The move is a body blow to the drug, a treatment for irritable bowel syndrome which has run into safety issues in the past and has never been approved for use in Europe, and it prompted Novartis to lower its financial targets for the year.
The Swiss drugmaker said the Food and Drug Administration had asked it to suspend marketing and sales to permit further discussion of benefits and risks of the medicine.
FDA officials said it was possible Zelnorm might be reintroduced on a limited basis in future but only if a sub-group of patients could be identified for whom the benefits outweighed the risks.
Zelnorm was Novartis's 12th-biggest selling drug in 2006, with global turnover growing 30 percent to $561 million, of which $488 million was generated in the United States.
"This news is obviously quite a surprise, involving a medium-size product for Novartis that was expected to have annual sales of $1 billion by 2012," said Shaojing Tong, an analyst with Mehta Partners in New York.
"Although it's a setback, I don't think will hurt Novartis to a great extent because overall it is a fairly solid company," he added.
Tim Anderson of Prudential Equity said loss of Zelnorm could lop around 2% off 2007 earnings per share. There was also a risk of product liability lawsuits, although this would be largely immaterial to a company of Novartis's size, he added.
The withdrawal was prompted by an analysis of data from more than 18,000 patients which found the incidence of serious and life-threatening cardiovascular side effects in those on Zelnorm was 0.11% against 0.1% for those given placebo.
The FDA said one of the 13 affected patients in the Zelnorm group had died. Of those taking placebo, only one had symptoms suggesting the beginning of a stroke, which went away without complication.
Sales Outlook Cut
The group lowered its financial targets in the wake of the move.
"Novartis has revised its outlook for net sales growth, barring unforeseen events, for the group to above five percent, and for the pharmaceuticals division to a low- to mid-single-digit rate, both in local currencies," it said.
Previously, Novartis had forecast group net sales would rise in 2007 at a mid- to high-single-digit percentage rate and net pharmaceuticals sales at a mid-single-digit rate.
"Novartis is still evaluating the impact on the full-year 2007 operating and net income results from continuing operations," the firm added.
Despite pulling the product, Novartis defended Zelnorm, which it said provided benefits to those suffering from constipation and irritable bowel syndrome. The group said it was discussing ways with regulators to continue to make Zelnorm available to appropriate U.S. patients.
Zelnorm was given a green light in the United States in 2002 and has been approved in more than 50 other countries.
However, safety information was added to its U.S. packaging in 2004, warning of the effects of diarrhoea and the risk of a condition where blood flow to the intestines is reduced.