Times are changing in the biotech sector. No longer can companies simply sit on their FDA-approved drugs for years at a time, reaping the benefits from a decade or more of research. The world's population is aging, technology is improving, and public demand for more effective medications with fewer side effects is growing.

One such market where investment dollars are pouring in is in type 2 diabetes research. Type 2 diabetes is marked by the body either resisting the effects of insulin or failing to produce enough, which results in excess sugar in the blood stream that can lead to nerve, kidney, and heart damage over time. Data from the Centers for Disease Control and Prevention notes that 26 million people currently have diabetes -- with about 90% to 95% of those cases being type 2 -- so the importance of research in this area is growing.

The hottest class of recent T2D drugs to hit the market is all-oral DPP-4 inhibitors, which work by reducing glucagon and blood glucose levels. Recently, researchers at Global Industry Analysts projected the global DPP-4 market could be worth $10.1 billion by 2017. The most well-known of all DPP-4 drugs was the first to be approved and is still the clear leader among DPP-4 treatments: Merck's (NYSE:MRK) Januvia. Sales of Januvia rose 23% in 2012 to $4.09 billion and single-handedly accounted for 10% of Merck's pharmaceutical sales. But even this trend may not last as is evidenced by some potentially serious complications and risks associated with Januvia, which can include severe allergic reactions, pancreatitis, and kidney problems.

We've come a long way in the T2D market from just injectable insulins, but physicians and patients are demanding more. Although I don't possess a crystal ball (but secretly wish I did), here's a glimpse at what the type 2 diabetes market may look like five years from now and what newly approved drugs and pipeline candidates could be making waves.

SGLT-2 inhibitors
The newest revolutionary trend in type 2 diabetes medications is SGLT-2 inhibitors. This class of drugs works in the kidneys and attempts to inhibit the reabsorption of filtered glucose to allow it to escape through a patient's urine, ultimately improving glycemic balance. What's really unique about SGLT-2 inhibitors is that they come with the added benefit of weight loss, a polar opposite side effect of many existing type 2 diabetes medications.

Forxiga, an SGLT-2 inhibitor developed by AstraZeneca (NASDAQ:AZN) and Bristol-Myers Squibb (NYSE:BMY) was approved for use in the EU in November and could pave the way (at least in the European Union) for new type 2 diabetes treatments. In trials, Forxiga significantly reduced patients' A1C levels. Forxiga didn't find nearly the same luck in the U.S. where the FDA sent the duo of AstraZeneca and Bristol-Myers a complete response letter because of cancer risk concerns associated with the drug.

Johnson & Johnson (NYSE:JNJ) is also developing a very promising SGLT-2 inhibitor, Invokana, at its subsidiary Janssen Pharmaceuticals. Similar to Forxiga, in late-stage trials, Invokana proved statistically more effective than the placebo at reducing A1C levels, while also providing modest weight loss and lower systolic blood pressure. Furthermore, it didn't just put itself against any old placebo -- it left Merck in the dust in a head-to-head trial against blockbuster diabetes drug Januvia.

Glucokinase activators
Glucokinase activators, or GKAs, are a class of type 2 diabetes drugs that would be well-suited for those not producing enough insulin. Glucokinase determines the rate of glucose metabolism and has been shown to function less in those with type 2 diabetes as compared to people without the disease. 

One leading drug currently in mid-stage development is AMG 151, formerly ARRY-403, from Amgen. Amgen is utilizing technology from Array BioPharma's (NASDAQ:ARRY) glucokinase activator program, which it licensed in 2009. In early-stage trials conducted by Array, AMG 151 demonstrated effective control of glucose levels, and, more interestingly, showed even better effects when combined with existing type 2 diabetes medications metformin or Merck's Januvia and reached maximum efficiency very quickly, after just five to seven days of treatment. 

The winds of change
It's abundantly clear that the winds of change are brewing in the diabetes sector. SGLT-2 inhibitors clearly look poised to begin to take some of the market share currently occupied by some two dozen FDA-approved treatments, especially considering that they can work independent of insulin. Other revolutionary treatment options, like GKAs, could become excellent combination therapies that further enhance the effectiveness of existing medications and could, ultimately, give existing companies producing type 2 diabetes medications, like Merck with Januvia, a chance to extend the revenue lifetime of their drug through combinations. What I can say with some certainty is that the type 2 diabetes market in 2018 will look nothing like it does now.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.