Sanofi Powers Ahead
As Diabetic Investor indicated the deal between Sanofi-Aventis (NYSE:SNY) and AgaMatrix would be the first of many deals made by Sanofi as they attempt to overtake Novo Nordisk (NYSE:NVO) for worldwide leadership in diabetes. Today Sanofi announced a second deal this one with privately held CureDM. According to company issued press release; “CureDM, LLC announced today that an agreement has been signed with Sanofi-Aventis (EURONEXT: SAN and NYSE: SNY) for the exclusive worldwide license of Pancreate™, a novel islet neogenesis agent for the treatment of type 1 and type 2 diabetes.”
The release goes onto to state; “Pancreate™ is a bioactive peptide sequence of a naturally occurring human protein that stimulates the formation of functional insulin producing islets from pancreatic progenitor cells. In both type 1 and type 2 diabetes, a fundamental problem is too few insulin-producing islets to keep up with insulin demand. In addition, islets provide the necessary metabolic control of insulin release that makes the pancreas so uniquely able to keep a consistent glucose level in the blood. Restoring whole islets is paramount to correcting the erratic blood glucose fluctuations associated with diabetes, making Pancreate™ a fundamentally new approach to the treatment of diabetes.”
While Pancreate™ is very early stage this deal, coming right on top of the AgaMatrix deal, shows how serious Sanofi is in achieving their stated goal of overtaking Novo for global dominance in diabetes care. By pursuing both drugs and devices Sanofi could well be the first company to offer diabetes management systems rather than have the patient uses drugs from one company and devices from another.
Although early it’s also looks like Sanofi will follow another diabetes trend where all the devices used in diabetes management will talk to each other, as well as communicating with a centralized database. Diabetic Investor sees the company integrating health coaching into this system as well. Basically the patient would have additional resources provided by Sanofi which would help the patient better manage their diabetes. Sanofi understands that with 80% of all patients being treated by a primary care provider, health coaching helps sells more of the products they make. It’s well known that PCP’s lack the time and infrastructure to properly educate their growing diabetes population. They further understand that educated patients are more compliant with their therapy regimen and diabetes management routines.
The facts of the matter are market forces are the catalyst behind Sanofi’s strategy. For years both drug and device companies really didn’t have to do much heavy lifting to sell their products. Now that market dynamics have changed they understand that it takes more than solid data to sell drugs or devices. Basically they understand what Diabetic Investor has been ranting about the last five years or so, great drugs and devices don’t do a damn bit of good if a patient doesn’t take the drugs or know what to do with the information provided by the devices.
They further understand that technology by itself is not the answer. Simply put Sanofi is marrying technology with human interventions (a health coach) to help the patient better manage their diabetes.
Given the follow the leader nature of diabetes, Novo, Lilly (NYSE:LLY), Merck (NYSE:MRK) and others in the space will likely make moves of their own to keep pace. For their part Novo has sniffed around the device area for several years but has yet to move beyond insulin pens. The InDuo device which combined glucose monitoring with insulin delivery failed miserably however this failure won’t prevent Novo trying again.
Lilly, the third player in the insulin market has publicly stated they have no desire to get into the device arena but may have no choice if they wish to remain a relevant player in the insulin market. Should Sanofi be successful in their efforts Lilly stands to be the biggest loser as they lack a long-acting insulin analogue and are completely dependent on their Humalog® franchise. Unlike Novo which offers a complete line of insulin analogues, Lilly lives and dies with Humalog®. The saving grace for Lilly is their partnership with Amylin (NASDAQ:AMLN) and Bydureon™ which is very close to FDA approval. Diabetic Investor suspects it’s just a matter of time before Lilly finally pulls the trigger and buys Amylin outright as they have become to their success in the diabetes market.
Needless to say things are changing rapidly in the diabetes space with Sanofi leading the way. It is not an overstatement to say that the moves being made by Sanofi will impact the entire spectrum of diabetes drugs and device companies. Should competitors wait too long they very well could be steamrolled by the Sanofi juggernaut. As B.H. Liddell Hart wrote; “The prime condition of national survival has been timely adaptations to changing conditions.”