According to new Diabetes Atlas figures released by the International Diabetes Federation, 366 million people on the planet now have diabetes. Yikes! Talk about a large market.
And better yet -- for companies that sell treatments, not patients or governments that have to pay $465 billion annually -- the number of people with diabetes continues to grow. People moving into the middle class in developing nations has been a major contributor to the upward trend.
While having lots of people that need drugs is a good thing for companies, there's lots of competition for those patients.
Type 2 diabetics -- a vast majority of the new diabetes patients -- usually start on metformin, a generic drug, progress to brand name oral drugs before eventually taking drugs that have to be injected.
After GlaxoSmithKline's Avandia ran into side-effect problems, the oral branded-drug space has become dominated by Merck's
The established leaders make it extremely hard for newcomers to break in. Two years after Bristol-Myers Squibb
If companies are going to break into the oral medication space, they'll have to find a way to differentiate themselves. Bristol-Myers and AstraZeneca seemed to have found that in dapagliflozin, which works through a different mechanism. But potential side effects could derail the drug.
For injectable drugs, the space is more open. Sure, they're not the first choice for most patients -- few people like to stick themselves with needles -- but diabetes is a progressive disease, and patients eventually need more glucose control than oral medications can provide. Type 2 diabetics eventually progress to insulin such as Sanofi's Lantus, Novo Nordisk's
The sweet spot is between oral medications and insulin, especially if the drug can be injected less frequently than insulin. Amylin Pharmaceuticals
That should be good news for Amylin and Eli Lilly as they wait for the FDA to approve their once-weekly version of Byetta called Bydureon. Alkermes, which contributed the extended-release technology, will also benefit from the launch.
More a matter of "where" than "how much"
While the global incidence of diabetes is increasing substantially, I'm not sure sales will keep the same pace. If much of that growth is coming from increases in developing countries' middle classes, the new patients may not be able to afford the drugs at prices that drugmakers are accustomed to. China has cracked down on ballooning drug costs for its citizens using price caps; expect other countries to follow suit.
Even with that caveat, there's still plenty of growth available. Another study predicted the potential for an additional 8 million cases of diabetes by 2030 in the U.S. alone as the obesity rate potentially climbs to 50%.
Fool contributor Brian Orelli holds no position in any company mentioned. Click here to see his holdings and a short bio. Motley Fool newsletter services have recommended buying shares of GlaxoSmithKline. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.