Take a look into the future

Take a look into the future

Right now the worst job in diabetes has to be a sales rep for a glucose monitoring company. As the BGM market continues to deal with the impact and fallout from competitive bidding, sales reps are feeling the heat. These reps, those that are still working anyway, know their days are numbered and it’s just a matter of time before BGM companies cut field forces even further and eventually eliminate all but a handful of reps. The harsh reality is with margins shrinking companies can no longer afford an army of sales reps and quite frankly can easily replace them using technology.

While BGM reps are the first to fell this pain, don’t be surprised when this trend spreads to insulin pump reps and then too drug reps. Sales reps at Novo Nordisk (NYSE:NVO), Lilly (NYSE:LLY) and Sanofi (NYSE:SNY) should be particularly worried as the insulin market is following the same path the BGM market did years ago and will soon become a full blown commodity market where price not performance will determine market share. With fewer and fewer new products to sell, thanks to shrinking pipelines and an overly conservative FDA, these companies will begin cutting costs just as BGM did when their margins began to shrink. Like it or not the fastest and easiest area to begin cutting costs is sales and marketing.

Although Diabetic Investor has no direct knowledge that these companies are already planning massive layoffs, it wouldn’t come as a shock if plans are in the works. All the insulin companies know that generic insulin is coming which will just accelerate the process. As we have noted before it really doesn’t matter whether generic comes directly on the heels of a patent expiration, nor will it matter that the cost of a generic will only be 30% to 40% lower than the branded version. If the branded companies, who’ve invested millions in building manufacturing capacity and brand awareness, want to protect their investment they will have no choice but to capitulate to the demands of payors for lower prices. This is exactly what happened with BGM and will happen to insulin very soon.

About the only reps who aren’t worried these days either sell GLP-1’s or work for Merck (NYSE:MRK). The Januvia juggernaut will continue to roll as the franchise still has years to run before facing the patent cliff, same goes for the current crop of GLP-1’s. The bigger issue for both Januvia and GLP-1’s is whether the FDA comes to their senses and stops their witch hunt. Unfortunately Diabetic Investor isn’t all that optimistic that even if the FDA clears these drugs severe damage has already been inflicted. Just as the Avandia controversy came down to which set of numbers someone believed should be included in the dreaded meta-analysis, this controversy could well come down to genetically altered lab rats of all things. Honestly there are days when Diabetic Investor wishes that before these zealots start shooting their mouths off that they would think of the possible repercussions of their tilting at windmills.  The truly sad part here is these zealots could care less about patients and are only doing this to raise their own profiles. Sad but very true.