* FDA panel splits vote on whether to urge Meridia ban
* Abbott seeks stronger warning, restricted sales
* U.S. obesity drug market nearly $400 mln annually
* Industry concerned about wider impact on sector
* Panel meets Thursday on Arena rival, shares slide
(Recasts to add panel decision, adds company comment, analyst reaction, updates shares' prices)
By Susan Heavey and Lisa Richwine
ADELPHI, Md., Sept 15 (Reuters) - A U.S. advisory panel urged tougher action against Abbott Laboratories' <ABT.N> controversial weight-loss pill on Wednesday but split over whether to call for a ban, casting further doubt on such drugs amid a rising crop of potential rivals.
Overall, the Food and Drug Administration's outside advisers agreed that some action -- whether a ban, new warnings or restricted sales -- needs to be taken to protect patients from the risk of heart attacks and strokes with Meridia.
Although little financial risk is at stake for Abbott, industry watchers are concerned new restrictions or a ban will impact other prescription weight-loss pills in the works.
Abbott, which had net sales of $30.8 billion last year, expects to see its global Meridia sales slip to less than $100 million this year from $311 million in 2009. Less than $30 million in 2010 sales are expected in United States.
"It's a bigger issue than just the dollars," said Ira Loss, who follows the FDA for Washington Analysis Corp. "It has more to do with the environment for diet drugs in general."
Eight of the 16 FDA panel members urged withdrawing Meridia, saying potential heart risks outweighed any benefits of weight loss. Six urged restricted sales along with a strong "black box" warning, while two others said the warning and patient monitoring was enough.
The move places the fate of Abbott's drug squarely at the feet of the FDA. The agency will weigh the panel's advice as it makes its final decision on Meridia, which has already been halted in Europe.
"Most people would look at it as a split between keep on the market and take it off the market," said Eric Colman, deputy director for the FDA division that oversees such drugs.
Abbott shares were about flat in after-market trading on Wednesday, after closing up less than 1 percent at $51.66.
TROUBLED MARKET
Whatever the agency decides could further shake up the nearly $400 million sector that has been dogged by recalls, unpleasant side effects and slow sales.
Prescription weight loss drugs have so far failed to gain much traction despite the potential for strong sales in a nation where two-thirds of the population are overweight or obese.
(For a graphic illustrating the extent of the obesity problem in the U.S. click on http://link.reuters.com/vup37m)
Critics have called for Meridia's withdrawal for years, saying the minimal weight loss seen by patients is not worth the potential cardiovascular risks. [ID:nN13176388].
At the meeting, Abbott defended Meridia even as it asked authorities to approve warnings and sales restrictions instead of an outright ban. That would ensure the drug, also known as sibutramine, was used only after other therapies were tried, it said.
"We continue to believe that there are appropriate and identifiable patients that derive benefit from sibutramine," Eugene Sun, vice president for global pharmaceutical development at Abbott, said in a statement after the meeting.
But even as FDA panelists were split over what restrictions to recommend, most agreed there was limited evidence to support the benefits of Meridia, which was approved in 1997.
"I have yet to see any of the positive benefit of the weight loss with this drug," said panelist Lamont Weide of Truman Medical Centers in Kansas City, Missouri.
BOOSTING THE MARKET
While the current U.S. obesity drug market is small -- prescription and over-the-counter diet pills took in $381.5 million in 2009, according to data from IMS Health -- some analysts have said a new product could more than double that.
New York Presbyterian Hospital's Louis Aronne, head of the hospital's weight-loss program who spoke on behalf of Abbott, said he worried that banning Meridia would harm patients and the development of new therapies.
Abbott told the FDA's advisers that even minimal weight loss could help some patients who have trouble slimming down.
"Obesity is a complex disease ... it is a difficult condition to treat," Sun said.
The FDA denied a petition in 2002 from consumer advocacy group Public Citizen to ban Meridia, saying it wanted to see key data from a European trial known as Scout.
Recently, the executive director of the New England Journal of Medicine and a top FDA epidemiologist questioned whether the marginal weight loss from the drug was worth the risk.
Sales sank in late 2009 after Abbott submitted early results of the trial to the FDA. In January, the agency called for a new warning advising against using Meridia for patients with heart problems and European sales were halted.
Earlier this month, more results from Scout showed Meridia increased the risk of heart attack or stroke in patients with preexisting heart disease, diabetes, or both.
Some panelists who backed restrictions short of a ban said they still saw hope for some overweight patients. "I think there is benefit in some people, but I think it's a very limited, low-risk group of people," said panelist John Flack, chief of internal medicine at Wayne State University School of Medicine.
RIVALS IN THE WINGS
Potential rivals are also struggling to get to market. [ID:nN15272713]
Investors had hoped another rival drug developed by Arena Pharmaceuticals Inc <ARNA.O> held promise, but a cautious critique by FDA staff released on Tuesday sent the company's shares down nearly 40 percent. [ID:nN14247519].
On Thursday, FDA advisers will consider whether to recommend approval of Arena's diet pill, lorcaserin.
The medicine is vital to Arena, a small company with no other approved drugs. FDA staff said Arena's drug met agency criteria for effectiveness "by a slim margin."
But they also raised safety concerns, including cancerous tumors in lab rats given high doses. The drug would be marketed by Japan's Eisai Co Ltd <4523.T> if approved. Although cancer rates were not higher in people, analysts worry that Arena may have a tough time overcoming such hurdles.
In July, a separate U.S. panel of outside advisers rejected Vivus Inc's <VVUS.O> diet pill due to concerns about side effects such as depression and potential birth defects.
Shares of Arena ended down more than 9 percent on Wednesday at $3.74, while Vivus closed up about 6 percent to $6.35. Shares of Orexigen Therapeutics Inc <OREX.O>, which faces an FDA panel in December, closed up more than 4 percent at $4.90. (Editing by Ted Kerr, Phil Berlowitz)
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