And so it begins ….

And so it begins ….

This morning Lilly (NYSE:LLY) announced that the European Union has recommended for approval their insulin glargine product. According to a company issued press release; “The Committee for Medicinal Products for Human Use (CHMP) today issued a positive opinion recommending approval for the investigational compound LY2963016, a new insulin glargine product, for the treatment of type 1 and type 2 diabetes. The new insulin glargine product from Eli Lilly and Company (NYSE: LLY) and Boehringer Ingelheim is the first biosimilar insulin recommended for approval in the European Union (EU). “

As everyone knows the US approval for this product is stalled due to the lawsuit filed by Sanofi (NYSE:SNY).  While no one knows the eventual outcome of this legal fight one thing is clear the long-acting insulin market is about to undergo a major transformation.  A change which will force Sanofi to make some major decisions as Lantus, the goose that lays the golden eggs for the company is about to get cooked.

Watching all this with great interest is Novo Nordisk (NYSE:NVO) whose long-acting insulin Tresbia is also stalled at the FDA. Now Novo is not in as bad shape as Sanofi as unlike Sanofi who has nothing besides Lantus, Novo at least has Victoza which is doing quite nicely. Novo also has a much better pipeline than Sanofi, although their most promising new compounds are very early stage and likely won’t hit the market for another 3 to 5 years.

As we have noted previously Sanofi is in serious danger of becoming irrelevant in the diabetes drug space. Their pipeline is weak and without a major acquisition they will face some very serious revenue issues. The real question is does Sanofi have the appetite for a major acquisition. While it’s true they now have an agreement with Medtronic (NYSE:MDT) Diabetic Investor doesn’t see much happening here, certainly nothing that will come remotely close to replacing the revenue that will be lost when Lantus faces generic competition.

Given that AstraZeneca (NYSE:AZN), who desperately needs to add insulin to their diabetes portfolio, is in no mood to be acquired the prospects of Sanofi adding anything of value to their portfolio is bleak. The harsh reality is there just isn’t a company or product around that will help Sanofi, that is unless they become ultra-aggressive and make a run at AstraZeneca.  And just to be clear buying MannKind (NASDAQ:MNKD), something that’s been rumored, won’t fill the bill either. Even if Afrezza is approved it will take years and millions of dollars to become successful.  The simple fact is Afrezza at best is a multi-million dollar product not a multi-billion one.

Granted Lantus is not dead yet and Sanofi still has some time to get their act together. Still all the pieces are falling into place for the competition and it’s just a matter of time before the goose that lays the golden eggs ends up a dead duck.