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Waking Up The Insomnia Markethttp://www.businessweek.com/magazine/content/05_03/b3916092.htm" If Americans have become jittery about popping pills to treat their everyday ills, you would hardly know it from the optimism surrounding Sepracor (SEPR ) Inc. On Dec. 16, the Marlborough (Mass.) company won approval from the Food & Drug Administration to market Lunesta, a new sleep aid.
Giddy investors pushed Sepracor's stock up 16%, to $60, in the two weeks following the news, as the tiny, still-unprofitable company announced a $60 million campaign to market the drug directly to consumers. Sepracor's ads, set to begin airing in February, will try to convince the bleary-eyed masses that they can safely take a pill every night to help them sleep.
There are plenty of customers, but it couldn't be a worse time to hit the airwaves with bold safety claims about a prescription drug. Recent revelations that painkillers Vioxx and Celebrex may raise the risk of cardiac disease have consumer groups howling that drug companies are abusing their right to market products directly to consumers. Critics who charge that Vioxx was overprescribed to people who would have done fine on aspirin say most insomnia cases can be treated with safer nondrug alternatives such as psychotherapy and meditation. Still, the drug companies, seduced by the wallets of 82 million Americans who battle insomnia, stand ready to entice restless sleepers with big ad campaigns that rival those of the sidelined painkillers.
Drug industry critics may be emboldened by Sepracor's ambitious plans for Lunesta. The market for drugs that treat insomnia is expected to double, to $5 billion, by 2010, and this year alone could see even more new insomnia fighters from the likes of Takeda Pharmaceuticals North America and Sanofi-Aventis. Analysts predict Lunesta will drive Sepracor's revenues up 66% in 2005, to $617.4 million. But Sepracor and some of its industry rivals are already looking to broaden the base of potential customers. Those companies hope someday to sell the drugs to patients with other illnesses, such as depression, for which insomnia is merely a symptom. "It's research and development, but it's really marketing," admits David P. Southwell, chief financial officer at Sepracor. "We think we can link into whole new markets for this drug."
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