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Potent Growth in Impotence Drug Market

The Eli Lilly-Icos joint venture reported after the bell yesterday that worldwide sales of their erectile dysfunction drug came to $971 million last year. The relatively new impotence fighter is now on the cusp of becoming a billion-dollar blockbuster drug in 2007. Bert Hazlett, the pharma analyst at BMO Capital Markets, writes in a research note to clients today that he believes the drug can grow to nearly $2 billion in peak worldwide sales. (BMO makes a market in Icos.) We will find out how Viagra is doing when Pfizer reports earnings before the bell on Monday morning, but sales growth is expected to have picked up. These results represent a significant turnaround in a drug segment that some thought had already had its day. However, Levitra from GlaxoSmithKline , Bayer and Schering-Plough is still very much an also-ran in the category.

The better-than-expected numbers out of Lilly-Icos come ahead of the Icos shareholder vote set for next Thursday on the proposed Lilly acquisition for $34 per share. Lilly has already raised the price two bucks. This morning Icos shares hit a new intra-day high of $33.99. Are investors hoping Lilly will up the ante again? Paul Latta, a biotech analyst at McAdams Wright Ragen in Seattle where Icos is headquartered, is telling clients that he thinks there's a 40% chance the price could go up. Nonetheless, he has a sell rating on the stock. While this kind of disclosure may be de rigueur--especially considering the proposed sale--the firm says it would like to do investment banking for Icos.

Monday morning we'll be live from the Pfizer analyst meeting in midtown Manhattan, but also monitoring developments from the Plavix patent and Vioxx trials which get underway Monday morning. In Atlantic City yesterday lawyers picked a 7-woman, 3-man jury to hear the two Vioxx cases. The Plavix case is a bench trial where the judge will make the decision.

Questions? Comments? Pharma@cnbc.com

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