Tim Healey & Jay Popli, Lunesta

This year’s hottest sleeping pill could have been called “Estorra.”

It could have been promoted with a series of TV ads in which an elderly elf sneaks into consumers’ bedrooms just as they’ve turned out the light, and sprinkles them with sand—a riff on the sandman tale oft told to children.

Neither of those things happened. The Food and Drug Administration nixed Estorra as a brand name because it sounded too similar to an existing drug, Estrace, which is hormone-therapy medication.

Worse, when the sandman character was tested, it bombed. “Women were very uncomfortable with the idea of a strange old man coming into their bedrooms late at night,” said Timothy Healey, executive director of central nervous system marketing at Sepracor.

The mysterious, migratory sandman was one of many concepts that Sepracor considered—and then killed—prior to the launch of the drug that was eventually named Lunesta. “They didn’t die in vain,” said Jay Popli, Lunesta’s marketing director. “Every one of those campaigns we saw gave us something.”

Apparently so. Two years ago, few people had even heard of Sepracor or Lunesta. Today, the sleep aid is the No. 2 drug in its category and boasts a 13% share of the market.

Based in out-of-the-way Marlborough, Mass., Sepracor is just one of hundreds of small American firms in the speculative world of specialized pharmaceuticals. These are companies that devote their entire business, year after year, to only one or two drugs, often funded by deals with the R&D arms of pharma giants. They hope to hit on that one formula that behemoths like Pfizer and Merck have missed. The rewards can be fantastic, as acquisition prices tend to reach the hundreds of millions.

Or they can go it alone, as Sepracor has done so far, and keep the bounty to themselves.

The results to date have been substantial. Lunesta has logged $616 million in total sales over its lifetime, according to IMS Health. Only Sanofi-Aventis’ Ambien leads it.

More significantly for the drug business as a whole, Sepracor has proven that even the least-promising category can be ripe for renewal. Prior to 2005, insomnia was a chaotic, mature segment beset by addiction worries and a string of high-profile failed drugs. Now, it is the most actively fought field in pharmaceuticals, and sales within it are forecast to grow for years.

How did Lunesta, with its dreamy, blue-tinged ads featuring an animated moth magically charming its users to sleep, achieve all this?

The answer is somewhat counterintuitive. While marketers frequently brag about their strategic skills, their amazing new ideas and their novel use of new forms of media, the story of Lunesta proves that two of marketing’s oldest chestnuts can still create a blockbuster: a massive TV ad budget coupled with sheer good luck.

May Cause Drowsiness
It’s hard to remember that, until Lunesta’s launch in April last year, the insomnia business was regarded by many as moribund and stagnant. It was dominated by one megabrand, Ambien, which had defeated an endless number of also-rans (such as King Pharmaceuticals’ Sonata). Any new prescription brand would also have to fend off over-the-counter alternatives (like Tylenol PM) and home remedies (a glass of milk or wine before bed, for instance).

In addition, the notion of “sleeping pills” carried with it a significant amount of dark cultural baggage in the form of Valley of the Dolls-style addiction. Is there an American alive who does not know that Marilyn Monroe died because she took an overdose of barbiturates? Another drug, Halcion, was for a time withdrawn from some markets after it was publicly blamed for the first President Bush’s slurred speech and incoherence on trips to Australia and Japan. Even U.S. Rep. Patrick Kennedy faulted his May 6 Capitol Hill car crash on the Ambien he’d been taking.