End of an era?

End of an era?

It isn’t often when a drug has 75% share and over $6 billion in sales that a company is forced to defend a blockbuster franchise. Yet that’s exactly position Merck (NYSE:MRK) found themselves in when they reported fourth quarter and full year results this morning. The simple fact is while the Januvia franchise continues to dominate the DPP4 market, competition has intensified.

To Diabetic Investor today’s results confirm something we have been stating consistently, namely the diabetes drug market is transforming into a commodity market. Januvia also could be the last major blockbuster drug in the diabetes drug space given how market dynamics have changed since the drug was launched back in 2007. Although the franchise has performed extraordinarily well, lost in this performance are the factors which contributed to this winning streak, factors which are unlikely to be repeated again.

The fact is Januvia was the beneficiary of almost the perfect storm of events which greatly contributed to its incredible growth.  For those with short memories or those new to this wacky world its worth reviewing the circumstances that existed when Januvia came to market. Back when Januvia came to market Avandia and Actos were dominate oral therapies. Yet in stroke of luck Januvia came to market just as the Avandia controversy was starting. In another stroke of luck a competing DPP4 which was supposed to come to the market at the same time as Januvia was delayed at the FDA. More luck came Merck’s way when Amylin and Lilly (NYSE:LLY) basically screwed up the launch of Byetta which also had been recently approved.

So think about this for a minute, basically Januvia came to market when physicians were actively looking for a drug to replace Avandia and Actos, there were no other DPP4’s to choose from and the one drug that could have been serious competition, Byetta, was having a series of issues which left the door wide open for Januvia.  To their credit Merck did not miss the opportunity created and the rest as they say is history.

Fast forward to today and take a look at what’s going on with another new drug Invokana, from Johnson and Johnson (NYSE:JNJ). After a fast start the drug is facing competition which has forced JNJ to resort to discounting the drug, offering co-payment equalization programs and being more aggressive with payors. This for a drug which was approved in late March 2013. So in the space of less than two years Invokana has gone from the being the bell of the ball, to just another drug. This is the new world order of the diabetes drug market and it’s about time everyone get with the program.

Times are a changing in the diabetes drug arena.