Beasley, Allen, Crow, Methvin, Portis & Miles, P.C.

Back in January we explained how many pharmaceutical companies, following a Hollywood business model, have started to experience an erosion of their profits as patents expire on their “blockbuster” drugs. Aggressive, multi-billion-dollar marketing campaigns lead to multi-billion-dollar drug sales, but when patents expire, so do profits.

Merck & Co.’s leading osteoporosis drug Fosamax illustrates the Hollywood paradigm. Its patent protection ran out earlier this year leaving Merck in a struggle to regain its share of the profitable osteoporosis market – a market that it once led, thanks to Fosamax.

As Hollywood producers acquire licensing rights for their blockbuster movies, so has Merck acquired licensing rights to a substance that appears to promote oral bone growth. Called JTT-305, it is a recombinant parathyroid hormone (PTH) that stimulates bone formation cells. Merck purchased the right to develop and commercialize JTT-305 from Japan Tobacco (JT), the world’s third largest manufacturer of tobacco products according to its own website.

In a statement issued by Japan Tobacco, Alan Ezekowitz, a Merck representative, said that “partnering with JT to develop this novel compound complements Merck’s portfolio of musculoskeletal drug candidates … In the future, we believe that use of antiresorptive and osteoanabolic agents together may provide an effective way to reduce the risk of fractures in patients with osteoporosis.”

Ironically, Fosmax is blamed for a high incidence of bone fractures in patients who have taken the drug for years. Faced with a growing number of lawsuits and a plummet in Fosamax sales and profits, Merck must come up with some new blockbusters to replace its old moneymakers, lest it appear to investors that it is losing money.

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