Could Vivus’ New Drug Be a Blockbuster?

Worries that Vivus’ (NASDAQ:VVUS) new obesity drug would not be widely covered by health insurers have been put to rest; on the drug’s first week on the market, Qsymia was covered approximately a third of the time it was prescribed, which could drive sales higher than expected.

Qysmia, the first new weight loss drug on the market in thirteen years, may generate as much as $1.1 billion per year by 2016, according to Bloomberg Industries analyst Andrew Berens. While only 106 prescriptions were written during the first week of its availability, the week of September 21, Qysmia’s prescription insurer payment rate rose 5 points in its second week to 36 percent.

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Vivus had said before the drug’s release, according to Berens, that the company did not expect health plans to agree to pay for the medicine. However, increased insurer coverage could potentially make the treatment more popular since patients would not have to pay cash. The drug is only available through Qsymia Certified Home Delivery, which includes CVS Pharmacy (NYSE:CVS), Walgreens (NYSE:WAG), and Express Scripts (NASDAQ:ESRX).

Shares in the company have increased by 83 percent this year, through October 1.

But Vivus is not the only pharmaceutical manufacturer with a new obesity drug. The U.S. Food and Drug administration approved San Diego-based Arena Pharmaceuticals’ (NASDAQ:ARNA) drug, Belviq, in June. Also, Orexigen Therapeutics (NASDAQ:OREX) is developing a third treatment, which if it is approved, will be sold under the name of Contrave.

However, Cowen & Co analyst Simos Simeonidis told Bloomberg that the obesity drug market probably will expand slowly. While at an annual meeting of the Obesity Society in San Antonio last month, Simeonidis found that about 70 to 75 percent said they would prescribe Qsymia or Belviq.

“The biggest demand I saw was from the obesity specialists,” Simeonidis said in the interview. “From the general practitioner perspective, they’re going to be slower to adopt.”

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