The LAR Domino Effect
Although the FDA has yet to issue their formal approval of the long-acting once-a-week version of Byetta, which Diabetic Investor expects later today, the impact of this approval will be felt throughout the diabetes sector. While Byetta LAR is a drug used to treat type 2 diabetes, its impact will go beyond the sales of other drugs and extend to the device market as well. LAR has already impacted the future of the diabetes drug market as drug companies have a host of compounds under development that require less frequent administration. It is not an understatement to say that no matter what happens later today LAR has already changed the competitive landscape of the diabetes market.
Two companies in particular are nervously wondering how LAR could change their prospects; Lantus maker Sanofi-Aventis (NYSE:SNY) and Januvia maker Merck (NYSE:MRK), have billions at stake here. Initially Diabetic Investor expects neither Lantus nor Januvia sales to suffer. The simple reason is physicians are reluctant to switch patients from existing therapy regimens when that treatment regimen is working. When it comes to treating diabetes the majority of physicians follow a treat to failure approach before switching or adding medications. Finally primary care physicians, who treat 80% of the patients with diabetes, will likely wait to see how endocrinologists adopt LAR before moving their patients to the drug.
Blood glucose monitoring companies already suffering from slower growth and pricing pressure will be pushed further into targeting insulin using patients. As Diabetic Investor has previously reported patients on LAR really don’t need to monitor their glucose levels. The real question for BGM companies is what happens when physicians begin switching type 2 patients currently on insulin therapy to LAR, something Diabetic Investor sees happening with greater frequency once LAR is available in a patient friendly pen delivery device. Whether the patient is on Lantus plus orals or an insulin blend physicians will have a relatively easy time switching patients to the very patient once-weekly LAR, the simple fact is the fewer injections the better.
Much has been made recently of the many changes that have already taken place in the BGM world. All the major players have trimmed staff; cut R&D budgets and slashed marketing spend. These moves are logical as these companies understand that market dynamics are unlikely to change and protecting margins is the new mantra over gaining share. As Diabetic Investor has noted previously the sooner these companies switch their marketing efforts to increasing strip usage among their existing customer base the better. The stark reality of the market is that it’s just too expensive to gain share today.
The biggest loser today could well be Novo Nordisk (NYSE:NVO) who must be looking back at how they handled the whole Victoza® approval process. Novo already knows that Sanofi has publicly stated they are gunning for the company and their insulin franchise. They see the potential of GLP-1 and mostly due to their own mistakes have a wounded new product that offers few, if any, advantages over LAR. Just what will a Novo rep tell a physician when they ask why they should prescribe Victoza®, a drug that carries a black-box warning and no patient history, over LAR which offers fewer injections and years of patient history? (As we noted earlier there has been no formal announcement from the FDA on LAR, still Diabetic Investor does not except the drug to come with any black-box warnings, a situation which only make this question more problematic for Novo.)
Well we’re just hours away from what could be a paradigm changing day for the diabetes market, stay tuned!
