A Preview of coming attractions

A Preview of coming attractions

As Momma Kliff used to say the more things change the more they remain the same. We couldn’t help but feel this way while listening to Lilly’s (NYSE: LLY) earnings call this morning. Once again, the diabetes drug space is the domain of Lilly and Novo Nordisk (NYSE: NVO). We were also encouraged by some of the comments made by the company related to the coming of a biosimilar short-acting insulin.

Let’s cover that last point first as the company noted they will NOT sue Sanofi (NYSE: SNY) over their short-acting biosimilar. It seems the company has learned from their Basaglar experience and concluded such a lawsuit just isn’t worth the capital investment. To us this shows the company understands what we’ve been stating all along this is a commodity market where price trumps performance.

This point was also illustrated when they were asked about Novo’s coming long-acting GLP-1 semaglutide. Lilly sees the GLP-1 class growing organically, understands that Trulicity is doing quite nicely and it will be up to Novo to compete. The real threat to Trulicity is not semaglutide but the oral version of this drug. However, until that drug gets here the long-acting GLP-1 class will become a battle for formulary position. A battle Lilly is prepared to fight.

It’s also obvious that the company will not take any section of the market for granted. Now that Novo has a faster acting insulin so too will Lilly. The reality is neither company can afford to ignore what the other does. We still give Lilly the overall advantage due to the depth of their diabetes portfolio. While Novo has solid group of injectable medications they have nothing to compete with Jardiance, which is finally growing as many expected.

Given the growth of GLP-1 usage and the coming oral version of semaglutide from Novo it will be interesting to watch and see if these dynamics change. Yet it seems that Lilly is ready for anything thrown their way. The same goes for the coming of a biosimilar short-acting insulin. Basically, Lilly will press the advantages they have today while preparing for the coming fights that lie ahead.

This is also refreshing as the company is not content to sit back and enjoy the diabetes juggernaut they have reinvigorated. They seem to be taking each threat seriously. Again, a lesson learned from past mistakes.

Frankly the reality is Lilly can fight on multiple fronts while their competition can’t.