Throwing in the towel

Throwing in the towel

Try and imagine what happens when a sales team loses faith in the product they are supposed to be selling. Well that’s exactly what’s happening with the team at Sanofi (NYSE:SNY) that’s assigned to sell Afrezza. Yes it seems these reps are beginning to throw in the towel basically resigning themselves to the fact contrary to what management may believe this is not the blockbuster drug management imagined it was.

Now not every rep feels this way but based on the comments made to Diabetic Investor a fair majority do. The harsh reality is that poor formulary position, the need for additional tests plus physician resistance to Afrezza is taking its toll on morale. Add in the fact these reps see the marketing efforts for Afrezza as a complete joke combined with the sentiment that management just isn’t listening to their concerns has created a toxic environment. Finally it doesn’t help matters any that reps believe it’s just a matter of time before the other shoe drops and layoffs begin.

Anyone who’s been following the Afrezza debate on Twitter knows that the MannKind (NASDAQ:MNKD) zealots have been touting the fact that more reps are being trained to sell not just Toujeo but Afrezza as well. That these additional reps will be able to overcome the issues facing the reps already assigned to sell Afrezza. As if magically they will have better luck.

Yes we know this beginning to sound like a broken record, for those of us who remember what a record is anyway, but the issues facing Afrezza aren’t going away. Even if the MannKind zealots are correct and the direct to consumer ad campaign is spectacular the issues won’t go away. Even if, as the zealots contend, Afrezza is a “better” insulin which produces better patient outcomes these issue won’t go away. Even if Afrezza truly is the greatest thing to happen to diabetes since the discovery of insulin, as the zealots claim it is these issues won’t go away.

Just for grins and giggles let’s assume everything the zealots believe is true, what about the financial issues facing MannKind, will they go away- we think not. Take a look at excellent analysis we found on Seeking Alpha While we don’t know much about the author other than what’s stated on his profile, he does make several compelling points to the financial issues facing not just MannKind but Sanofi too.

As we have reported in the past a major issue facing Afrezza is how expensive it is to manufacture, how these higher costs makes it very difficult for Sanofi to turn a profit on the drug. Profits which the author notes are split 65%/35%.

Add it all up and it’s easy to see why these sales reps are frustrated. They know that while some patients have seen solid results with Afrezza and some physicians are adopting the drug, conventional short-acting insulin works just fine, is cheaper and has better formulary position. They know that Afrezza is superior to Exubera but Exubera’s failure is another obstacle they must overcome. They are coming to the realization that Afrezza is nothing more than a niche product unlikely to ever achieve blockbuster status.

Worst of all they are beginning to realize they can’t make money selling the drug. And let’s be honest here sales reps could care less what they are selling as long as they can make money selling it. Hence with a very difficult sales process and little in it for them personally they have begun to throw in the towel.