are bullish for Lilly's (Research) Cymbalta, which entered the market as an antidepressant in August, 2004, and was also approved in September of that year as a treatment for diabetic peripheral neuropathic pain. The drug's sales during the first nine months of 2005 totaled $451 million. Ryan, the Deutsche Bank analyst, wrote that Cymbalta is off to a "solid launch," and she projected $1 billion in annual sales by 2007. Both Suntrust Robinson Humphrey analyst Hazlett and Bear Stearns' Boris project that Cymbalta could reach $3 billion in annual sales by the end of the decade, bringing it neck in neck with competitor Lexapro.
  • The antidepressant Lexapro is the flagship drug for Forest Laboratories (down $0.02 to $41.04, Research). Its sales totaled $467 million in the second quarter of fiscal year 2005, the most recent figures available from Forest Labs, which saw a total revenue tally of $736 million during that time. Suntrust Robinson Humphrey's Hazlett projects that Lexapro's annual sales will reach $3 billion by the end of the decade -- enough to compete with Cymbalta. "We think Lexapro and Cymbalta are solid drugs and can gain market share," he said.

Fate in the hands of the FDA

The future of the antidepressant market lies largely with the FDA, which still has to consider whether the drugs should bear warning labels about the risk of suicidal thoughts in adults, as well as children and adolescents.

"If the FDA ends up putting out a black box [warning] for suicide risks in adults, [the antidepressant market] will end of taking another hit," said LeCroy.

But it is by no means certain that the FDA will do so. Indeed, the January issue of the American Journal of Psychiatry cast doubt on the antidepressants' tendency to cause suicidal thoughts. "Available data do not indicate a significant increase in risk of suicide or serious suicide attempt after starting treatment with newer antidepressant drugs," concluded the article, which was based on health plan records of more than 65,000 patients.

Some analysts believe that the FDA's black cloud over antidepressants is unjustified. "There could be a much higher rate of suicide with people not taking their medications, than with people taking their medication," said Bear Stearns' John Boris.

The analysts do not own stock in the companies mentioned here, but some of their firms do conduct business with them.


To see how the drug market performed in 2005, click hereTop of page

Pfizer Incorporated
Eli Lilly and Company
Food and Drug Administration (FDA)
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