Throw it at the wall
There are all sorts of strategies being attempted in our wacky world these days. Drug and device companies have plenty of issues to deal with and what used to work isn’t working now. Still as much as companies would like to change old habits die hard. Listen change is never easy even when change, sometimes drastic change is needed.
One company that desperately needs to change is our wine drinking friends in France. Since Lantus has transformed into a dead duck from the goose that lays the golden eggs the company has been struggling to come up with a strategy that will reinvigorate this once surging franchise. Their first attempt Toujeo has fallen well short of expectations which has led to several management changes. The company has gone the traditional slash and burn route to lower costs but when it comes to restarting the growth engine nothing has worked.
Recently the company has embarked on a series of deals and/or collaborations in the hope they will yield fruit. Today they announced yet another one, per a press release;
“Thermalin, Inc., a privately held company with its main laboratories in Cleveland, announced today a worldwide collaboration with Sanofi to discover and develop novel, engineered insulin analogues. The collaboration builds on Thermalin’s pioneering science, which alters the insulin molecule to achieve greater therapeutic performance.
Thermalin also announced the first closing of a tranched, Series A Preferred financing that will raise at least $17.5M to support the advancement of Thermalin’s programs. The round is being led by Sanofi, with participation by JSR･mblVC LifeScience Investment Limited Partnership (a Tokyo-based fund), Green Park & Golf Ventures (a Dallas-based fund), Thermalin’s existing investors, and other undisclosed investors.”
After reading this it dawned on us that when it comes to diabetes Sanofi’s strategy is let’s throw some money around and hope for the best. Or as Momma Kliff used to say; “If you spread around enough manure hopefully something good will grow.”
The problem as we see it is not that there is anything wrong with Thermalin and what they are working on. The problem as we see it is even if successful the payoff is dubious at best. Even with new and better insulin analogues payors will not reward Sanofi with higher reimbursement or favorable formulary position. This is to say not without a healthy combination of discounts and rebates. Discounts and rebates which lower margins and will be meet by the competition.
At some point, you would think the company had learned their lesson with Toujeo and then have that lesson reinforced when Basaglar arrived. Diabetes drugs have become a commodity with price trumping performance. Payors will no longer pay a premium for what are incremental improvements. Payors do not care about outcomes, they do not care about whiz bang or way cool, they care about money and that’s it. Sure, they will talk a good game about helping patients achieve better outcomes but that’s all it is talk.
Now Sanofi is not the only company who needs to change but just can’t break from the past. No, they are just a very good example of what’s wrong with the old guard. A collection of companies who just cannot seem to grasp that drastic change is needed, that the old model does not work anymore and a new vastly differently model is needed. That if they do not get with the program they will get run over and left wondering what the hell just hit them.
As we said when we started change even when it’s necessary is never easy and sometimes change hurts. However, the pain will be much worse if the change doesn’t take place. Without change, real change not cosmetic change these companies will just become hamsters on that wheel to nowhere.
