Bayer buys back some Levitra marketing rights from GlaxoSmithKline

Bayer and GlaxoSmithKline have agreed that Bayer will buy back co-promotion rights for Levitra (vardenafil) for certain markets outside the United States, Bloomberg and other news sources report. Under the terms of the new agreement, Bayer will pay Glaxo 208 million euros ($272 million) and will end its co-promotion of the erectile dysfunction drug in Canada, Asia Pacific, Africa, Latin America, and most European countries.

The co-promotion agreement for Levitra in the US remains unchanged, the two drugmakers said in a press release, as reported in the news sources. The co-marketing agreement for Levitra in Italy, where Bayer markets the drug as Levitra, and Glaxo markets it as Vivanza, remains unchanged. In other countries, where one of the companies markets the drug exclusively, there will be no changes made to the agreement, CBS MarketWatch and other news sources report.

"The deal is being done to maximise Levitra revenue and take advantage of Bayer's network in Europe, Asia and Latin America," CBS MarketWatch reports, citing the drugmakers.

Levitra's sales lag behind the two other treatments for erectile dysfunction that are on the market -- Pfizer's Viagra, which commands over 70 percent of the US market; and Eli Lilly's and ICOS' Cialis, which accounts for about 19 percent of prescriptions in the US, as reported in Bloomberg and other sources. Glaxo reported 11 million pounds ($21 million) in sales for Levitra in the third quarter, Bloomberg reports.

"Levitra seems to have been losing the marketing battle to Cialis and market share has stalled," says Barclays Stockbrokers, as reported in Forbes. "We consequently expect the product to grow broadly in line with the erectile dysfunction market's low-teen growth and never become a significant product in the Glaxo portfolio."

"The decision to buy back Levitra co-promotion rights is a logical step to enhance our pharmaceuticals business in Europe, Latin America and Asia," said Bayer Pharma chief Wolfgang Plischke, Deutsche Welle reports. Bayer noted that the transaction would reduce its first-quarter earnings, before interest and taxes, by 118 million euros. It will add to earnings starting in 2005, CBS MarketWatch and Bloomberg report. "This move seems logical, given the underperformance of Levitra since launch and the limited opportunities available to Bayer Pharma," said Citigroup analyst Andrew Benson, reports Bloomberg.

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