Desperate measures

Desperate measures

Besides undergoing several management changes our wine drinking friends in France are also making some structural changes. Diabetic Investor has learned that sales responsibilities for Toujeo will be transferred to the cardiovascular sales team. According to sources within the company this change was made for two reasons. First management anticipates that LixiLan will soon be approved plus they are unsure what will happen with the Praluent lawsuit.

Now how this move will help is anyone’s guess. The fact is Toujeo is not the product Sanofi (NYSE: SNY) thought it would be. Designed as a replacement for Lantus, neither payors or physicians, have been buying what Sanofi is selling. From the beginning Sanofi touted Toujeo as a better version of Lantus banking heavily on the fact that patients using the drug experienced fewer hypoglycemic events. While this is true this benefit wasn’t overly compelling as from a glycemic control perspective the two drugs are equal.

Simply put as we stated from the beginning Toujeo was just incrementally better than Lantus and therefore not worthy of favorable formulary position or premium reimbursement. Which is exactly how payors viewed Toujeo forcing Sanofi to heavily discount the drug just to get it on formulary. The drug may have had a built in customer base, existing Lantus patients, but again as we noted previously physicians are loath to switch a patient from a drug that works and Lantus works just fine.

It also didn’t help matters that Novo Nordisk (NYSE: NVO) is playing hardball with Tresiba and Levemir. Nor did it help that payors knew Basaglar, Lilly’s (NYSE: LLY) biosimilar version of Lantus would be available soon. Simply put the long-acting insulin space has become a commodity market where price not performance matters.

The sad reality is Sanofi seriously miscalculated not just how Toujeo would be received but also the potential for LixiLan. We hate to be repetitive but Novo has Xultophy, their long-acting/GLP-1 combo coming plus Novo knows what they are doing and Sanofi doesn’t. Given that aggressive stance Novo has taken to protect their insulin franchise we suspect they will be equally aggressive getting Xultophy established in the marketplace. Given that LixiLan is no better than Xultophy Sanofi is basically in the same position as they were with Toujeo, either heavily discount the product or risk having Novo kick their butts- again.

Seriously there are times when we wish we were making this stuff up, that no company could so badly manage a franchise. Yet this is pure Sanofi, a company who has the reverse Midas touch when it comes to anything diabetes related. The reality is the stars aligned for Lantus and even Sanofi couldn’t screw that one up. The fact is when the Sanofi diabetes eulogy is written they will go down as a one hit wonder. It was a great ride while it lasted but even great athletes eventually retire and are replaced.

The real question now becomes how long does the company maintain this charade that they are actually a serious player in diabetes. Novo and Lilly are the clear leaders and even AstraZeneca (NYSE: AZN) who has a host of their own problems, is in a better position than Sanofi. If they follow standard operating procedure the company will over-hype their pipeline of me-too copycat late to market products. They will say now that they have “right-sized” the diabetes franchise they can survive until these new products become available.  This is like a baseball manager watching his pitcher walk the bases loaded in the bottom of the ninth of a tied game, go to 3-0 on the next batter and then thinking “Hey maybe I should get someone warmed up in the bullpen.”

As much as we would like to think there are other options available to the company the fact is they had their chance and they blew it – BIG TIME. When Lantus was riding high they had the opportunity to build a major diabetes franchise and for a time it looked as they might. Yet in classic Sanofi tradition they couldn’t execute, they couldn’t build on the huge success of Lantus. Not one executive was held accountable until the ship had already struck the iceberg.

The reality is they can behead all the executives they want, they can “right-size” the franchise and talk about their weak pipeline until they are blue in the face. But those pesky facts keep coming up which clearly show its time for Sanofi to leave this wacky world. That better to sell while they can and before it’s too late. Will they? Who knows as given the way management thinks this would be seen as admitting that when it comes to diabetes they couldn’t hit water if they fell out of an ocean liner.

We have this feeling that Sanofi will make another classic mistake, failing to acknowledge the obvious while overestimating their capabilities. Hubris is something Sanofi management has in abundance.