MSD pulls back pain killer drug
By Mu Jin (China Business Weekly)
Updated: 2004-10-20 09:43

Market withdrawal of the arthritis drug VIOXX is still proceeding well in China, with more returns likely to come following expanded market penetration measures.

Currently, around 40,000 VIOXX capsules have been returned from its 42 leading distributors in China, according to the drug maker Merck & Co Inc (MSD).

MSD made a decision to stop a clinical trial programme that enrolled 2,600 people and announced a voluntary worldwide withdrawal on October 1 of VIOXX, its arthritis and acute pain medication.

The move made it the largest drug withdrawal in history, due to its sales being worth US$2.5 billion a year worldwide, and it also marks the fourth medicine pullback in China following Contacnt from SKF, Baycol from Bayer and Astemizolo from Janssen.

The withdrawal was made because "there was an increased risk for confirmed cardiovascular events, such as heart attack and stroke, beginning after 18 months of treatment in the patients taking VIOXX compared with those taking placebo," said the company.

Withdrawal of the product began from October 1 on the global market, and in China from October 9, two days after the end of the National Day holidays.

Over 84 million capsules have been prescribed to over 2 million patients in over 80 countries since the drug was launched in 1999.

And sales of the medicine hit over US$2.5 billion in 2003. As of the end of 2003, the drug has been prescribed to approximately 84 million patients worldwide, including in China, and approximately 2 million patients are currently taking VIOXX.

The medicine was introduced to China in 2001. Although MSD declined to reveal the total sales of the medicine in China, experts believe that could be a huge number based on the extensive clinical use in hospitals and pharmacies.

MSD made the decision to withdraw the drug complying with its decision in the global market to show its commitment to the China market, said Alice Chin, director of MSD's public policy in China.

Customers could return the drug and get their money back by post, and they can also learn more about the withdrawal by visiting the company's website or calling a special hotline.

"China is just starting, like a little kid," said Chin, a veteran working with MSD for 15 years, when explaining her view of the China market.

According to Chin, MSD will stop production and use of the drug when it is returned.

"We, as a company, see the potential in China is enormous because China's growing ageing population and developing healthcare system will allow more people to have the most innovative medicine," Chin said.

According to statistics, about 10 per cent of the population will be over 65 in China by 2010.

"MSD thinks we need to have a more long-term strategic plan to make China an important market for MSD. And this will be good for the Chinese people because we'll bring more investment, create high value jobs and we also will work with research and development programmes," Chin said.

With a total workforce of over 900, MSD currently sells 13 different products in China.

With a manufacturing base set up in Hangzhou, capital of East China's Zhejiang Province, in 1994 and an 11-office nationwide distribution network, sales of MSD products reached US$100 million, with an annual double-digit growth on the China market.

The company launched a China development programme earlier this year to further lift the performance of its China operations in its global portfolio.

The programme that is now under assessment, with a detailed plan expected to be unveiled in the first half of 2005, will make China outperform many peers to become one of its top 10 generators of its global revenues within five to eight years, compared with the current position of around 20th.

Referring to the withdrawal of the drug, Raymond V. Gilmartin, chairman, president and chief executive officer of Merck, said: "We concluded that a voluntary withdrawal is the responsible course to take although we believe it would have been possible to continue to market VIOXX with labelling that would incorporate this new data, given the availability of alternative therapies, and the questions raised by the data."

And the pullback is likely to create huge losses for the US-based research-driven medicine maker.

The company currently estimates 2004 earnings per share of US$3.11 to US$3.17 to be negatively affected by 50 US cents to 60 US cents as a result of costs of the product withdrawal.

This estimate includes foregone sales, customer returns of products previously sold, withdrawal costs, inventory write-offs at MSD and asset write-offs.Included in this cost estimate is the expectation of foregone fourth quarter sales of VIOXX of US$700 million to US$750 million.

"In addition, we expect that globally approximately one month of inventory is held by customers and will be returned," said the firm.

MSD will report its third quarter earnings on Thursday.

However, the pullback creates many opportunities for its rivals, such as Celebrex from Pfizer and Meloxican from Boehringer Ingelheim.

With a price of less than half of VIOXX, Meloxican will be in a favourable position to get a larger market stake. But currently, both of these two firms remain silent to the recall of MSD's drug.

According to MSD, the drug will be replaced by ARCOXIA -- another painkiller made by the firm, which is currently under FDA's review, but already won approval in 47 countries. The drug is also under reviewing by China's drug regulators.

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