Just when it looked safe

Just when it looked safe

There are times in this wacky world of diabetes that just when it seems like a company is getting its act together a monkey wrench is thrown into the mix. This was the feeling Diabetic Investor got when we learned that Pfizer (NYSE:PFE) has held informal talks with AstraZeneca (NYSE:AZN) in what could amount to a $100 billion offer for the company. Astra, who released Q1 results this morning, obviously wouldn’t comment on the rumors however Pascal Soriot, Astra’s CEO did note while answering a question today on whether large pharma mergers truly create value noted:

“As far as your last question it would actually be difficult for me to tell you that I do believe that large mergers do not create value, first of all, because I am a pragmatic person and I think this — it’s never really good to have a philosophy that applies to everything.

I think you’ve got to be practical and look at things case by case. And secondly because the Roche Genentech merger that you mention, I led that integration, and I actually believe that it actually worked and created value, so I really think it depends on the companies you merge. It depends on whether you can integrate them. It really is a question of are there really true synergies you can generate, complementarity from a geographic viewpoint from a collaborative viewpoint. Can you bring the two cultures together? Can you operationalize the integration? And so there is never really a simple answer to those questions. It’s really case by case.”

Honestly Diabetic Investor has no clue as to whether or not this deal would ever be consummated, but it would be the ultimate irony as just when it looks like Astra is getting their act together in diabetes, this franchise would go through yet another change in ownership. Looking over first quarter results sales of Bydureon, which have disappointed since the product was launched, appear to be approving and should be helped further when the pen delivery system, which was recently approved by the FDA, hits the market. Yet in a sign that Astra doesn’t have it all together just yet, the company could not give a date or even time frame when the pen delivery system will become available.

Looking over the remainder of the diabetes portfolio, Astra is clearly taking a page out of the Lilly (NYSE:LLY), who also reported results today, playbook by offering a full range of diabetes therapy options.  Really the only option missing is insulin which made one wonder whether Pfizer would be the only company interested in doing a deal with Astra. Yes this is likely to going to sound crazy but again this is the wacky world of diabetes where nothing is out of the realm of possibility, but would not Sanofi (NYSE:SNY) also be interested in Astra. Like Pfizer, Sanofi is facing a major patent expiration with Lantus, their bread and butter diabetes product and to date really has nothing in their diabetes franchise other than Lantus.

Back in the day Sanofi claimed they were going to challenge Novo Nordisk (NYSE:NVO) for global supremacy in the diabetes space. At the time Lilly seemed to be going nowhere in a hurry and Astra wasn’t even in the diabetes space. All of which changed when Lilly went through a nasty divorce with Amylin, who was then acquired by a Bristol Myers Squibb (NYSE:BMS) Astra partnership, only to see Astra buy out Bristol from this partnership. Lilly has now gotten their act together while Novo has experienced a mixed bag of results doing better than expected with Victoza yet having issues major regulatory issues with Tresiba®. Sanofi meanwhile couldn’t do anything right as they desperately searched for a strategy to find a Lantus replacement. Apidra, their short-acting is a failure, their once-daily GLP-1 Lyxumia is another failure and the way cool iBGStar is now a way cool failure.

The harsh reality is if Sanofi wants to remain relevant in diabetes about the only real option they have is to acquire Astra. The company may have been temporarily successful in stopping Lilly from getting a generic version of Lantus to market but longer term the presence of a Lantus generic is inevitable.  Once a generic Lantus comes to market Sanofi, unless they do something and in a hurry, will be a non-factor in the diabetes space.

Yes we know this sounds just a bit off the wall but then again who would have thought that Amylin would go from being partnered with Lilly, bought by BMS/AZN and then AZN buying out BMS.  While all this movement is great for the investment bankers who’ve never meet a fee generating deal they didn’t like, its wreaking havoc with Bydureon which at one time had the potential to become a mega-blockbuster. Honestly try as we might we couldn’t make this stuff up.

So just when it seems like Astra is finally getting their diabetes act together and it appears to be safe to re-enter the water along comes Pfizer, maybe Sanofi, like the man eating shark in Jaws. Now does anyone really need any more reasons why we call this the wacky world of diabetes?