Lilly- A Tough Fight
The news was mixed today when Lilly (NYSE:LLY) released third quarter results. The company acknowledged that their insulin franchise after recovering somewhat in the second quarter fell back slightly this quarter. They also announced that the KwikPen™, their new pre-filled insulin pen which was approved by the FDA in September will be launched in early 2008. The KwikPen™ will be the third new insulin pen launched by Lilly and is further evidence that delivery systems are becoming as important as efficacy.
Currently there are three short-acting insulin analogues available Humalog® from Lilly, NovoLog® from Novo Nordisk (NYSE:NVO) and Apidra® from Sanofi-Aventis (NYSE:SNY). While there are some minor differences between how all three perform, the three are basically interchangeable. Try as they might Lilly, Novo and Sanofi cannot use study data to conclusively prove their short-acting insulin is better than their competition. This is the reason why delivery devices have become so important.
Both Lilly and Sanofi have been chasing Novo, widely regarded as having the best insulin pens, by upgrading their insulin pens. While this is a positive development for patients it creates another conundrum for Lilly and Sanofi; proving their pens are better than Novo’s. This is difficult, if not impossible. Just as all three companies are trying to prove they have a better insulin they are also trying to prove they have a better insulin pen.
It’s no accident that all three have aggressively increased the number of sales reps selling insulin. Each company understands that when you have a product that is basically the same as your competition two things really matter; boots on the ground and price. Rather than risk an all out price war all three have chosen to fight it out at the physicians’ office.
Lilly also has another fight on their hands with Byetta and its sister product Byetta LAR. During today’s call there were several questions on how the label change for Byetta will affect LAR prospects at the FDA. As Diabetic Investor pointed out yesterday everyone is starting to understand that LAR has the potential to be a mega-blockbuster. In an interesting shift in tone from previous calls where the company appeared to be distancing themselves from Byetta, the company stood behind Byetta and Byetta LAR. Investors aren’t the only people who understand just how important LAR is, for Lilly it could mean the difference between being a major player in diabetes or just another company in diabetes.
It will be a tough fight but in the end Diabetic Investor sees LAR giving Lilly a powerful punch.