GlaxoSmithKline further expands its rapidly growing consumer health care business by acquiring exclusive marketing rights to two cold sore treatments in a week, just months after announcing a third deal in the category.

The U.K.-based firm bought exclusive marketing rights to Medivir's cold sore cream Xerclear (acyclovir and hydrocortisone) and a topical patch to treat cold sores from Labtec in separate deals.

Under the June 23 arrangement with Sweden-based Medivir, GSK will pay €3 million ($3.69 million according to same-day exchange rates) upfront and in pre-launch milestones to exclusively market Xerclear under Glaxo's cold sore franchise Zovirax in Europe, Russia, India, Japan, Australia and New Zealand. It also will pay Medivir up to double-digit royalties on sales for the rights.

In a release, GSK Consumer Healthcare President John Clark said the deal "demonstrates GSK's ongoing commitment to invest in and expand our OTC business."

The deal excludes marketing rights for Xerclear in North America, where another firm, Meda, will market the product as Xerese . Meda paid $5 million in upfront and pre-launch milestones for the rights - significantly more than GSK paid for the rights elsewhere. Like GSK, Meda will pay Medivir double-digit royalties on nonprescription sales.

Acyclovir is a prescription ingredient in the U.S. FDA in July 2009 approved Xerese, which contains acyclovir and hydrocortisone, for prescription sale.

Meda declined to comment on the possibility of attempting to switch Xerese to nonprescription status in the U.S.

Acyclovir also is a prescription ingredient in Canada and Mexico.

GSK's deal with Medivir excludes marketing rights in China, Israel, South America and South Korea.

Nonetheless, "this collaboration demonstrates our ongoing commitment to invest in dermatology OTC business, relying on sales and marketing footprint, regulatory and switch capability, and scientific expertise," said GSK spokeswoman Malesia Dunn.

Specifically, the deal strengthens GSK's dermatology portfolio in Europe, where it already sells Zovirax (acyclovir) as a nonprescription cold sore treatment, and across multiple other territories, including several key emerging markets, such as Russia.

Last year, GSK reinforced its dermatology portfolio in the U.S. with the $2.9 billion acquisition of Stiefel - which brought it PanOxyl Foaming Acne Wash among other OTC products (¹ Also see "GSK Gains Foothold In U.S. Skin Care With Stiefel Deal" - HBW Insight, 27 April, 2009.).

Both GSK and Meda will fund commercial development of the 5 percent acyclovir and 1 percent hydrocortisone drug in their respective territories.

GSK is responsible for paying the costs of regulatory approval for switching Xerclear in all territories covered by the agreement, but Denmark, the Czech Republic, Poland, Portugal, Slovakia and Sweden already approved the drug for nonprescription sale, Dunn said.

"We are well-placed to expand our existing cold sore franchise through this agreement," she added.

LabiPatch Platform Spawns Deal

GSK also expanded its OTC cold sore business through a June 21 license agreement with Labtec to acquire exclusive marketing rights for a topical patch to treat cold sores.

The patch is based on Labtec's LabiPatch platform technology, which is suitable for "the delicate surface of the lip" and maintains "a moist and optimal healing environment," according to Labtec.

The firms did not disclose financial details.

Both deals come within months of GSK's $14.5 million deal to license exclusively an OTC version of NanoBio's NB-001, a novel cold sore treatment that had not entered phase III safety and efficacy testing when the deal was announced in December 2009 (² Also see "NanoBio's OTC Route For Cold Sore Med Pays Off With GSK Deal" - Pink Sheet, 21 December, 2009.).

GSK plans to develop NB-001 under its well-established OTC cold sore brand Abreva (docosonal), and position it as the next-generation alternative.

Abreva already dominates the OTC cold sore therapy category, with a market share of more than 50 percent as of December 2009, according to GSK.

In the U.S., Abreva captured 20.2 percent of the lip balm/cold sore medication category with $80.8 million in U.S sales, excluding Walmart, in the year ending May 16, according to SymphonyIRI Group, a Chicago-based market research firm. This is 13 percentage points above its closest competitor in the category - Burt's Bees lip balm.

GSK's Growing Consumer Health Business

The three deals reflect GSK's interest in growing consumer health to cushion the blow of patents for blockbuster prescription drugs expiring and exposing the firm to stiff generic competition.

"The consumer health business, clearly a business which has a fundamentally different risk profile to pharma, is clearly a business where GSK can be a winner," said CEO Andrew Witty at the Goldman Sachs Healthcare Conference June 16.

He noted GSK doubled consumer health research and development spending in the last two years, and "what we have seen in that period is an incremental step-by-step, year-by-year increase in growth rates to the point now where, for the last 18 months, we've been the fastest growing consumer company in the world."

GSK is growing around 9 percent per year, he added.

Witty also said GSK Consumer Healthcare will continue to make acquisitions, roll out new products and deliver sustainable sales growth alongside the pharmaceutical business.

The firm's recent acquisitions in the cold sore category support this strategy.

The strategy also helped GSK's Consumer Healthcare sales grow 9 percent to £1.2 billion ($1.87 billion according to GSK's conversion estimate) in the first quarter of fiscal 2010, the firm said in April (³ Also see "GSK's Launches, Global Expansion Drive Consumer Sales Ahead Of Market" - Pink Sheet, 3 May, 2010.).

- Elizabeth Crawford ( ⁴ e.crawford@elsevier.com )

GSK Expands Consumer Business With Acquisition Of OTC Cold Sore Products

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