Direct-to-consumer pharmaceutical advertising is everywhere in American media because it works. Generally speaking, it drives patients to ask/tell their doctors to prescribe a particular medication.
Full disclosure: the commercials are probably responsible for a sizeable amount of advertising revenue at the company I work for (NBC Universal/General Electric which own CNBC). And conspiracy theorists: that has no influence on my reporting. But today there's a rare example of where so-called DTC advertising didn't pay off.
Eli Lilly and Amylin Pharmaceuticals are partners on the twice-a-day injectable diabetes drug Byetta (buy-ate-uh). This is the drug made with a synthetic version of Gila monster saliva and helps Type 2 diabetics control their blood sugar levels and lose weight. For some patients, there's a side effect of nausea and vomiting.
The companies report that in the fourth quarter Byetta sales came in slightly above Wall Street expectations, but the beat may have been due to inventory building. Amylin said that its selling, general and administrative expenses, which includes ad spending, were nearly $110 million higher last year than the year before. As a result, the biopharmaceutical company lost a lot more money than analysts thought it would.
Over the past several months, the companies started advertising Byetta in newspapers and magazines and on TV. But they apparently didn't get as much bang for the buck as they had hoped. On the Lilly conference call this morning, CEO-designate John Lechleiter said, "Our DTC investment in Byetta did not fully meet our expectations."
That's an unusual comment to hear from a pharmaceutical executive. Officials aren't ruling out another Byetta ad campaign, but it sounds like they're gonna make sure it has an effective message that resonates before pulling the trigger on another Byetta marketing campaign.
As I've blogged many times before, the big potential of Byetta lies in the once-a-week version which is in late-stage testing right now. More important data could come out in early June at the American Diabetes Association meeting.
If it works, many analysts believe the product has mega-blockbuster potential. But Wachovia analyst George Farmer, in a research note to clients this morning, says with new diabetes drug competition looming that time is of the essence. "The company desperately needs its more user-friendly LAR (long-acting release) formulation in order to win this battle...."
Wachovia makes a market in AMLN.
Questions? Comments? Pharma@cnbc.com