DPP-4 Day
This morning both Merck (NYSE:MRK) and
Bristol Myers Squibb (NYSE:BMY) reported third quarter results. It’s appropriate
that Merck went first today as they continue to dominate the DPP-4 market with
another strong quarter for Januvia and Janumet. Listening to the Merck call it’s
obvious the company is taking no chances with the Januvia franchise now that
BMY has brought Onglyza to market.
While the two companies would disagree the
two drugs are basically mirror images of each other. To Diabetic Investor this
fact plus Januvia’s strong presence in the market makes it next to impossible
for BMY to gain share in the market. Still, Merck is making every effort to
fend off any possible inroads by Onglyza.
The strangest aspect of the Merck call was
the lack of questions regarding Januvia and pancreatitis. In fact, there wasn’t
one question asking the company what effect if any, the recent news linking
Januvia with pancreatitis, had on Januvia sales. It seems as though the analyst
community who follows Merck is either unconcerned about these reports or is
ignoring what could be a possible problem for the drug down the road.
The major selling point for Januvia has
never been its powerful profile, as Diabetic Investor has noted several times
before Januvia is a rather lackluster drug. The major selling point has been
the absence of serious adverse events associated with the drug. A point which
Diabetic Investor has also questioned in the past as the drug has already undergone
one label change and now has been associated with pancreatitis. Although
Diabetic Investor does not believe there is a casual relationship between
Januvia and pancreatitis, we remain concerned that more issues could come out
the longer the drug is in the market. Frankly the last thing this space needs
is one more drug that after being on the market turns out to have more issues
than originally anticipated.
That being said one has to wonder how
Onglyza will gain more than a few market share points. As we noted earlier
Januvia and Onglyza are basically the same drug, targeted at the same group of
patients. When Onglyza was initially approved Diabetic Investor speculated that
Bristol would undercut Januvia and sell Onglyza as a cheaper version of
Januvia. Instead Bristol has embarked on a strategy of trying to position as
better than Januvia. Diabetic Investor has no idea how they plan on doing this
as the data just doesn’t support this claim.
As we look towards the future Diabetic
Investor believes it’s just a matter of time before Bristol capitulates and
ends up cutting the price for Onglyza. The fact is Januvia has a huge lead over
Onglyza and Merck is not foolish enough to believe the drugs status is
untouchable. The company knows there are too many examples of drugs once
considered untouchable who lost their edge. To their credit Merck is taking
full advantage of the many lucky breaks Januvia has had since the drug hit the
market.
