Well beyond the numbers
Looking over the results released by Lilly (NYSE: LLY) it’s refreshing that there we no surprises. The diabetes franchise continues to march along doing basically what we expected. The newer drugs in the portfolio continue to gain traction while old stalwarts like Humalog hold their own in highly competitive markets. Lilly continues to benefit from having the deepest portfolio of diabetes drugs and their continued commitment to use price as weapon when needed.
The bigger perhaps untold story and not just for Lilly is how they will interplay with all the efforts underway to improve medication adherence. Although we are still years away from these programs becoming commonplace the goal for all these way cool whiz bang cloud enabled toys is to improve medication adherence. This is the reason Apple asked Lilly and other drug companies to stop in at the new headquarters for a nice chat.
Everyone expects Apple to follow their neighbors at Google and make the deep dive into diabetes. Like Google, Apple too wants to target ALL patients with diabetes not just insulin using patients. Like Google, Apple sees this effort as a battle of platforms. Platforms which not only help patients better manage their diabetes but also allows these patients to buy other stuff through the platform. We may have a little fun with the Alexa/Siri thing but this is ultimately what every tech company wants, customers buying more stuff using their platform.
We could see for example Amazon replacing Walgreens and CVS and becoming the preferred provider of the drugs a patient uses to manage their diabetes. Drugs which would be refilled automatically as because all the toys are cloud enabled will know when the patient needs something. Even pills can be refilled this way for as we have noted previously the system using data and sophisticated algorithms can determine when refills are needed.
This is in the new world that all the drug companies will have to play in. This is the reason Merck (NYSE: MRK) has already teamed up with Alexa and why Apple is learning everything they can about the drugs used to treat diabetes. As we have noted before insulin using patients are the low hanging fruit for these coming systems but the real money will be made by getting non-insulin patients medication adherent.
This is the same reason we like the Intarcia micropump and believe this product which won’t need a whiz bang way cool cloud enabled platform to solve the adherence issue has mega-blockbuster potential.
Although it may not seem like it now but this coming transformation of how drugs are sold and brought to the patient will help companies become even more profitable. Drug reps are already becoming a luxury companies can no longer afford and would like to do without. These newer systems will make this become a reality especially for diabetes drugs which are basically commodities now. Yes, we will have the occasional outlier but for the most part these drugs have become commodities already.
We can even envision the day when it’s the platform saying to the patient’s physician that a change in therapy is needed. Again, as we have noted previously the physician’s role will change too.
The fact is and everyone knows this is our healthcare system is highly inefficient and technology will bring about much needed efficiencies. The issue is when will outdated laws and preconceived notions catch up with technology. The real answer is probably never as technology always seems to move faster than the law does. To us it’s no longer a question of if this will happen but when it will happen. Change is coming let’s see whose ready to adapt and who will fall by the wayside.