GSK, which is co-marketing the drug with Germany’s Bayer, pledged to launch Levitra early next month, marking the first time that Viagra has faced a rival product in the US.

Levitra, which was developed by Bayer, is a similar drug to Viagra but is said to have benefits over its rival, such as acting more quickly.

Analysts were unsure whether Levitra’s launch would echo the overnight success of Viagra, which was launched five years ago and has built up global sales of $1.7 billion (£1.1 billion).

Levitra was launched earlier this year in Europe but its sales growth has been relatively modest, partly because it was launched after both Viagra and Eli Lilly’s ED drug Cialis.

Cialis, which is yet to be launched in the US, has impressed analysts by the speed with which it has gained market share in Europe following its launch in February.

In June Cialis accounted for 30 per cent of the German market for ED drugs whereas Viagra took 56 per cent and Levitra 14 per cent.

Nigel Barnes, pharmaceuticals analyst at Merrill Lynch, said: “It is possible that Levitra could do much better in the US than it appears to be doing in Europe because it will be the second rather than third to market.”

Merrill Lynch estimates that the ED market will be worth as much as $3 billion a year by 2007.

Mr Barnes added: “Cialis seems to be the most differentiated of the three drugs, whereas Levitra is more similar to Viagra.”

Cialis’s benefit is that it remains active for more than a day whereas Levitra is active for five hours and Viagra for four hours.

Some analysts believe the market for ED drugs could grow to more than $5 billion a year, particularly if companies are allowed to market the drugs for sexual dysfunction in women.

However, drug companies will need to overcome the argument that they are expecting healthcare providers to fund so-called lifestyle drugs.

GSK and Bayer signed a global co-marketing deal for Levitra two years ago, under an arrangement likely to give them an equal share of profits.

Merrill Lynch forecasts that GSK will receive £270 million in sales of the drug in 2007.

Mr Barnes said: “It’s not insignificant but it won’t electrify GSK’s earnings.”

The US launch of Levitra will intensify a legal action launched by Pfizer, the world’s biggest drugs group, against GSK and Bayer in the US.

Pfizer has filed a suit alleging that the sale of Levitra infringes one of its patents. The case is in its early stages and such litigation is a feature of the pharmaceutical industry.

GSK shares were down 2p at £12.38 yesterday, reflecting a muted response to Levitra’s US approval. Bayer’s shares added 24p in London trading to £13.91.

In New York trading, Pfizer shares closed down 1.7 per cent to $30.74.