Can Arena and VIVUS Profit From Glaxo's Troubles?

Last week, GlaxoSmithKline announced that it was on recalling its over-the-counter obesity drug, Alli, in the U.S. and Puerto Rico because it appears that some packages were tampered with. The drug remains on the shelf in Europe, where there doesn't seem to be a problem.

In the following video, Fool contributor Brian Orelli and health-care bureau chief Max Macaluso discuss how the issue is reminiscent of Johnson & Johnson's troubles with Tylenol tampering in the mid-1980s, although GlaxoSmithKline seems to be in much better shape: No one has been hurt from the tampering, and Alli isn't nearly as big of a product as Tylenol was.

Depending on how long the drug remains off the market, the removal of Alli could be a boon to the new prescription obesity drugs Arena Pharmaceuticals' Belviq and VIVUS' Qsymia. While the drugs provide more weight loss than Alli, the biotechs will only be able to gain sales if patients are willing to go to their doctor to get a prescription. The prescription drugs may also be more expensive than Alli, especially since the Belviq and Qsymia still aren't covered by many insurance plans.

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The article Can Arena and VIVUS Profit From Glaxo's Troubles? originally appeared on

Brian Orelli and Max Macaluso have no position in any stocks mentioned. The Motley Fool recommends and owns shares of Johnson & Johnson. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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