Earnings Round Up

Earnings Round Up

This week there was a plethora of earnings calls which were diabetes related – Lilly (NYSE:LLY), Roche, Sanofi (NYSE:SNY), Bristol-Myers Squibb (NYSE:BMY) and AstraZeneca (NYSE:AZN) all reported second quarter results. Perhaps the biggest news to come from all these calls was that Lilly and Roche, both located in Indianapolis site of next week’s American Association of Diabetes Educators (AADE) conference, are beginning to understand that they are no longer major players in the space. Both companies are restructuring their faltering diabetes units in a desperate, perhaps last-ditch attempt to remain somewhat relevant in the space.

It is also becoming clearer with each passing call that Sanofi is having an increasingly difficult time executing their diabetes strategy and still remains heavily dependent on Lantus to drive this franchise. After some initial success, sales of their new glucose monitor the iBGStar have slowed and sales of Apidra, their short-acting insulin continue to disappoint.  The fact is Sanofi blew it when they didn’t buy Amylin (NASDAQ:AMLN) as they have nothing substantive in their pipeline and they flat out cannot execute when it comes to getting their diabetes strategy going.

Neither Bristol nor Astra had much to add at this point as the Amylin deal has not yet closed and quite frankly it will be at least two quarters before we get a better picture of whether or not they too can execute.

If there was one common theme with every call it was how difficult the market has become. As Diabetic Investor anticipated pricing pressure continues to intensify, particularly in Europe.  And it really doesn’t matter whether it’s a diabetes drug or device, payors whether they are governments in Europe or private insurers here in the US, are demanding and getting deeper price concessions.

Looking ahead Diabetic Investor does believe that the Amylin deal is just the beginning of another round of M&A activity in the diabetes sector. Soon we’ll learn who the official winner is as we anticipate that Bayer will announce whether it’s Panasonic or a private equity group that has purchased their diabetes device unit. But these two deals could well pale in comparison to what could be coming as Diabetic Investor is hearing all sorts of rumors and quite frankly no company is immune, no matter how big, from speculation.  Based on what we’re hearing lots of wackiness is coming to the already wacky world of diabetes; where anything can and usually does happen.