New Condom Nears Approval

By TOMMY STUBBINGTON

LONDON—A new erection-enhancing condom product, dubbed "Viagra for condoms," is nearing regulatory approval and could be on sale in Europe by the end of the year.

Analysts say the condoms, which contain a gel that helps men maintain a firmer erection for longer, could make a significant splash in the condom market, where innovation is rare and patent-protected inventions are hard to come by.

The product could also provide a boost to Durex, the world's biggest-selling condom brand, not least in the U.S., the world's largest market and one where Durex has struggled to gain a sizable market share.

European regulatory approval for the product, developed by U.K. biotechnology firm Futura Medical PLC and licensed to Durex's owner SSL International, was held up during SSL's takeover last year by consumer goods giant Reckitt Benckiser Group PLC. Futura now expects the green light in the first half of 2011, meaning the condom, named CSD500, could be on the shelves of pharmacies and supermarkets by the end of the year.

Futura's condoms contain a gel with an agent that boosts blood flow—a so-called vasodilator—which is absorbed through the skin, enhancing erections. Finding an active ingredient was straightforward—it's a generic compound for the treatment of angina, a severe chest pain caused by lack of blood flow to the heart. However, "immobilizing" the gel in the condom, so the vasodilator only touches the wearer during sexual intercourse, was the clever part.

"The challenge is having a stable product in a condom—a gel that doesn't do anything detrimental to the condom," Futura Chief Executive James Barder said.

"Some products can degrade the latex very quickly," Mr. Barder said, noting that adding the vasodilator to the lubricant is complicated. "It has to be immobilized in the condom." Most of the patents protecting CSD500 are associated with this "immobilization", Mr. Barder said.

Unlike the drug Viagra, to which Futura's product has inevitably been likened, the condom is not being scrutinized by regulators as a treatment for erectile dysfunction. Rather, it's specifically targeted at men who struggle to maintain an erection while wearing a condom.

If European regulators give CSD500 the green light, it will be because it encourages these men to use protection, and so help to curb the spread of sexually transmitted diseases.

The commercial benefit of this distinction is twofold. Firstly, as Mr. Barder points out, erectile dysfunction is generally found in older men, whereas the inability to maintain an erection while wearing a condom is "much less age specific", meaning a wider potential market.

Moreover, as a medical device rather than a drug, the condoms will be available off the shelf, avoiding the need for a potentially embarrassing trip to the doctor for a prescription.

Reckitt has so far remained quiet about the product, and declined to comment prior to regulatory approval. Reckitt boss Bart Becht has played down the potential of new Durex products, telling analysts back in November: "In terms of SSL innovation, there are some interesting projects in the pipeline, but I would say, most of them are relatively small."

Still, experts say a clinically proven, patented innovation should help the consumer goods firm take market share from major competitors, which include U.S. firm Church & Dwight Co. and Australia's Ansell Ltd.

"If competitors can't come out with a 'me too' in a relatively short period of time—and let's face it, they've known about this as long as anyone else—these clinical claims are going to help Durex's market position," said Chas Manso de Zuniga, a consumer goods analyst at Evolution Securities who has closely followed CSD500's progress under both SSL and Reckitt.

According to research from stockbroker Taylor Collison, Durex accounted for 42% of the $3.9 billion condom market in 2010, with Ansell on 15%, and Church & Dwight on 11%. However, SSL found life tougher in the U.S., by far the largest single market, where Church & Dwight's Trojan brand dominates with a 76% market share.

Once Reckitt has secured European approval, it may be tempted to pursue the U.S. market, according to analyst Navid Malik of Matrix Group, although approval from the Food and Drug Administration would require further clinical data from U.S. patients.

"The reason why Durex hasn't been successful in the U.S. is [SSL] didn't want to go into a war with the incumbents. Reckitt will be less shy on that," said Malik.

"CSD500 will give them a really good jumping off point to marketing Durex [in the U.S.]. In my view, it's the perfect opportunity to highlight the brand."

Nomura, Futura's broker, says a "modest" estimate is that the new product could capture 3-5% of the global branded condom market, while priced at a 50% premium to standard condoms.

That's not to say Reckitt's competitors are running scared. Church & Dwight boss James Craigie told analysts a slight decline in Trojan's market share for its most recent quarter—to 75%—was "no big deal", given the overall growth in the condom market.

Mr. Manso de Zuniga points out that the American firm has "pushed the button on innovation" in recent years. In 2009, the firm launched its 'Ecstasy' condom, designed to offer greater sensitivity to the wearer and last year began selling 'Fire and Ice', a condom with lubricants offering hot and cold sensations. According to Mr. Manso de Zuniga, these developments are not dissimilar to products in Durex's "play" range.

Still, CSD500's patents may mean it's more difficult for competitors to match. The condom market has recently been devoid of "real innovation", Mr. Malik said. With its clinically proven claims, Futura's condom has the potential to bring about "a big change in the way condom products have been used," he added.