This Drug Market Is Booming

It's easy to identify shrinking market opportunities for most companies in many industries throughout the world, from air travel to homebuilding, but finding growing markets is far trickier. In 2007, IMS Health (NYSE: RX  ) estimated that the overall global pharmaceutical sector grew a healthy 6.4%. And within that realm, one therapeutic category seems to be expanding significantly faster than most of its peers.

This category of treatments helps the unfortunately burgeoning number of diabetics in the U.S. and worldwide. Earlier this week, the Centers for Disease Control and Prevention (CDC) revealed that in just the past two years, the number of U.S. diabetics grew by a whopping 3 million people (14%), to 24 million patients. According to the CDC, there are another 57 million U.S. patients currently at high risk of sliding into full-blown diabetes as well.

A number of drugmakers are now poised to capitalize on the trend. Pharmaceuticals like Eli Lilly, Novo Nordisk (NYSE: NVO  ) , and Sanofi-Aventis specialize in rapid-acting or long-acting insulin injections for the disease. Some medical device manufacturers such as Medtronic (NYSE: MDT  ) have also developed insulin pumps that can help patients avoid these injections altogether.

The CDC reported that 29% of type 1 and type 2 diabetics currently taking medication in the U.S. used insulin, while more than 60% of diabetics were treated by pills such as Merck's (NYSE: MRK  ) oral pill Januvia, or common genericized compounds like metformin. Many compounds already approved or awaiting approval, including Januvia, Novartis' (NYSE: NVS  ) Galvus, and Bristol-Myers Squibb's Onglyza, are used solely for type 2 diabetics (adult-onset diabetes). But since this form of the disease is posting the most alarming growth, there's still a huge market for these drugs.

There are multiple other new and innovative diabetes drugs in development, from MannKind's (Nasdaq: MNKD  ) Technosphere inhaled insulin to Amylin Pharmaceuticals' (Nasdaq: AMLN  ) Byetta compounds. The market has plenty of room for these products; IMS Health estimated that anti-diabetic compounds generated $24 billion in sales in 2007.

While many drugmakers can give investors exposure to the growing prevalence of diabetes, the best large-cap pure-play anti-diabetes drugmaker is Novo Nordisk, which provides a wide variety of treatments for the disease. As the CDC report this week unfortunately reminded us, the market for its compounds won't be dwindling anytime soon.

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Fool contributor Brian Lawler does not own shares of any company mentioned in this article. MannKind is an active Hidden Gems Pay Dirt pick. Eli Lilly is an active Income Investor pick. The Fool's disclosure policy won't change your glucose levels.


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