Glaxo's Weight-Loss Wait

GlaxoSmithKline (NYSE: GSK  ) shareholders should mark Jan. 23 on their calendars. That's when the company expects an FDA advisory committee to review its application to sell Orlistat, also known as Xenical, over the counter. If approved, it will be the only FDA-approved drug for weight loss in the over-the-counter market.

Xenical, approved in 1999, is the No. 1 selling prescription weight-loss medication. It works by keeping the body from absorbing fat in food as it digests. The drug should be used "along with a reduced calorie, low-fat diet," according to Glaxo.

The need for weight reduction in the U.S. is well-known. 65% of U.S. adults are overweight or obese, according to the National Institutes of Health. Xenical's website claims that there is clear scientific evidence that losing 5% to 10% of body weight can improve health. In clinical studies, almost two-thirds of subjects using Xenical and the required low-fat diet lost 5% of their body weight in two years. Only one-half achieved that using diet alone.

Last year, Xenical had worldwide sales of $496.6 million -- a disappointing level for a veteran product with only one competitor, the appetite suppressant Meridia from Abbott Labs (NYSE: ABT  ) . Another reason for concern among Glaxo shareholders is new competition, as Sanofi-Aventis (NYSE: SNY  ) has a much-discussed weight-loss drug called Acomplia. If Acomplia is as good as results indicate, Xenical prescription sales could be headed south. A switch to over-the-counter status, where Orlistat could be a major seller, might just help it dodge that critical bullet.

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Fool contributor W.D. Crotty does not own any shares in the companies mentioned. Click here to see The Motley Fool's disclosure policy.