Coming into clearer focus Sanofi outlines their strategy
This morning Sanofi-Aventis (NYSE:SNY) outlined their longer term strategy and while the company faces many challenges it’s clear that their diabetes franchise will play a major role as they move forward. It’s also becoming increasingly clear that the company is moving full steam ahead with their commitment to developing a complete diabetes management system which will include all the elements a patient needs to manage their diabetes. This system will go beyond including merely the drugs and devices a patient uses but will include some form of patient coaching/disease management. As Diabetic Investor noted earlier today, the future of diabetes management, particularly for insulin using patients, is moving quickly towards interconnected systems that include some form of patient coaching.
It should surprise no one that Lantus®, the world’s number one selling insulin, is the cornerstone which this strategy will be built upon. Interestingly Sanofi is one of the few insulin companies, perhaps the only one, who does not see a threat from generic insulin’s. However, they do recognize that Lantus will have competition in the future, although Diabetic Investor believes the company is just a little paranoid and overly obsessed with their main competitor Novo Nordisk (NYSE:NVO). Although Sanofi should not ignore what Novo is doing, the concern held by Diabetic Investor is that they may be underestimating other competitive threats.
Like Novo, Sanofi is also firmly committed to pushing a greater share of their Lantus patients into a pen delivery system and as noted by Diabetic Investor the company is developing a pen that communicates with the patient’s mobile phone or other electronic devices. Based on comments made by the company it would come as no surprise to Diabetic Investor if the company actually phased out syringe delivery of Lantus.
It’s also quite clear that the BGStar and iBGStar will play an integral role and as Diabetic Investor has been stating these products are as much about selling more insulin than they are about selling test strips. The company did note of a study that showed patients lowering their A1C by 10% and increasing their Lantus usage from 40 units per day to 45 units per day when they use the company’s patient dosing assistance tool. This is what makes Sanofi’s entry into the BGM intriguing as they see interconnected devices as the key to driving greater insulin sales.
The one area that is somewhat problematic for the company is the remainder of the diabetes portfolio. Although the company continues to tout Apidra® as a better short-acting insulin, the fact remains it’s not that much different than its competition. The same can said for Lyxumia® their once daily GLP-1. Just as Novo is looking to combine Victoza, their once daily GLP-1 with their long acting insulin, Sanofi is following the same path and combining Lyxumia with Lantus. Finally the company did note they are investigating a new Lantus formulation which Diabetic Investor suspects will try and extend its dosing pattern not unlike what Novo is trying to do with Degludec and DegludecPlus.
Given that other than Lantus their product portfolio is full of me-too products, some of which will come late to market the company’s future growth in diabetes is heavily dependent on a systems based approach to diabetes management. Sanofi is betting that physicians and patients will prefer systems that include everything the patient needs to manage their diabetes, a system that will not just offer the patient additional tools to help them better manage their diabetes but a tool that also keeps the physician in the loop as well. In effect the company like so many others, including Diabetic Investor, believes that in the future outcomes will determine reimbursements rates and that it really doesn’t matter which drugs and/or devices are used to achieve these outcomes. Put another way, in the future it matters less which tools a patient uses to achieve better outcomes as long as they achieve better outcomes. Its results that will matter!
Again as we noted earlier today while this may be the future, the future is still not here and anything can and usually does happen, before these expected events occur. However, Diabetic Investor believes the company at least has the right idea and is headed in the right direction. As with so many other bold strategies, especially one that has never been attempted before, the key comes down to execution. It’s one thing to say you are going to develop a system based approach to diabetes management, it’s quite another to actually do it.
Looking ahead Diabetic Investor continues to believe that the company will continue to build its system via acquisition. As it stands today the company still does not have an insulin pump or a market presence in BGM, both needs which could be easily filled via acquisition. Given that Abbott (NYSE:ABT) recently announced they were exiting the continuous glucose monitoring business, another hole in the Sanofi system, and seems to be positioning their diabetes device unit for sale it would not surprise Diabetic Investor at all to see Sanofi make a play for the unit. Nor would it come as any surprise if the company acquired some selected smaller companies to round out its drug and device portfolio.
Unlike others in this space Sanofi is taking perhaps the most ambitious approach to managing the change coming to diabetes management. A strategy that literally involves every aspect of diabetes management not just which drugs a patient uses or which meter they use. Although advanced technology is central to this strategy it’s not the lone driving force. What makes the Sanofi strategy unique is they correctly see diabetes not just a chronic disease state but a lifestyle that impacts millions of patients each and every day.
Things are getting more interesting by the day and not a moment too soon.
