Inside Drugmakers' War on Fat

A huge jackpot awaits the company that devises an effective fix for obesity

by Arlene Weintraub

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Like hundreds of other executives whose companies are trying to develop blockbuster weight-loss drugs, Amylin Pharmaceuticals (AMLN) CEO Daniel M. Bradbury has been riveted by the saga of a once-promising medication called Acomplia. The Sanofi-Aventis (SNY) drug, which is on sale in 20 countries, got clobbered last June in a review by the U.S. Food & Drug Administration. Bradbury watched a live simulcast as an FDA advisory panel grilled Sanofi executives over the memory loss, dizziness, depression, and other side effects reported by people who took Acomplia in clinical trials. Most worrisome, at least four people on the drug committed suicide. When it came time to vote on whether the FDA should approve the drug, the results weren't pretty. "No," declared the first panelist. "No," echoed the second, and so on, until all 14 panelists had given Acomplia the thumbs-down.

Pleased though they may have been to witness a rival's misfortune, the 20-odd companies with obesity drugs in the works took a clear message from Sanofi's drubbing: The FDA isn't playing around. If a diet medication poses health concerns, it won't get a free pass—and with no FDA approval, there will be no payoff for all the time and money drugmakers have expended. "We're going to have to be extremely sensitive to safety," acknowledges Bradbury.

The first company to create the magic pill that helps people shed pounds without getting sick will reap an astronomical windfall. About a third of the people in the U.S. are obese, putting them at risk for heart disease, diabetes, and some types of cancer. Another third are merely overweight, but still desperate for a drug that will return them to their former svelte selves. The market for weight-loss treatments (BusinessWeek, 1/10/08) in the U.S., including diet programs, herbal products, and the like, is worth some $33 billion a year. Just a tiny fraction of that—about $200 million—comes from prescription products such as Roche's (RHHBY) Xenical and Abbott Laboratories' (ABT) Meridia, none of which works especially well, say obesity experts.

To grasp the potential impact of just one really good weight-loss drug, consider all the medicines taken to treat conditions caused or exacerbated by obesity. Statins for high cholesterol rake in $25 billion in global sales each year. Demand for blood-pressure drugs comes to about $30 billion. Then there's the $12 billion-a-year market for drugs that treat Type 2 diabetes, the most prevalent form of the disease. Many patients who swallow such pills today might be persuaded to trade in their prescriptions if there were an alternate route to a healthier body weight. Add to that everyone's desire to look better, and you have the makings of a giant product.

STRONG FIELD

The race for riches has attracted a diverse group of contenders worldwide, from fledgling biotechs to deep-pocketed pharmaceutical giants. They're all using the latest insights of neuroscience to conquer side effects, from heart troubles to melancholy, that have plagued obesity treatments for more than half a century.

But all are under enormous pressure to succeed. Tiny Vivus Pharmaceuticals (VVUS), with a market value of $360 million, is betting that its controversial concoction, which contains half of the dangerous fen-phen combination, will keep the struggling company alive. At the opposite extreme, $95 billion Merck (MRK) has ample resources to make its obesity drug a success. But it needs a safe, mass-market drug soon to make people forget about Vioxx, its popular painkiller that was pulled from shelves in 2004 and resulted in a $4.85 billion liability settlement.