Watson Pharmaceuticals says the outlook for its recently-launched Rapaflo and Gelnique is much improved in 2010, now that it has revamped its branded sales strategy and secured better insurance coverage for these products.

Watson derives most of its revenue from its generics business, which is expected to grow to $2.3 billion in 2010 up by a whopping 40 percent from $1.65 billion in 2009. After the recent $1.7 billion acquisition of the privately held Arrow Group, it is well-positioned as a global generics player (Also see "Watson Acquires Arrow Group And Expands Its Global Footprint" - Pink Sheet, 17 June, 2009.).

But just as companies specializing in branded products are looking to diversify by buying into generics, so are generic-makers aiming to round out their portfolios with branded drugs.

In total for 2010, Watson is forecasting revenues of $3.5 billion, including $460 million for its global branded products, equivalent to about 13 percent of total sales. Past sales figures for its branded division were not released, but $450 million had been projected for 2009.

Future growth in the branded division is partly riding on two mass market products. The company launched the alpha blocker Rapaflo (silodosin) for benign prostatic hyperplasia in April 2009, following approval in the fall of 2008 (Also see "Rapaflo Approved For BPH; Watson Will Stress Unique Selectivity" - Pink Sheet, 13 October, 2008.). On the heels of the Rapaflo launch, the next month, Watson launched the overactive bladder treatment Gelnique (oxybutynin gel), which had been approved in January 2009.

Both drugs address good-sized markets. BPH is the number one urological disease treated in the U.S., and the market is worth about $3 billion and "growing beautifully" at an annual rate of about 25 percent, said Frederick Wilkinson, executive vice president of global brands, during a Jan. 21 investor meeting. Drugs for BPH are prescribed by urologists and primary care doctors, among other professionals. About one in four men will be treated for BPH by the time they are 80 years of age and millions more are thought to be undiagnosed.

Overactive bladder, meanwhile, is the third-most commonly treated urological condition-- that market is worth about $2.2 billion and is growing at an annual rate of almost 11 percent, he said. Since most patients with overactive bladder are female, treatments are prescribed by obstetrician/gynecologists in addition to urologists and primary care doctors.

But reaching the target prescriber markets for such broad indications as BPH and OAD is a challenge for a company like Watson, which does not have a primary care sales force of its own. The company had been seeking a partner but none stepped up to the plate (Also see "Watson Seeks Partner For Rapaflo: Is There Still A Market For “Me-Too’s”?" - Pink Sheet, 10 November, 2008.). In the past, it has tried creative approaches to primary care sales, such as the expansion of its telemarketing program (Also see "Watson’s New Tele-Detailing Take on Primary Care" - Pink Sheet, 13 March, 2009.).

But during the Jan. 21 investor day, the company signaled a change in its strategy, noting that it has greatly expanded its outreach to primary care doctors in 2010 and is now focusing its sales efforts geographically. Both products also have a much better position on formularies this year.

Making up for iron deficiency losses

Wilkinson explained that the company is intent on making up for the loss of Ferrlecit (sodium ferric gluconate). As of Jan. 2010, Watson stopped marketing the iron deficiency treatment for hemodialysis patients due to the expiration of a supply and distribution agreement with Sanofi Aventis.

"From 2009 to 2010, we were faced with a significant challenge. We lost our largest product-- over a $100 million product-- with our largest gross margin," said Wilkinson. "The goal of this division was to replace that revenue and hopefully replace the gross margin. We believe we will successfully replace and exceed the revenue position. We're working diligently on replacing the margin."

In addition to Rapaflo and Gelnique, the company's current branded portfolio includes the prostate cancer treatment Trelstar and INFed (iron dextran injection) for iron deficiency and the hormone replacement therapy Femring , which is co-promoted with Warner Chilcott.

This slice of the primary care market accounts for 12 percent of BPH prescriptions, he pointed out. In combination with the other professionals targeted, such as urologists, reps will be reaching 50 percent of all BPH prescribers.

Reps would need to call on about 350,000 primary care physicians to get the rest of the BPH market, which would be inefficient, he explained.

Watson had previously expanded its outreach to obstetricians and gynecologists in OAB. In 2009, it called on more than 10,000 ob/gyns, up from about 3,000 in 2008.

Performance for the two recently-launched products has not been disclosed, but IMS monthly figures indicate Rapaflo may have annual sales of about $20 million and Gelnique could notch $12 million, wrote CLSA analyst David Maris in a Jan. 21 investor note. Considering performance in the first year of launch, both have potential to be $50 million to $100 million annual sellers over time, Maris noted.

Reps target 10,000 urologists

Watson's 350 branded sales reps are divided into three groups, including one focused on primary care and urology (covering Rapaflo and other products), and another on urology and gynecology (including Gelnique). The third is made up of strategic account specialists, who focus on institutions.

The primary care/urology and the urology/gynecology groups will both be visiting some 10,000 urologists, who account for 32 percent of BPH prescriptions and 19 percent of OAB scripts.

"We are going to call on 10,000 urologists with the two groups. And so it provides us an opportunity to really dig into what they are doing and get our message across," Wilkinson said. "This will have a dramatic impact on both Rapaflo and Gelnique in the near term and some of our other products as we bring them to the market."

Going forward, sales efforts will be focused more regionally. "We get to know the geography and the interplay between the physicians, the hospitals and the managed care environment within a very small locale," Wilkinson said. This will allow the company to apply unique sales strategies that will play well locally, he said.

Product differentiation is a big challenge in BPH. A late entrant to the alpha blocker family-- a primary care blockbuster class-- Rapaflo recalls old-time pharma with its penchant for me-too products. Rapaflo competes directly with GlaxoSmithKline's Avodart (dutasteride), Pfizer's Cardura XL (doxazosin extended-release), finasteride (Merck's Proscar and generics), and Astellas/Boehringer Ingelheim's market-leading Flomax (tamsulosin), which will go generic this spring. Watson has been looking to accentuate the rapid onset of its Rapaflo, and also its selective nature, which minimizes side effects

The first and only topical gel for OAB, Gelnique is being positioned as having a rapid onset of action with a better side effect profile than standard oral treatments like Pfizer's Detrol LA (tolterodine), and Sanofi's Ditropan (oxybutynin).

A six-month formulation of Watson's prostate cancer treatment Trelstar (triptorelin) is now under review at FDA. A decision is expected by the end of the first quarter and if it is positive, the product will be launched in the middle of this year. Second generation versions of Gelnique and the testosterone replacement therapy Androderm are in Phase III development.

Reimbursement outlook for 2010 is looking up

Watson has also been working to improve reimbursement policies for both drugs. Obtaining a good position on formularies of managed care organizations has been an obstacle to launch, but is now diminishing as an issue, due to aggressive action, Wilkinson said.

As of January 2010, Rapaflo and Gelnique will each be covered for about 100 million people insured by private payers. Recently, the company also secured Medicare Part D coverage, including 8 million lives for Gelnique and 10 million for Rapaflo.

The company also enters 2010 with Tier II rather than Tier III coverage for more patients (50 million lives have shift to preferred status for Gelnique in OAB and 12 million lives for Rapaflo in BPH). "We feel like we're now in a great position where this is no longer an issue," Wilkinson said.

The investor day presentations suggest branded business is very much a focus for Watson, according to CLSA's Maris. "A realignment of their branded sales force, the expected increase in managed care coverage of Rapaflo and Gelnique, the increased push into urology and ob/gyn will all serve as growth drivers," Maris wrote.

- Emily Hayes ( e.hayes@elsevier.com )

Reeling From Ferrlecit Loss, Watson Revamps Branded Sales Strategy

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