GSK is reforming portfolio affected by generic competition.
Biovail is buying U.S. commercialization rights to depression drug Wellbutrin XL® from GlaxoSmithKline (GSK) for $510 million. The agreement also provides Biovail with the right to launch an authorized generic formulation of Wellbutrin XL.
The deal lets GSK monetize an asset that has been declining due to generic competition. It also commemorates Biovail’s restructuring plan announced today to focus on in-licensing and development of CNS compounds and to reduce R&D.
Generic competition to Wellbutrin XL began at the end of 2006 for the 300 mg tablet and during the second quarter of 2008 for the 150 mg tablet, GSK reports. U.S. sales thus dropped 70% in the first quarter of 2009 to reach $60 million.
“We are actively reshaping our U.S. business and managing the transition occurring in our product portfolio,” says Deirdre Connelly, president, North American Pharmaceuticals, GSK. She is referring to declining sales from certain drugs due to generic competition in the U.S.
In fact, the company reported that competition to the CNS disease drug portfolio reduced sales by close to £450 million, or roughly $678.85 million, compared to the same quarter last year. GSK believes that the second half of 2009 will be impacted less, and new products will contribute more. GSK expects to record a pretax gain of approximately E340 million, or almost $452 million, as a result of this divestment.
Biovail, on the other hand, believes that it can leverage whatever revenues Wellbutrin XL brings in for its development activities. “We have a good track record of managing off-patent branded pharmaceuticals to maximize value, which bodes well for the product’s long-term commercial prospects,” says Bill Wells, Biovail CEO.
The firm expects the transaction to add between $90 million and $145 million in revenues between 2009 and 2010. It will also increase its cash flow by $80 million to $130 million in this timeframe. Biovail’s first quarter revenues were $173.3 million.
Wellbutrin XL, which is indicated for the treatment of major depressive disorder and seasonal affective disorder, was developed and is manufactured by Biovail and has been distributed by GSK in the U.S. since September 2003.
Under the terms of this latest agreement, GSK will retain rights outside the U.S. except for Canada; Biovail Pharmaceuticals Canada markets the drug in Canada. Biovail will continue to manufacture and supply the compound to GSK for distribution in these territories. Sales of Wellbutrin XL outside the U.S. were E7 million in the first quarter of 2009, according to GSK.
Biovail’s restructuring strategy will reduce R&D overhead by roughly $8 million annually. The firm will close its R&D site in Mississauga, Ontario, and will streamline R&D operations in Chantilly, VA. Headcount will go down by approximately 50. Restructuring charges of approximately $4 million and other costs of approximately $2.2 million are expected to be incurred largely in the second quarter of 2009.
Other News from Biovail
Biovail Licenses Acadia’s Late-Stage CNS Disease Drug with an Initial Fee of $30M (May 4, 2009)
Biovail Acquires Prestwick for $100M Gaining Approved Drug in CNS Indication (Sept. 17, 2008)
Biovail Gains License to Two Pharma Pass II Early-Stage Compounds (Nov. 7, 2007)
Biovail Settles Infringement Case Related to Wellbutrin XL (Mar. 5, 2007)
Depomed Grants Biovail License to Drug Delivery Technology (Feb. 12, 2007)
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XenoPort Opts into Co-Promotion Deal with GSK for RLS Drug (Apr. 13, 2009)
Synta Obtains $10M from GSK under Cancer Deal (Feb. 17, 2009)
GSK Pays $34M Up Front for Idenix’ Mid-Stage HIV Therapy (Feb. 6, 2009)
Galapagos and GSK Expand Anti-infectives Collaboration (Jan. 19, 2009)