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Bayer retakes Levitra rights

Bayer will pay Ä208m in cash to buy out marketing partner GlaxoSmithKline for a large share of the rights to Levitra.

Bayer will pay Ä208m in cash to buy out marketing partner GlaxoSmithKline for a large share of the rights to Levitra, which competes with Pfizer's eminent erectile dysfunction drug, Viagra.

Bayer, of Germany, explained that it was ìa logical stepî to buy back the co-promotion rights for the drug in Europe, Asia Pacific, Africa, Latin America and Canada, while GSK added that it was an opportunity to ìrealise the maximum potential value from Levitraî.

Head of Bayer HealthCare's pharmaceuticals division, Wolfgang Plischke, commented that Bayer has ìa strong primary care organisation with the capacity and the commitmentî to see Levitra achieve its top potential.

However, both companies are understood to be disappointed by the sales of Levitra so far, especially in the US, where Pfizer's ìget back to mischiefî campaign for Viagra holds the lion's share of the market at 70 per cent, and also in countries where direct to consumer advertising is permitted.

GSK, which is believed to be frustrated at its lacklustre return on marketing efforts in the men's health market, such as sports sponsorship, will continue to co-market Levitra with Bayer in the US, through distributor Schering-Plough, and Italy.

A spokesman for Bayer noted: ìThe growth of both the product and the [erectile dysfunction] market have been not so good. We must invest more but it has a lot of potential.î At the beginning of the co-marketing deal, four years ago, GSK had predicted that Levitra would become a blockbuster product.

David Stout, president of pharmaceutical operations for GSK, stressed that the firm remains ìfirmly committed to its [Levitra's] commercial successî and that the relationship between Bayer and GSK remains ìstrongî.

Bayer, which is continuing to restructure and reposition itself as a mid-sized European pharmaceutical firm, estimates to see a negative impact of Ä118m, before interest and tax, on earnings in the first quarter of 2005. The remaining Ä90m (to make a total of Ä208m) will be offset as a one-time payment that has been made already. The firm hopes that the transaction with GSK will show up positively in its 2006 earnings.

30th September 2008

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