Seems inconceivable
Maybe we are getting a little snarky but after covering this wacky world of ours for more than 20 years we still cannot believe the things companies do. Yesterday we noted that Lilly (NYSE: LLY) seems somewhat clueless as to the devasting impact Amedlog will have on sales of Humalog, a $3 billion product. But then again Sanofi (NYSE: SNY) was also clueless before Basaglar hit the market. The question that circles around in our mind is why? How can these people not see or grasp the realities of the market?
We keep asking why Lilly wants to be in the insulin pump business. And why they are doing so the way they are doing it starting from ground zero rather than buying an established player. We wonder why Sanofi seeing what Basaglar did to Lantus why they weren’t ready when Amedlog gained approval. Seriously it boggles the mind that these companies cannot seem to grasp simple concepts.
It’s not like there isn’t ample evidence available. Lilly must know from first-hand experience the playbook Sanofi is about to play from as they did it with Basaglar. Being in the insulin business since the beginning of time one would also think that Lilly understood the dynamics of the insulin pump market. Yet it seems either they don’t want to look, or they are just plain stupid.
Lilly is about to spend millions to enter a market where just one company has consistently made money. They are about to see their leading diabetes product, Humalog be hit with a heavy ax. Yet they continue to walk with their head in the clouds seeing only sunshine when a storm looms on the horizon.
This blindness, this unwillingness to see things clearly is not limited to Lilly and Sanofi. No unfortunately its common throughout our wacky world. Listen we can understand why most analysts see things with only rose-colored glasses, but we cannot fathom how these companies can be so blind.
We weren’t overly impressed by how Johnson and Johnson (NYSE: JNJ) excited the diabetes device business but at least they had the fortitude to understand that it was time to get out. The decision was the right one it was the execution of that decision that sucked.
Our guess and it’s only a guess is that many of these companies figure they have a magic potion. That they have something so unique or some sort of special talent that they will be immune to the ills that infected others who tried and failed before them. Lilly for example must know that Medtronic (NYSE: MDT) owns the insulin pump space and that everyone who has attempted to dethrone them has failed. They must know that Sanofi has nothing to lose and everything to gain by being aggressive with Amedlog.
We can only imagine a discussion between Lilly and payors as the 2019 contracting seasons gets underway. The payors will note that Sanofi has come in with a very aggressive combination of price/rebates for Amedlog but if Lilly can match or beat them they will consider keeping Humalog on their preferred formulary list. When Lilly looks stunned and ask why they would do such a thing the payor will likely respond; “You really should have known this was coming as you did the exact same thing with Basaglar.”
Looking ahead a year or two we can also imagine another conversation only this one between the insulin pump team at Lilly and their CEO Dave Ricks. The team will explain that things aren’t going all that well and they are having a very tough time making inroads with payors. To wit Mr. Ricks will likely say; “How can this be isn’t our system different? Do not payors see this?” To wit the team, if they are honest will respond with, “Sir we tried to tell you when you began this crazy quest that payors don’t care about different and that Medtronic owns the space. That if we were to have any chance at all, and it really wasn’t much of a chance, we had to be really, really cheap.”
This same type of discussion might also happen at Roche who’s about to reenter the insulin pump business with the Solo patch pump.
Now we suspect that some of this what we like to call willful blindness stems from the fact these old school diabetes companies cannot accept how things operate today. They see it but cannot bring themselves to accept it. They long for days long gone when they made stuff for pennies and sold them for dollars. They remember fondly when things like price concessions and rebates were a minor annoyance.
This is why we held out some hope that the many newbies to our wacky world might be different. Being unchained to the past they could do things different. Well our hope is quickly fading as they seem to be falling into the same traps the old guys did. These companies may have a ton of money, but it takes more than money to be successful in our wacky world. Spending money is one thing, spending it wisely is another.
Not to overly hype our upcoming special report but this is exactly what we will reveal, what it takes to be successful in this new environment. Now whether companies have the capacity to understand and then implement our suggestions we have no idea. One thing that’s very common in our wacky world is the it can’t be any good because we didn’t invent it or think of it here syndrome.
We continue to watch the transformation of our wacky world with great fascination. Yet as much as things no longer surprise us as they once did we still cannot believe that these companies continue to look for new ways to overcomplicate simple things and continue to practice willful blindness. We keep ask ourselves can they really be that blind, is it possible they can be that stupid? Unfortunately, the answer is YES.
