Two’s company, three’s a crowd

Two’s company, three’s a crowd

Yesterday Lilly (NYSE:LLY) became the third player in the long-acting GLP-1 market when the FDA approved Trulicity™. Lilly joins AstraZeneca (NYSE:AZN) and GlaxoSmithKline (NYSE:GSK) as there are now three long-acting once-weekly GLP-1’s to choose from. Looking over the three Lilly just may have the advantage as unlike Bydureon and Tanzeum, Trulicity comes in a patient friendly pen which requires no mixing, measuring or needle attachment.

Given that all three drugs do basically the same thing, the same way and all three come with the same warnings how the drug is administered matters. Diabetic Investor also suspects that Lilly will be ultra-aggressive when it comes to pricing just as Glaxo was when Tanzeum first came to market. Given that back in the day Lilly once owned Bydureon, it’s fair to say they will use their knowledge of the drug to compete against it.

In other GLP-1 news Novo Nordisk (NYSE:NVO) released data for Xultophy®, which is a combination of their once-daily GLP-1 Victoza® with their new long-acting insulin Tresiba®. According to a company issued press release; “In the DUALT I clinical trial, the proportion of people achieving fasting plasma glucose <=7.2 mmol/L at Week 4 and glycated haemoglobin (HbA1c) <7% at Week 8 was greater with Xultophy® (76%; 57%, respectively) than with insulin degludec (62%; 38%) or with liraglutide (62%; 47%). At Weeks 4, 8 and 12 in DUALT I, treatment with Xultophy® also resulted in significant weight loss compared with insulin degludec, which was associated with a small overall weight gain (p<0.0001 at Weeks 4, 8 and 12). Weight loss with Xultophy® was less than that achieved with liraglutide 1.8 mg alone. Results from DUALT II were consistent with DUALT I findings for Xultophy® and insulin degludec.”

These results come on the heels of the FDA panel vote which endorsed Victoza® as a treatment for obesity.

Although it should be obvious a few points need to be made regarding the GLP-1 market. First competition is increasing which given the nature of the beast means pricing pressure. Second, the growing usage of GLP-1’s is a very serious threat to the insulin market. Third, delivery systems matter and could well make the difference which drug a payor favors given all other factors are equal. Fourth, drugs like Xultophy could change the treatment paradigm for Type 2 diabetes as it combines the best attributes of two worlds.

It’s noteworthy that also this week Merck (NYSE:MRK) released data for their extended release once-weekly version of Januvia. Besides facing increasing competition for the current Januvia franchise, Merck is well of aware of the increasing popularity of GLP-1’s and the threat this category is to Januvia. If approved, and based on the data we’ve seen so far we see no reason why it wouldn’t be, a once-weekly version of Januvia could be, excuse the play on words here, the shot in the arm Merck needs.

Getting back to the GLP-1 market we should reiterate that this market, like the rest of the diabetes drug market is dangerously close to becoming a commodity style market where price trumps performance. Looking over the market we see Lilly having the edge not because Trulicity is better than the competition, and in some respects it is. Rather we see Lilly having the edge as they have a more complete portfolio of diabetes drugs. Astra would be the next closest competitor but without any insulin’s in their portfolio payors who are moving more towards single source contracting will favor Lilly.

This places companies like Novo, Glaxo, Merck, Johnson and Johnson (NYSE:JNJ) and Sanofi (NYSE:SNY) in a more difficult position. Of these companies Novo is the best positioned given the depth of their injectable franchise. We also see Merck as a formidable competitor as they will not let their Januvia juggernaut go quietly into the night. JNJ and Sanofi face similar problems as neither has much in the diabetes drug space beyond their respective one-hit wonders. Glaxo now back in diabetes after the Avandia debacle may wish it had stayed out of diabetes as the competition is far greater today than it was back in the day.

The simple fact is whether it’s GLP-1’s, insulin or DPP4’s the diabetes drug space is not for the weak. Payors have gained the upper hand when it comes to pricing and only Lilly offers a comprehensive portfolio which matches payors favoring single source contracting. We wouldn’t won’t call it an all-out war just yet but the combatants are preparing for one.