Summary
In acquiring Sepracor, Dainippon Sumitomo is gaining a modest-sized commercial bridgehead for marketing its products in North America, but one which by itself had an uncertain future. Dainippon Sumitomo will need to take action to stabilize a company which has been facing issues concerning its future sustainability.
Analysis
Sepracor, the most successful chiral chemistry product company which has ever existed, switched a few years ago from its pure chiral strategy, as scope for this approach became mined out.
But Sepracor has not yet succeeded in its revised strategy of selecting just two therapeutic fields – CNS and respiratory – and then making a success of marketing any type of product, chiral or not, in just those areas.
A critical problem for Sepracor has been the enormous burden SG&A costs have proven to be. Even with substantial recent cutbacks in its salesforce, the company is currently still spending over half of its revenues on SG&A. Those recent cutbacks have unfortunately undermined its capability to grow several of its leading products, whose sales have stubbornly refused to increase significantly over the past couple of years. Also it has singularly failed to get off the ground two respiratory products from Nycomed, Alvesco and Omnaris.
The most important forthcoming product from Dainippon Sumitomo’s pipeline is likely to be the anti-psychotic lurasidone, which is currently in Phase III development. However, it is unclear whether lurasidone will prove to have significant advantages over earlier members of its class already on the market. Much more marketing muscle is likely to be needed than is now available from Sepracor to compete with established competitors in the highly competitive anti-psychotic market.
John Ansell consults with leading institutions through GLG
Analyses are solely the work of the authors and have not been edited or endorsed by GLG.
