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Can Arena and VIVUS Profit From Glaxo's Troubles?

Last week, GlaxoSmithKline (NYSE: GSK  ) announced that it was on recalling its over-the-counter obesity drug, Alli, in the U.S. and Puerto Rico because it appears that some packages were tampered with. The drug remains on the shelf in Europe, where there doesn't seem to be a problem.

In the following video, Fool contributor Brian Orelli and health-care bureau chief Max Macaluso discuss how the issue is reminiscent of Johnson & Johnson's (NYSE: JNJ  ) troubles with Tylenol tampering in the mid-1980s, although GlaxoSmithKline seems to be in much better shape: No one has been hurt from the tampering, and Alli isn't nearly as big of a product as Tylenol was.

Depending on how long the drug remains off the market, the removal of Alli could be a boon to the new prescription obesity drugs Arena Pharmaceuticals' (NASDAQ: ARNA  ) Belviq and VIVUS' (NASDAQ: VVUS  ) Qsymia. While the drugs provide more weight loss than Alli, the biotechs will only be able to gain sales if patients are willing to go to their doctor to get a prescription. The prescription drugs may also be more expensive than Alli, especially since the Belviq and Qsymia still aren't covered by many insurance plans.

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Brian Orelli

Dr. Orelli is a Senior Biotech Specialist. He has written about biotech, pharmaceutical, and medical device companies for The Motley Fool since 2007.

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Related Tickers

8/28/2015 4:02 PM
GSK $41.25 Up +0.04 +0.10%
GlaxoSmithKline CAPS Rating: ****
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JNJ $95.17 Down -1.05 -1.09%
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VVUS $1.15 Up +0.04 +3.60%
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