annual report 07

over 20 years of remarkable growth and achievement

exceptional results during a time of transformation

For the last six years, our pain management franchise has been a key driver of our success. We pioneered the creation of products for breakthrough pain in cancer and are on the verge of extending our reach to help additional patients with non-cancer breakthrough pain. The advancement of our tamper-resistant opioid (CEP-28109) into clinical development has the potential to take our pain management franchise to a new level in the years to come.

Our first-in-class product for wakefulness, PROVIGIL, has generated more than 12 million prescriptions and over $3 billion in cumulative revenue. Our Phase 3 development program focusing on FENTORA for the management of breakthrough pain in opioid-tolerant patients with chronic pain conditions delivered the positive data we needed to submit a supplemental New Drug Application to the U.S. FDA. In the European Union, we filed a request for marketing authorization of the fentanyl buccal tablet formulation (EFFENTORA) under the Centralized Filing Procedure. An approval in Europe for EFFENTORA in the treatment of breakthrough pain in cancer will provide a solid foundation for future follow-on regulatory submissions.

In August 2007, we further strengthened our pain management franchise through the acquisition and launch of AMRIX, the only once-daily extended-release muscle relaxant approved in the U.S. AMRIX competes in a large market, where we believe the product benefits of once-daily dosing and low rates of sedation are being well received by both physicians and patients.

ACTIQ has been generic for a full year, and as expected, we saw significant erosion of our market share. Despite this, we were able to generate more than $500 million in pain management franchise sales in 2007 by executing on a sound life cycle management strategy. AMRIX will build on this foundation and will be a near-term growth driver as we prepare for future product launches in our oncology, pain and Central Nervous System (CNS) franchises.

The CNS franchise that generated our first commercial success continues to be a strong source of revenue. As the foundation of our pharmaceutical business, our first-in-class wake-promoting medication, PROVIGIL, has generated more than 12 million prescriptions and over $3 billion in cumulative revenue. Over the last year, we have seen significant expansion in the use of PROVIGIL in the treatment of obstructive sleep apnea, and with a sales and marketing focus on this segment, we believe we will continue to see product growth. The U.S. FDA approval of our next generation wakefulness medication, NUVIGIL, gives us confidence that we will maintain our current leadership in the field and better serve a broader group of patients for many years to come.

As we enter our next decade of business, we find ourselves in a vastly changed industry. In this environment, clinical trials, safety data, and sales and marketing practices of the entire pharmaceutical industry are subject to intense scrutiny by regulators, the media and the public. Last year, we were able to resolve a three-year U.S. Department of Justice investigation of our sales and marketing practices. Undoubtedly, this resolution was significant and caused us to re-evaluate and re-invigorate our compliance initiatives. Accordingly, we elevated our chief compliance officer position to an executive officer position of the corporation, and we are fortunate that Valli Baldassano, an outstanding corporate compliance attorney, joined us last year. We are confident she will provide the leadership we need.

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