GSK and Bayer's orange pill challenges Viagra

GlaxoSmithKline and Bayer, the British and German drug groups, are aiming for an additional $1bn (£627m) in sales between them after yesterday winning approval to sell their impotence pill, Levitra, in the United States.

Levitra, an orange coloured pill, will compete directly against Viagra, the blue pill produced by Pfizer, which has become a household name since its launch five years ago.

A third drug to treat erectile dysfunction, Cialis, from Eli Lily and Icos Corporation, is expected to be given the go-ahead by the food and drug administration in the crucial US market later this year. Pfizer has attempted to block the launches, claiming they infringed its patents.

The two rival drugs have already been launched in Europe, where they have taken significant market share from Viagra. In the biggest European market, Germany, Cialis has taken a 27% share, while Levitra has 14% of the market, according to IMS Health Data.

The two new drugs are both claimed to take effect more rapidly than Viagra does and to last longer.

Pfizer hopes that the increase in publicity given to erectile dysfunction by the launches will help to increase the number of men seeking help. An estimated 30m American men suffer from some form of impotence, but only one in 10 will discuss the problem with his doctor.

Viagra at present has annual sales of $1.5bn, making it one of Pfizer's most important products.

Salomon Smith Barney has suggested that both the new impotence drugs have potential for $1bn a year in sales. Lehman Brothers estimates sales of erectile dysfunction drugs will reach $6bn globally within six or seven years.

Levitra is an important launch for Bayer, which is still trying to put the disastrous recall two years ago of the cholesterol drug, Baycol, behind it. Shares in the company were 1.9% higher yesterday at €19.81. GSK slipped 5p to £12.35.

Analysts noted that the approval by the food and drug administration had been expected and did little to bolster faith in GSK's ability to develop blockbuster drugs - Levitra was a Bayer development.

Like other big names in the industry, GSK has come under increasing pressure as patents on some of its biggest sellers have expired, exposing it to cheaper generic versions.

In the US, where restrictions on pharmaceutical advertising are less strict than in Europe, GSK and Bayer plan a marketing blitz, including sponsorship of the national football league. It hopes to exploit the fact that it has first approval to launch against Viagra, reversing the situation in Europe, where Cialis stole a march.