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What Should You Expect From Arena Pharmaceuticals, Inc. (ARNA) and VIVUS, Inc. (VVUS)?

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Arena Pharmaceuticals, Inc. (NASDAQ:ARNA)The anti-obesity market is becoming interesting as Arena Pharmaceuticals, Inc. (NASDAQ:ARNA) has launched its anti-obesity drug, Belviq.

For a long time, VIVUS, Inc. (NASDAQ:VVUS) was operating as the only player in the anti-obesity market. However, the entry by Arena Pharmaceuticals, Inc. (NASDAQ:ARNA) has changed the dynamics of the market, and we will now see two rivals going head-to-head for this large market in the U.S.

How big is the market?

Obesity has become an epidemic, and the authorities are looking to declare obesity a disease. The market for anti-obesity drug manufacturers is fairly large. The willingness of the FDA to approve anti-obesity drugs indicates that the authorities are serious about tackling the issue. The total net spend on obesity related diseases was about $140 billion during the last year.

Anti-obesity drugs can help bring down the health bill by helping patients control other related diseases. At the moment, obesity in youth is becoming a serious issue, which needs to be tackled promptly. There are only two players in the market at the moment, so there should be enough for both of these players to fight for.

What is the expected response?

Anti-obesity drugs have had a positive response in the early phases of their launch. VIVUS, Inc. (NASDAQ:VVUS)’ Qsymia did not get good reception due to the restricted marketing, availability of ingredients (Phentermine and Topiramate) at lower prices and possible side effects. However, earlier anti-obesity releases were received well by the market and produced impressive sales figures.

However, sales figures tend to fall for the anti-obesity drug manufacturers as the early excitement abates. Almost all of the previous drugs have come with some sort of side effects, which caused the manufacturers to pull the drugs from the market. Also, some drugs failed to live up to the high expectations built before the launch and patients decide to discontinue. As a result, a sharp decline has been seen in anti-obesity drug sales in the past.

What should we expect from Arena and Vivus?

Sales figures for VIVUS, Inc. (NASDAQ:VVUS) have been very poor due to the above mentioned reasons. The company reported sales of only $4.1 million for the first quarter of the year. However, there might be some good news for the company. One of the biggest reasons for slow Qsymia sales has been the lack of coverage from insurers. However, recently, the company announced amended insurance agreements with Medco Health Solutions and its parent company Express Scripts Holding Company (NASDAQ:ESRX).

According to the amendments, Qsymia will be available in either a tier-2 or tier-3 position for those clients of Medco that offer obesity drugs in their benefit design. Furthermore, patients with benefits where Qsymia is offered on tier-2 should expect to pay an estimated $25.00 to $30.00 co-payment for a monthly prescription of Qsymia. The out of pocket cost was a big deterrent for patients and the company also started a free trial period to stimulate sales. However, the amended insurance agreement should prove beneficial for VIVUS, Inc. (NASDAQ:VVUS).

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