This Obesity Drug Hits the Market, but Check Your Expectations

VIVUS launches Qsymia.

Brian Orelli
Brian Orelli
Sep 17, 2012 at 12:00AM
Other

VIVUS' (Nasdaq: VVUS) Qsymia has hit pharmacy shelves first, beating Arena Pharmaceuticals' (Nasdaq: ARNA) obesity drug Belviq, which has to wait for the Drug Enforcement Administration to sign off on its potential for abuse; and Orexigen's (Nasdaq: OREX) Contrave, which isn't even approved yet since it's waiting for safety trial data.

Interestingly, VIVUS didn't issue a press release or make a big deal about the availability two months after it gained FDA approval. The availability was noted on Qsymia's website and in an SEC disclosure. Is that a sign of confidence, or is VIVUS trying to avoid hyping up investors' expectations? My guess is the latter.

VIVUS is launching without a partner. It has enlisted the help of a contract sales organization, PDI (Nasdaq: PDII), to hire 150 sales reps, but management of the sales force will be internal. That'll get the job done, but don't expect the same kind of well-oiled machine that a launch from a big pharma could provide.

Without a big direct-to-consumer campaign, the difference between a fast and slow launch will come down to doctors' enthusiasm for Qsymia. On one hand, there hasn't been a new obesity drug in many years. But doctors were burned by post-launch side effects of Abbott Labs' (NYSE: ABT) Meridia and before that by Fen-Phen; I have a hard time seeing doctors putting most of their obese patients on Qsymia right after the launch. As with many drug for diseases that aren't immediately life-threatening, my guess is doctors will take a wait-and-see attitude, perhaps initially just prescribing to patients who ask for it.

That isn't to say Qsymia and Belviq can't be blockbusters. There's certainly a need, considering more than 35% of U.S. adults are obese. And the drugs work, Qsymia to a greater extent, but with more side effects.

But I think investors need to think a little longer term. Until doctors gain more confidence in the drugs and insurance companies decide to cover the drugs, sales are likely to be slow.

Long-term thinking is the only way to build long-term wealth. With that approach in mind, Fool analysts have identified three stocks that can help you retire rich. Find out what they are and just why the analysts like them so much in the Fool's new free report. Click here now to claim a copy.