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Wednesday 19 April 2006

Mental health drug market tapped out?

By: Aaron Smith

Growth in the $12 billion anti-psychotic medicine business is slowing, especially in the U.S. See what drugmakers are doing next.

The monster-sized market for anti-psychotic drugs is expected to keep growing for years, though at a slower pace.

"As drug classes go, growth rates in anti-psychotics are actually quite healthy," said Bruce Cranna, analyst for Leerink Swann. "But it's fairly well penetrated. It gets harder to grow as [the industry] gets bigger."

Sales for anti-psychotics, which are used to treat mental disorders like schizophrenia and mania, are slowing down in the U.S., but analysts say there's still room for them to grow in Europe, where the market is less mature.

Going forward, the $12 billion worldwide market for anti-psychotics will keep growing at 10 percent or slightly more, but that's down from 15 to 20 percent in 2003, Cranna said. But other analysts say growth could slow much further, to the 2 to 5 percent range.

The market is dominated by Zyprexa, Eli & Lilly's (up $0.09 to $54.59, Research) top-selling drug with $4 billion in 2005 sales. But worldwide sales for Zyprexa slipped 5 percent last year, primarily because of weak U.S. sales.

The industry-wide growth rate is currently being driven by Zyprexa's fast-growing competitors. But analysts do not expect the rapid sales growth for these other drugs to last.

For instance, Johnson & Johnson's (down $0.15 to $57.98, Research) Risperdal sales totaled $3.5 billion in 2005, and surged 21 percent in the first quarter of 2006, to $1.2 billion. That sales increase was driven by Risperdal Consta, an injectable form of the drug.

Astrazeneca's (up $0.68 to $52.81, Research) Seroquel, which grew by a third in 2005 to sales of $2.8 billion, is the fastest growing anti-psychotic, and is particularly popular in the expanding elderly population.

Pfizer's (up $0.02 to $24.95, Research) Geodon grew by 26 percent to $589 million in 2005 sales, while sales of Abilify, from Bristol-Myers (down $0.32 to $24.51, Research) and the Japanese drug maker Otsuka, jumped 54 percent to $912 million in 2005.

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