Cialis ended the year with one weak quarter, but in the first full year of the global battle among erectile-dysfunction drugs, it still...

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Cialis ended the year with one weak quarter, but in the first full year of the global battle among erectile-dysfunction drugs, it still finished where many expected — a popular but distant No. 2 to Viagra.

The joint venture between Bothell-based Icos and Eli Lilly, the makers of Cialis, said yesterday the drug reached all its financial goals for the year. Cialis had $552 million in worldwide sales for 2004, within its $500 million to $600 million forecast. The joint venture spent $606 million on marketing and administrative costs, and ended up losing $262 million, within the expected range.

The drug now has 20 percent of the U.S. market share, compared with Viagra’s 69 percent.

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Based on the current trends, with marketing spending expected to decline, Icos and Eli Lilly repeated they expect their joint venture to become profitable in mid-2005.

Still, the drug finished the year with a thud. Fourth-quarter Cialis sales were flat worldwide, and down in the U.S. from $70 million to $53 million. The reason: Wholesalers stocked up on the drug in the third quarter, just before the price went up 6 percent to $9.02 per pill. The wholesalers then began selling the extra inventory after the higher price kicked in on Sept. 30, without needing to make more short-term orders.

Icos spokeswoman Lacy Fitzpatrick said the company discovered the stockpiling in December through an audit, and has put a stop to it by reaching agreements with all its wholesalers. She said the company may still feel the effects through the first quarter of this year.


Cialis




What:
Erectile-dysfunction drug

Makers: Bothell-based Icos and Eli Lilly

U.S. market launch: November 2003

2004 worldwide sales: $552 million


Icos stock fell 66 cents to $25 per share yesterday after the report.

Charles Hill, a business professor at the University of Washington and an Icos shareholder, said the fourth-quarter sales were “a disappointment” but the overall year was solid. He said he’s still concerned about how much Icos and Lilly will have to spend on the marketing competition with Viagra. There will be intense interest among shareholders next week, he said, when Icos releases its financial forecasts for the coming year.

Dr. Fred Govier, the head of urology at Virginia Mason Medical Center in Seattle, said there was a surge in patients’ interest in Cialis and rival Levitra after their introduction, which lasted about six weeks for both. After a period of experimentation, he said, many patients have settled on their “favorite,” which he said surprised him. Cialis is a longer-acting drug, which can allow for more sexual spontaneity, but in other respects, all three are very similar.

Govier, who consults for all the erectile-dysfunction drug makers and owns stock in Pfizer and Icos, said he believes the overall market for the drugs hasn’t exploded because there really aren’t 70 million men in North America and Europe who are candidates for the drugs, as the companies claim. Many of those men, and their partners, aren’t interested in sex, he said.

Still, he said there is opportunity because many men remain reticent about seeking treatment. He said the companies need to get their message across to primary-care physicians, who are less familiar with the drugs than specialists. He expects Pfizer’s Viagra, which had $469 million in worldwide sales in the fourth quarter, to have an edge for a long time.

“They were the first, they have great name recognition, they have a great drug,” Govier said. “I don’t think anybody expected the new drugs to come in and knock them off their pedestal.”

Luke Timmerman: 206-515-5644 or ltimmerman@seattletimes.com