Erectile dysfunction drug market

 
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Erectile dysfunction (ED) refers to the condition of being unable to develop or maintain an erection of the penis. It is estimated that 10 to 20 million Americans experience recurring ED at some point in their lives, or about one in ten men.[1] ED can result from a number of causes, both psychological and physiological, and is not always treatable with drugs. Nevertheless, the pharmaceutical industry has found the market to be lucrative, with the top 3 companies posting sales of $3.1B in 2006. Pfizer's Viagra was the first drug to effectively treat the condition. Since its introduction in 1998, Bayer and Eli Lilly have also entered the ED market with the drugs Levitra and Cialis in 2003. However, the ED market faced a major setback in 2006 after state and federal insurance programs decided to remove coverage for erectile dysfunction medications. If private insurers choose to do the same, it would have a significant impact on sales of ED drugs.

Major players in the ED market

There are three major ED drugs on the market—Viagra, Cialis, and Levitra. All of these drugs belong to the same family of drugs called PDE5 inhibitors. These drugs function by relaxing the smooth muscle in the arteries of the penis, allowing it to fill with blood and an erection to occur.

Source: Company 2006 annual reports
Source: Company 2006 annual reports

Pfizer - Viagra (sildenafil)

Approved by the FDA in 1998, Viagra was the first effective pharmaceutical treatment for ED. Sales of the drug exceeded $1 billion within a year. However, Viagra has faced competitive pressure after Cialis and Levitra entered the market. As of 2006, Viagra remains the market leader, with $1.6 billion in sales and represents 58% of all prescriptions.[2]

Because of the vascular effects of the drug, Viagra is sometimes also prescribed to treat diseases such as pulmonary arterial hypertension and Raynaud's phenomenon.

Viagra had sales of $1.6 billion in 2006, representing 3.4 percent of Pfizer's total revenue of $48 billion.

Bayer AG - Levitra (vardenafil)

Chemically very similar to Viagra, Levitra has almost identical effects and duration of use. In 2006, it had the smallest market share of the three drugs, with $464 million in sales.

Levitra acts quicker than Viagra, becoming effective after 15 minutes versus half an hour after oral administration of the drug. Levitra can be taken with food, while Viagra should be taken on an empty stomach.

Levitra had sales of $464 million in 2006, representing 1.1 percent of Bayer's total revenue of $43 billion.

Eli Lilly - Cialis (tadalafil)

Cialis is the most recently released ED drug, becoming available in 2003. While it is also a PDE5 inhibitor, Cialis differentiates itself by having a significantly longer half-life of 17.5 hours versus 4-5 hours for Viagra and Levitra. The longer effect of the drug is more convenient for users, and for this reason it has been nicknamed the "weekend pill."

Cialis is currently undergoing Phase III clinical trials for the treatment of pulmonary arterial hypertension.

Eli Lilly had sales of $971 million in 2006, representing 6.2 percent of Eli Lilly's total revenue of $16 billion.

Johnson & Johnson - Priligy (dapoxetine)

In February of 2009, Johnson & Johnson won approval in Sweden for its premature ejaculation drug Priligy (dapoxetine) and is similarly expecting approval in several other EU countries. The first drug of its kind, Priligy is a pill that has been shown to effectively delay ejaculation in men 18-64 years of age.[3] Although previously rejected by the FDA, Johnson & Johnson retains the option to file another submission in the future. Analysts have estimated the potential market for the drug to be $575 million per year.[4]

Insurance policies no longer cover ED treatment

Changes in health care coverage can significantly impact a drug market. If an insurance program changes its policies and removes coverage for a certain treatment, sales of related drugs are likely to decrease. In general, insurance programs are more likely to cover essential expenses, such as heart disease medication, and less likely to cover nonessential expenses, such as cosmetic surgery.

Since 2006, many states have eliminated erectile-dysfunction coverage, and federal funds may no longer be used to reimburse for ED medications on Medicaid and Medicare. Private insurers such as Aetna (AET), UnitedHealth Group (UNH), WellPoint Health Networks (WLP), and AFLAC (AFL) will likely follow, benefiting from decreased reimbursement costs. On the other hand, Pfizer, Bayer AG, and Eli Lilly will face pressure in sales as customers must use more money out of their own pocket to pay for the drugs.

What is ED?

Erectile dysfunction (ED), also known as male impotence, refers to the condition of being unable to develop or maintain an erection of the penis. This sexual dysfunction is estimated to affect 10 to 20 million Americans, or about one in ten men.[5]

ED may be caused by a combination of physiological and psychological factors. Oftentimes, it is more important to treat the underlying problems that cause ED. Physical conditions such as spinal cord injuries, stroke, hormonal disorders, or vascular disease may make men incapable of sustaining an erection. In these cases, surgery or drugs to treat the underlying condition are needed to treat ED. Psychological factors such as depression, mental disorders, or even negative feelings about a relationship may cause ED, which may be resolved with psychological or relationship counseling. There is known to be a very strong placebo effect associated with psychologically-based ED.

Disease risk factors and drivers

  • Age - Research has shown that male sexual function sharply declines after the age of 50 along with increased incidence of ED. Natural physical and hormonal changes can decrease libido and contribute to the cause of ED. [6] The ED market is likely to grow with the aging of the baby boomer generation.
  • Obesity has been linked to increased incidence of ED. With the growing trend of a sedentary lifestyle and increased incidence of obesity, this may boost the ED market in the long term.
  • Smoking and alcoholism have both been shown to increase the risk of ED.

References

  1. Viera AJ et al, "Newer Pharmacologic Alternatives for Erectile Dysfunction," American Academy of Family Physicians. 60:4 September 15, 1999
  2. Pfizer 2006 Annual Report
  3. http://www.tradingmarkets.com/.site/news/Stock%20News/2170588/
  4. http://www.bloomberg.com/apps/news?pid=conewsstory&refer=conews&tkr=LLY%3AUS&sid=ae7ddq6aGZgk
  5. Viera AJ et al, "Newer Pharmacologic Alternatives for Erectile Dysfunction," American Academy of Family Physicians. 60:4 September 15, 1999
  6. WebMD, "Erectile Dysfunction Common With Age"
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