What to expect

What to expect

Before we begin today we’d like to take a moment to stand in solidarity with the people of France. Yet again there has been another terrorist attack on French soil and more human suffering has ensued. To all the great people of France our heartfelt condolences you are in our prayers today.

Next week begins the parade of earnings calls with Johnson and Johnson (NYSE: JNJ) kicking things off on Tuesday morning. While we aren’t overly enthusiastic about any of these upcoming calls we are curious about a few things;

When Roche reports on Thursday just how much attention will they give to their diabetes device unit. If past calls are any indication not much but things may be different now that it seems the company is stuck with this unit.

It should be noted that also on Thursday is Dexcom’s (NASDAQ: DXCM) FDA panel meeting, given that Roche reports in the morning and the panel likely won’t be over until late in the afternoon expect multiple updates. We’re putting the early betting line on Dexcom getting a replacement indication at even money.

Another interesting aspect will be when all the drug makers report, particularly the insulin companies Lilly (NYSE: LLY), Novo Nordisk (NYSE: NVO) and Sanofi (NYSE: SNY).  The real question isn’t whether this market is ultra-competitive, it is. The real question is how much are these companies giving away in rebates and/or discounts. Just how aggressive will Novo and Sanofi be in blocking Lilly’s biosimilar version of Lantus from gaining any traction in the market. The drug won’t hit US shores until December but you can bet Novo and Sanofi are laying the groundwork now.

We’re also curious to see how the long acting GLP-1 market is developing. The question here really isn’t whether this market continues to grow but which of three once-weekly versions becomes the leader. By all accounts Bydureon from AstraZeneca (NYSE: AZN) should be well ahead of the other two but Astra hasn’t exactly performed that well, and yes we are being overly kind.

The question for both Tandem (NASDAQ: TNDM) and Insulet (NASDAQ: PODD) can they compete going forward. Insulet is handicapped as they don’t yet have a sensor augmented system, while Tandem is handicapped because they are bleeding cash. Insulet is in the midst of transitioning to become a drug delivery company while Tandem is fighting just to survive.  Right now we put the odds of Tandem making it as independent entity over the next 12 months at less than 30%.

There is no question these next few weeks will give us some clues as to who’s winning and who’s not. When it’s over we suspect Lilly and Novo will remain dominate in the drug space and that JNJ is about the only device company that will survive over the next five years. To us it’s just a matter of time before there is even more consolidation in both the drug and device worlds. These markets have become ultra-competitive and scale has become critical.

Have a great weekend everyone.