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Novartis' Galvus approved, but pipeline fails to drive up shares

The EU grantsmarketing approval for the Novartis' type 2 diabetes drug, Galvus, but shares show little response

The EU has granted marketing approval for the Novartis' type 2 diabetes drug, Galvus (vildagliptin).

Novartis has yet to secure marketing approval for the US market for the drug, as the FDA has stated that they want more clinical data before they make any decision. The Swiss-based pharmaceutical company has stated that the FDA talks are continuing.

Novartis is not planning to resubmit Galvus to the FDA before 2009. The delay has allowed Merck's competitor product Januvia (sitagliptin) to secure market lead. The two treatments are similar and were initially expected to reach the market simultaneously and slug it out. It now seems, however, that Merck will prevail.

Novartis says it hopes the drug will generate sales of over USD 1bn, as the development costs have been high. The company is also relying on sales of the recently approved blood pressure drug, Tekturna (aliskiren).

Late in September 2007, Novartis received positive opinion from the Committee for Human Medicinal Products (CHMP) for a single tablet combination of Galvus and metformin for the treatment of Type II diabetes. Should Eucreas be approved, it will be the first single-tablet combination of a DPP-4 inhibitor and metformin available in the EU.

Along with Galvus and Tekturna, Novartis has received EU approval of Exelon (rivastigmine), a once-daily patch treatment for AD patients. The drug is the first and only transdermal patch therapy approved in the EU for patients suffering from mild to moderately severe AD.

Novartis has also secured a CHMP recommendation for its leukaemia drug Tasigna (nilotinib), the company's alternative to Glivec (imatinib), the patent of which was not supported in the Indian courts recently.

Tasigna has been recommended for use in patients suffering from a rare form of leukaemia but resistant or intolerant to Glivec. The drug was created just one year after the launch of Glivec and was first approved in Switzerland in July 2007, with a decision from US regulators expected by the end of 2007.

Despite the recent spate of positive news, Bank Vontobel analysts have said that Novartis' product pipeline lacks near-term revenue-generating power. The source of the negative comment was the fact that Novartis' share price did not react to the positive approvals news. On 24 September, a share value rise of only 0.5 per cent rise to CHF 64.80, showing that the market was taking a very short-term stance on the pharmaceutical sector.

Although it was good that Novartis' diabetes and leukaemia drugs were recommended for approval, the problem was that drug launches take longer in the EU than in the US, according to Landsbanki Kepler analysts.

The analysts added that another problem was that the market for leukaemia drug Tasigna was not large. Novartis' share price may, however, may increase when phase III data is revealed at the beginning of 2008. Also, the full EU approval of the Exelon patch should help to drive up sales. Bank Helvea forecast sales of USD 1bn by 2011 for the product.

30th September 2008

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