New Vivus diet pill aimed at retail
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New Vivus diet pill aimed at retail

Qsymia's disappointing salesThe huge obesity epidemic in America and the western world in general demonstrates the need for prescription diet pills, although this demand has not translated to profits for Vivus’ Qsymia product.

Despite being the first prescription diet pill to be fully licensed in the USA for thirteen years, Vivus has struggled to command a section of the market and is now suffering financial losses as a result.

These losses that Vivus, the global biopharmaceutical company based in California USA, have haemorrhaged, which include a 4% fall in shares after the market close and a greater than expected loss overall in the second quarter.

The new approach

vivus logoAnthony Zook was recently appointed as the new Vivus CEO and has been setting priorities for the company regarding their marketing and expenditure. One of his main priorities is increasing patients’ access to the diet drug Qsymia, which Zook believes, will positively affect the physiological and economic problems that obesity has on America.

Qsymia (pronounced Kyoo-sim-EE-ah) is an FDA-approved prescription medicine with key ingredients phentermine and packaged in extended-release capsules. It is designed to be taken as a supplement to support weight loss, help weight-related medical problems, and maintain a target weight in the long term. Qsymia should be taken in conjunction with a reduced-calorie diet and increased physical activity.

By establishing Qsymia in retail pharmacies throughout the US, Vivus aims to make the diet pill more widely available and therefore effective on a much larger scale. This is Zook’s first major move after he was chosen to take on the role of CEO during a change around in the Vivus boardroom. The company’s largest shareholder First Manhattan Co. selected him.

The marketing strategy behind the retail launch of Qsymia is being conducted by Zook himself, who previously aided the multibillion-dollar launch of the cholesterol medicine Crestor while executive vice-president for global commercial operations at AstraZeneca Plc. He has disregarded a direct-to-consumer campaign, stating that other marketing opportunities would be a much more effective use of Vivus’ funds and resources.

The Fall in sales

Qsymia is the first approved weight-loss treatment in America for 13 years and with the US in the middle of an obesity epidemic could have a marked effect on the overall health of the population. However, initial sales of the product following its launch in September have been very poor, particularly when compared to the forecast figures, and Vivus has suffered a 40% fall in its stock price as a result.

During the first quarter of 2013, Vivus brought in $4.1 million net product revenue and $5.5 million in the second quarter. These statistics reflect the weak sales of Qsymia, falling well beneath the estimate from analysts Thomson Reuters I/B/E/S of $12.8 million.

The criticism against Vivus’s marketing strategy of Qsymia following these losses was one of the main reasons Anthony Zook was brought into the company, as well as six new board members. Former CEO Leland Wilson blamed the slow sales on the resistant reimbursement environment that Qsymia faced, although the side effects of the product include heart problems, dizziness, insomnia, seizures, hypoglycaemia, serious eye problems and birth defects such as cleft lip/cleft palate if consumed by pregnant women can arguably be called contributing factors as well.

10,000 certified retail pharmacies currently sell Qsymia but Vivus are looking for a commercial partner and fresh marketing ideas to boost sales and increase exposure of the brand. However, the company has lost its unique selling point of exclusivity since its rival Arena Pharmaceuticals Inc. launched its obesity pill in June. Vivus has not capitalised on its early entry into the market and the increased competition doesn’t bode well for future sales.

Further losses were recorded in the second quarter of the year where $55.5 million or 55 cents per share were lost. This is a difference of $31.5 million, or 31 cents per share, compared to figures from the previous year, where losses added up to $24.0 million, or 24 cents per share. Analysts estimated an average loss of 44 cents per share for this year showing greater losses than forecast. A $2.8 million charge for the proxy contest and $4.4 million for Qsymia inventories was included in this profit loss. Shares in Vivus at close of market trading on the Nasdaq in the first week of August fell by 4% after finishing at $14.73.

Sign of hope, but for how long?

Despite this, Vivus say that independent analyst data shows weekly prescription trends of Qsymia to be looking up. The 81,000 Qsymia prescriptions dispensed in this quarter was up by 37% on the previous, showing much stronger sales than initially recorded. With $358.3 million remaining at the end of this quarter, Vivus’ cash, cash equivalents and available-for-sale securities figures demonstrate an increase of $143.7 million from the fourth quarter of last year.

Although the diet pill industry seems vast, the number of people using weight loss products is a drop in the ocean compared to the number of people medically classed as obese. The short time period that diet pills are allowed by users before results can be visibly seen is one of the reasons Qsymia has faced problems with sales. In a survey conducted by the Food and Drug Administration, data found that frequently only 25% of people continued usage of a single weight loss product for a period of three months, and just 10% continued for six months.

Clinical trials of Qsymia demonstrated an average weight loss of 22-28lbs from overweight and obese patients taking various doses of Qsymia (7.5 mg/46 mg, 15 mg/92 mg, placebo) over a period of 12 months. Although this a healthy weight loss and a good start to a lifestyle change, the results are too slow for typical consumers of diet pills.

In addition to this Vivus also faced challenges with their distribution system; as much as 30% of prescriptions were rejected before they were even made. In order to make allowances for the slow start and to try to extend usage of Qsymia in the long term, Vivus is offering the first two weeks of Qsymia free. By initiating this offer, Vivus hopes that consumers will achieve enough weight loss to regard the product a success.

Conclusion

diet and exercise over diet pillsOn a larger scale, the losses Vivus has faced with Qsymia despite the promising niche it occupies stirs up debate on whether prescription diet pills can actually help with the level of obesity in the USA. The side effects specific to Qsymia such as birth defects if taken by pregnant women are an obvious aspect, but there are general problems such as the history of weight loss products, lack of insurance reimbursement, and the slow weight loss that will affect all products in the prescription weight loss range.

Many doctors and medical professionals still believe that obesity can be cured through lifestyle choices and that a balanced diet and exercise regime are much preferred options over medicinal drugs and treatment. However, the fact that the biggest group of doctors in the US, the American Medical Association recently declared that view obesity as a disease shows that attitudes are changing, but prescription diet pills like Qsymia will need to strike a happy medium if they are to generate profitable retail sales from the drug.

References

The Star. (2013) ‘New weight loss drug Qysmia struggles with lean sales’, The Star, 2 July [Online]. Available at:http://www.thestar.com/life/health_wellness/2013/07/02/new_weight_loss_drug_qsymia_ struggles_with_lean_sales.html

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