GlaxoSmithKline moved a step closer to securing approval to sell an over-the-counter version of Roche’s weight-loss drug Xenical in the USA late Friday, after the Food and Drug Administration gave conditional approval for the product.

GSK is hoping to sell an OTC version of Xenical (orlistat) under the Alli brandname, and said the notification from the FDA that its application is ‘approvable’ puts it on track for a launch later this year, once certain questions raised by the agency have been answered. The company did not disclose the conditions that must be met before a green light will be given.

In January, an FDA advisory committee recommended approval of orlistat 60mg capsules as an OTC weight-loss medication, to be used three times daily in combination with a low-fat diet in adults. GSK already co-promotes Roche’s Xenical 120mg as a prescription product alongside Roche in the USA.

If a full approval is granted, Alli would be the first OTC weight-loss product to be approved by the FDA, hoisting it above the legions of largely unproven OTC brands and dietary supplements on the US marketplace.

The market for these products is immense – estimated at over $39 billion in 2004 - and is already saturated with low-fat and low-calorie products such as diet soft drinks, artificial sweeteners and OTC meal replacements and diet pills.

Backed with clinical trial data that shows it can lead to weight loss of 5 to 6 pounds over six months, Alli could quickly become a leading brand with sales of more than $1 billion, according to analysts. But the big unknown in predicting sales is how consumers will cope with the product’s side effects, which include anal leakage and gas, although these are seen less frequently than with the prescription version.

GSK has said it plans to make Alli available at a cost of around $12 to $15 a week, and expects could be used by 5 to 6 million consumers, which would bring in sales of $1.5 billion or more.