It was only a matter of time
This morning Lilly (NYSE:LLY) announced they will be establishing a new drug delivery and device innovation center in Cambridge, Massachusetts. According to a company issued press release;
“The Lilly Cambridge Innovation Center complements a deliberate push by the company to be an industry leader in providing convenient, reliable drug delivery and device innovation,” Lechleiter said. “Locating in Cambridge is an important strategic move for achieving this goal, as it provides us access to a concentration of high-caliber academic institutions, cutting-edge life science and technology companies, and some of the world’s leading talent.”
Jan Lundberg, Ph.D., executive vice president of science and technology and president of Lilly Research Laboratories added – “New drug delivery and device innovation is critically important to Lilly’s growing portfolio of potential medicines, particularly in our focus areas of diabetes, neurodegeneration, immunology and pain. The best therapies of the future will marry breakthrough scientific discovery with customer-friendly devices. That’s what will make life better for people who need our medicines and give Lilly a true competitive edge.”
This move into devices is hardly a surprise given how the diabetes drug market is evolving. A move we suspect that will go beyond hardware and incorporate mobile apps as well. As we noted many times interconnected diabetes management (IDM) has the potential to improve patient adherence to their prescribed therapy regimen. Simply put Lilly knows that they can sell more drugs when the patient has not just a patient friendly delivery device but also apps that help them more effectively manage their diabetes.
This is especially true given the many me-too diabetes drugs physicians can prescribe for their patients. Looking into the future when outcomes based reimbursement becomes a reality physicians will be looking for diabetes management systems. Systems which bring together drugs, delivery devices and apps.
Lilly’s main rival in diabetes, Novo Nordisk (NYSE:NVO) is well known for producing some of the best delivery devices. Devices which have helped Novo gain the upper hand in the expanding market for injectable therapies. Besides insulin, GLP-1 another injectable therapy which is gaining share, is also delivered via injection. In this expanding market Lilly has learned from past mistakes made when Byetta first came on the market. Looking over the 3 once-weekly GLP-1’s now on the market Diabetic Investor gives Lilly’s Trulicity an edge based solely on its superior delivery device.
Diabetic Investor also sees the potential for Lilly to partner with one or more of the many newcomers to glucose monitoring. These systems which provide for two way communication between the glucose monitor and the patient can help patients more effectively dose insulin.
The one thing we don’t see is Lilly entering the BGM market via acquisition. Like everyone else Lilly knows this market is changing and given the many newcomers anxious for partnership opportunities there is little reason to own a meter of their own. Should it turn out a partnership yields positive results they can always acquire the partner at a later date.
The bottom line here is this move is just further confirmation that IDM will one day become the standard or care. That diabetes management systems will also become a reality. It’s taken longer than we expected for this to happen but the fact that a company like Lilly is jumping on the bandwagon is another positive step forward. It is no longer a question of if IDM will get here but when it becomes the standard of care. The die is cast it’s just a matter of time.