Chattem looks to launch Cialis over the counter

Chattem CEO Zan Guerry announces that his company will manufacture, market and distribute Cialis if it becomes an over-the-counter drug.

Chattanooga-based Chattem will take on the most important product launch of its 135-year history if company officials win regulatory approval to switch erectile dysfunction medicine Cialis from prescription to over-the-counter sales.

"It will be a big deal," Chattem Chief Executive Zan Guerry said Wednesday about Cialis, which last year garnered more than $2.1 billion in global sales.

Sanofi, the French pharmaceutical giant that owns Chattem, and drug-maker Eli Lilly and Co. have agreed to pursue regulatory approval, with the Chattanooga company taking the lead in the switch. Terms of the licensing agreement weren't announced.

Chattem and Sanofi first need to earn the U.S. Food and Drug Administration's OK and patents must expire, which all could take three to four years, according to the companies.

Blair Ramey, a Chattem senior vice president, said plans are to meet with the FDA and align with it over future steps.

"Over the next couple of years we'll build a file and get ready for an application," he said.

The effort could face difficulties. In Europe, for example, Pfizer Inc. sought regulatory approval to turn Viagra to over-the-counter status in 2007. But the company withdrew its application in 2008 in the wake of concerns by a regulatory advisory body that the product could be misused.

For Chattem and Sanofi, the stakes are high.

Lilly reported in January that U.S. Cialis sales in 2013 were $942.8 million, a 21 percent increase over a year ago driven by higher prices. Total Chattem sales for all its products, including key allergy medicine Allegra and the company's Gold Bond line, are about $1.16 billion.

Guerry said officials believe there's a big untapped market for Cialis, which is No. 2 in the U.S. behind Viagra in segment sales but tops worldwide.

It's estimated that more than half of men over age 40 have erectile dysfunction. Guerry said only a third or less are taking medicine for the problem because of embarrassment or cost, especially given that it's often not covered by insurance.

"That's a big market," he said. "It's an example of where there's a great consumer need out there."

Guerry also said that there are unregulated OTC dietary supplements in the market that claim to ease impotence.

For Chattanooga, the OK to sell Cialis off store shelves is seen as potentially pushing up Chattem employment.

Robert Long, a company executive vice president, said Chattem would like to move certain parts of Cialis manufacturing or packaging to Chattanooga. That could include more blue- and white-collar jobs, he said, though it's too early to give a number.

Chattem now employs 680 people, with just over 600 in Chattanooga, the company said.

Marketing the turn from prescription to OTC use would be the third such major task for Chattem since it was bought by Sanofi for $1.9 billion in cash in 2009. Chattem earlier took Allegra and later Nasacort to OTC use, all "big successes," Guerry said.

John Stroud, a Chattem executive vice president, said about half the company's recent sales growth has been due to Nasacort and Rolaids. Nasacort has done about $50 million of business in four months and is headed toward becoming a $100 million-a-year brand, he said. That would give Chattem six such brands, versus just one five years ago, Stroud said.

Guerry said 45 million people have taken Cialis, and there was "intense competition" within the industry for the opportunity to try to take it over the counter. He cited Sanofi's commitment to put in the time and capital.

"Anytime you've got millions of people doing anything, it becomes a significant brand," he said. "People will suggest it certainly can be among the very largest OTC brands."

Contact Mike Pare at mpare@timesfreepress.com or 423-757-6318.