The Januvia Juggernaut

The Januvia Juggernaut

This morning Merck (NYSE:MRK) released their fourth quarter and 2012 full year results which for the Januvia franchise were nothing short of amazing. For the fourth quarter sales of Januvia reached $1.1 billion, while sales for Janumet reached $452 million. For the full year Januvia broke the $4 billion barrier while Janumet hit $1.7 billion. Just by way of comparison sales for its nearest competitor Onglyza were $286 million for the quarter and just over $1 billion for the full year.

To Diabetic Investor the success of the Januvia franchise illustrates perfectly the problems facing every company in the type 2 drug market. While a billion in sales is nothing to sneeze at, sales of nearly $6 billion is truly extraordinary. As we noted yesterday about the only way a me-too, copycat drugs like Onglyza can gain any share at all is to use an aggressive pricing model. Yet as the success of Januvia clearly shows even with competitors using an aggressive pricing model gain any reasonable share is very difficult and it should go without saying that for drugs like Tradjenta, the third entry into the DPP4 category, gain share is next to impossible.

The Januvia juggernaut should send a clear message to everyone who’s about to enter the SGLT2 market. As Diabetic Investor has previously reported while this class of drugs offers some intriguing possibilities, it also brings with it some concerns due to its known side effect profile.  Not only will competition be fierce within the category but also from Januvia which has established a huge market presence mainly due to its relatively benign side effect profile. And let’s not forget the growing usage of GLP-1 therapy with type 2 patients.

The success of Januvia should also provide another valuable lesson and provide hope for Bristol Myers Squibb (NYSE:BMY) and AstraZeneca (NYSE:AZN) and their first in class long acting GLP-1 Bydureon. Januvia in a large part owes much of its success to the timing of its launch which occurred just as the Avandia controversy was rearing its ugly head. Mainly due to the Avandia controversy physicians, a conservative bunch to begin with, has become even more reluctant to prescribe new therapies. Rather than embrace a new drug that comes with solid clinical data, physicians are more than ever selecting a small percentage of their patient population to try a new drug. Once comfortable with the results they will then start prescribing the drug to broader percentage of their patient population. Looking back at Januvia’s growth pattern this is exactly what happened as the drug continues to gain a greater share.

Based on everything Diabetic Investor is hearing from the field, Bydureon is following this pattern as well. Physicians are now seeing the results from their test patients and so far, so good. We suspect Bydureon sales will see real growth once the pen delivery system becomes available, likely in the middle of the year. We should caution however that while the reports from the field have been generally positive Bydureon will take longer to reach blockbuster status due to the fact the drug must be injected. Although it’s only injected just once a week, physicians prefer to use orals before moving towards an injectable, even when that injectable is clearly superior to the oral. Simply put Bydureon, based on everything we know so far will get to blockbuster status it just will take a little longer.

Still Merck should be congratulated for the success of Januvia as they truly took advantage of the many breaks Januvia has received. Just by way of comparison Byetta also came to market shortly before the Avandia controversy yet Amylin and their then partner Lilly (NYSE:LLY) failed to capitalize on the situation and made series of mistakes which to this day haunts the drug. Diabetic Investor maintains that had Amylin/Lilly executed Januvia would have never reached its current sales levels, the drug would still have been a blockbuster just not a $6 billion franchise.  One thing is certain Merck is one of the few companies in this space who is not in line for a Wacky Wabbit, as they have shown they value of knowing how to execute.