For Cubist, a tough sell

Despite robust US sales of its antibiotic Cubicin, the Lexington biotech finds global success is difficult to achieve

Cubist won Food and Drug Administration approval in 2003 to market Cubicin, after several years of research and development. The drug is mainly used to fight skin infections caused by certain bacteria. (PHOTOS BY Jonathan Wiggs/Globe Staff)

Since Cubist Pharmaceuticals Inc. launched its first drug five years ago - an antibiotic called Cubicin - sales have skyrocketed.

This year alone, the Lexington biotech company expects Cubicin to generate $395 million to $405 million in sales nationwide, up more than one-quarter from 2007. And executives predict that US sales could climb to $750 million within the next few years. Domestic sales have been so strong that the company next month will add 187,000 square feet to its Lexington headquarters.

But sales have been tepid elsewhere in the world. Cubist expects to reap only about $7 million in royalties this year from Cubicin sales outside the United States. In documents filed with the Securities and Exchange Commission, Cubicin acknowledged that European sales have been disappointing.

"People have been asking why their international sales haven't been stronger," said Howard Liang, a biotech analyst with the Boston investment bank Leerink Swann & Co.

The problems illustrate the challenge US drug companies sometimes face when marketing drugs in other parts of the world, where they must navigate through different healthcare and regulatory systems. One analyst said drug companies need to learn to customize their approach for each country, because every one is different.

"That's a hard message for pharmaceuticals companies," said Todd Evans, who leads PricewaterhouseCoopers's commercial life science practice. "Your pricing strategy needs to be quite different. Your IP protections vary. You have different attitudes for different payers," referring to insurers and other entities that ultimately pay for the drugs.

But several Massachusetts companies - including two Cambridge biotechs - have found success overseas. Slightly more than half of Genzyme Corp.'s product revenue now comes from outside the United States. And Biogen Idec Inc. expects foreign sales to account for two-fifths of its revenue by 2010.

International sales are also key to Cubist's long-term growth plans. The company hopes Cubicin will eventually become a blockbuster - generating $1 billion or more in annual sales, including hundreds of millions of dollars from outside the country.

The drug, also called Daptomycin, was discovered by Eli Lilly & Co. researchers in the early 1980s. But Eli Lilly halted work on it because of concern about possible side effects. Cubist subsequently licensed the rights to it in 1997, spent several years on further research and development, and ultimately won approval from the Food and Drug Administration to market the drug on Sept. 12, 2003. (Cubist plans to hold an anniversary celebration next month.)

Cubicin is mainly used to fight skin and infections caused by certain bacteria, including methicillin-resistant Staphylococcus aureus, commonly referred to as MRSA. Unlike many more common antibiotics, Cubicin is administered intravenously instead of with a pill or capsule. But because it needs to be administered only once a day, Cubist has been able to tap the home market and hospitals, boosting sales.

Still, Cubist's chief executive, Michael Bonney, said Cubicin has been slower to catch on in Europe than in the United States for several reasons. It took three years longer to get approval to sell the drug in the European Union, and Cubicin still needs approval in some other parts of the world. Also, Cubicin faces additional competition abroad. And it's possible the market for the drug could be larger in the United States than in most other countries.

Nonetheless, Cubist has been disappointed with sales by its European partner, Novartis AG. Cubist signed a deal with Chiron to market the drug in Europe in 2003. But shortly afterward, Chiron was sold to Novartis, putting the drug in limbo as the two companies worked on how to combine their operations.

Then, even after Novartis decided to go ahead with Cubicin, Bonney said, the sales pitch sometimes fell flat.

"Neither we nor Novartis are satisfied with the results," said Bonney.

Cubicin's foreign sales are somewhat understated because Cubist reports only its royalties from overseas sales - thought to be one-third of the drug's total foreign revenue. (Novartis and other partners keep the rest.) But even a tripling of Cubicin's foreign revenue would amount only to $21 million this year, about 5 percent of the drug's worldwide revenue.

Bonney said Novartis made a tactical error: trying to market the drug to every hospital with the same marketing pitch, instead of tailoring its message. But he said Novartis and Cubist are now working together to refine how the drug is presented to potential buyers.

Their effort may be paying off - Cubist recently said it saw strong sales growth for Cubicin in certain countries, including the United Kingdom and Germany.

"Outside the US, we see signs of progress," chief operating officer Rob Perez told investors last month.

A Novartis spokeswoman said the Swiss drug maker was happy with its results, despite Cubist's past complaints. She said the drug was on track to meet its goals this year.

Todd Wallack can be reached at twallack@globe.com.

Correction: Because of incorrect information supplied by Cubist Pharmaceuticals Inc., the size of the company's expansion at its Lexington headquarters was overstated in a Business story on Monday. The company is adding 87,000 square feet of space.