Fierce Competition in the Diabetes Drug Market

GSK, Eli Lilly and Sanofi fight for already-crowded diabetes market share

Feb 2, 2014 at 10:00AM

Developing new treatments for diabetes has emerged as an area of focus for biotechs. GLP-1 agonists in particular are now a major space for research and development among the biggest players in the space. Diabetes is a chronic disease of insulin resistance and/or inability to produce insulin, a hormone essential to metabolism. With over 347 million people in the world afflicted with diabetes type 2 (according to the World Health Organization), drugs in this space have the potential to reach blockbuster status, and companies are consequently clamoring for market share. In particular, GLP-1 (glucagon-like peptide-1) agonists mimic an endogenous incretin hormone that spurs the body to produce more of its own insulin; these agents hold the distinct advantage of being either once-a-day or weekly dosing. 

The field is becoming more crowded, with Novo Nordisk's blockbuster Victoza, Bristol-Myers Squibb and AstraZeneca's Byetta and Bydureon, and Sanofi's (NYSE:SNY) once-daily Lyxumia.

In the pipeline
Of developing therapeutics, GlaxoSmithKline (NYSE:GSK) recently gained approval from the Committee for Medicinal Products for Human Use (CHMP) for its agent albiglutide (Eperzan), which is a recommendation that should help when the Euopean Medicines Agency (EMA) decides on approval.  For GSK, the CHMP decision is certainly a positive move forward for albiglutide's approval by the EMA later this quarter. In the U.S., the FDA delayed approval from fall of 2013 to April 15, 2014, allowing an extra 8 months for competitors to edge in. Nonetheless, approval by the FDA is largely expected. Among current competitors for GLP-1 agonist development, Eli Lilly's (NYSE:LLY) dulaglutide has been seen as the front-runner for some time, proving efficacy over the standard treatment of metformin.

If Eli Lilly is to gain approval for dulaglutide as expected this year, the timing could not be better. The pharmaceutical recently lost exclusivity for Cymbalta and is losing it for Evista this year. In diabetes, the company is best known for Humalog, with over $1 billion in annual sales, and has not only dulaglutide in the pipeline but also empagliflozin.

For GLP-1 agonists, GSK's albiglutide is certainly in the running as well, but suffers from studies showing more gastrointestinal side effects with the drug as well as less efficacy than both Takeda's Actos and Novo's Victoza in comparison studies. Additionally, its projected sales in the range of $400 million far lag the billion-dollar estimates for Eli Lilly's dulaglutide.

Sanofi, maker of diabetes blockbuster Lantus, has its agent lixisenatide already approved in Europe as Lyxumia. However, Sanofi management announced last fall that they were awaiting complete data from Phase III studies before filing for FDA approval in the U.S., putting their new drug application to 2015, well behind both Eli Lilly's and GSK's projected 2014 dates.

Lagging as it may be in the GLP-1 space, Sanofi is a diabetes giant with its insulin formulation Lantus, the top selling insulin brand accounting for $6.7 billion in annual sales. Even without a lixisenatide approval this year, Sanofi's pipeline is still strong with 18 products and higher-than-average investment in R&D.

Bottom line
The development of new drugs that can more effectively treat type 2 diabetes is certainly an emerging trend in the pharmaceutical industry. However, the fact remains that none of these approvals would be the first drug of its class, and existing therapies are already marketed both in the US and Europe. While developers are racing time for approval, the fact remains that the initial excitement and surge for this class is decreasing, and there is no unique advantage to being the next approved GLP-1 agonist.

That being said, this is a very large market and sales estimates are mostly moderate for these drugs still in the pipeline. In absolute numbers, they are not sure blockbusters, but approvals will still be welcome for investor confidence.

For GSK, more influential will not be the impending drug approvals but the fourth quarter and full year earnings reports to be released February 5. The company responsible for NicoDerm and Advair certainly has had significant presence in diabetes with Avandia, although the drug only recently had its FDA restrictions lifted last November with concerns of heart risk. News of EU approval of albiglutide would help matters with GSK, but probably not enough to detract from the negative PR GSK has been battling over charges of fraudulent behavior in China and the 2016 expiry of its asthma blockbuster Advair. Even without albiglutide, however, GSK's pipeline is still very strong, with 14 potential products in late stage development.

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