Delivery Systems – The Second Battleground

Delivery Systems – The Second Battleground

According to a jointly issued press release Novo Nordisk (NYSE:NVO) and privately held Zosano Pharma, Inc., have entered into an agreement for Novo to uses Zosano micro-needle patch delivery system to deliver Novo’s once-weekly GLP-1 semaglutide. Although unrelated to this just last week Sanofi (NYSE:SNY) sued Lilly (NYSE:LLY) over Lilly’s generic version of Lantus plus the SoloStar insulin delivery system. To Diabetic Investor these two seemingly unrelated events actually say more about the diabetes drug market, injectable therapies in particular, than most realize. It also should send a strong message to AstraZeneca (NYSE:AZN) the new owners of Bydureon, currently the only once-weekly GLP-1 on the market, that the sooner they get the Bydureon pen delivery system on the market the better.

As Diabetic Investor has been stating for months now, the diabetes drug market is quickly transforming itself into a commodity style market where price favors performance. Further evidence of this came this morning when Merck (NYSE:MRK) reported 2013 fourth quarter and full year results which showed that the Januvia juggernaut while still strong is beginning to show signs of slowing. Hardly a surprise given that Januvia’s main competition Onglyza® and Tardjenta® have been using price as their primary weapon to gain formulary status and additional market share.

Given that the pipelines of most diabetes drug companies are filled with me-too, copycat drugs or drugs which are just enhanced versions of existing drugs how these drugs are delivered to a patient can mean the difference between commercial success and failure. This is obviously true in the injectable market where insulin and GLP-1 therapies are being used in even greater numbers. Perhaps the best way to look at this is to use another commodity market as an example- laundry detergent. Now we know there are people who believe that Tide is really better than anything else on the market but we also know that while there may be subtle differences between brands most laundry detergents do the same thing in pretty much the same way and in this respect the market is very similar to the short-acting insulin market.

While all the detergent makers do their best to differentiate their respective offerings based on cleaning ability another key point of difference is delivery systems. First it was powders, next was liquids and now pods – simply put the battle for the consumer’s dollar is not just about how the product works but also how it is delivered.  This is why insulin and GLP-1 delivery systems are truly the second battleground for market share and play just as an important role as how the product performs.  Anyone who doubts this should go back in time and look at how Novo was able to unset Lilly in the US insulin market years ago. A large part of their success was due to their vastly superior insulin delivery systems, something which has become a Novo trademark.

Hopefully the folks at AstraZeneca know this and will do whatever they can to get the Bydureon pen to market as quickly as possible. It won’t be long before they have competition in the long acting GLP-1 space as besides Novo, GlaxoSmithKline (NYSE:GSK) long-acting GLP-1 Eperzanrecently revived a positive from the Committee for Medicinal Products for Human Use (CHMP) of the European Medicines Agency (EMA) and has an April 15th PUDFA date here in the US- and let’s not forget that Lilly also has a long-acting GLP-1 in their pipeline.

The bottom line here is that the diabetes drug market already an extremely competitive market is becoming even more competitive. As prices continue to come under pressure and more drugs become copycats of each other, delivery systems could well be the difference as how payors choses which drug receives the coveted preferred formulary status. Additionally it would be wise to keep an eye on Becton Dickinson (NYSE:BDX) as besides nearly owning the syringe and pen needle market they also own a ton of insulin delivery intellectual property.

Things are certainly heating up in the diabetes drug market and it would be foolish to ignore the implications of delivery systems.