Drugmakers led by Novo Nordisk A/S (NOVOB) and Merck & Co. (MRK:US) are increasing sales efforts for their top-selling diabetes drugs to grab as much of the market as possible ahead of a wave of new therapies.
At the start of this year, Novo, the world’s biggest maker of insulin, directed its sales force to boost promotion of the company’s drug Victoza. Soon after, revenue slowed for competing treatments from Merck and Bristol-Myers Squibb Co. (BMY:US), forcing those companies to put more resources behind their medicines and overhaul their strategies.
With a half-dozen new products lined up for approval within two years, the fight to win the growing $22 billion U.S. diabetes market will only intensify, said Michael Leuchten, a Barclays Plc analyst. By expanding sales forces and spending more on educating doctors, the top companies in diabetes are working to more strongly establish brand loyalty.
“It’s going to be a push for market share and somebody’s going to get squeezed,” said Leuchten, who is based in London. While drugs used in the pre-insulin stages of diabetes may work differently, “they’re all competing for the same patients.”
There were 26 million Americans with diabetes in 2011, an increase of 2 million from 2007, according to the U.S. Centers for Disease Control and Prevention. People with diabetes fail to produce insulin or their body doesn’t use the hormone properly to convert blood sugar into energy, leaving blood sugar levels too high without treatment.
Merck’s Januvia, Bristol-Myers’ Onglyza and Eli Lilly & Co. (LLY:US)’s Tradjenta are DPP-4 inhibitors. The drugs cause the pancreas to make more insulin and cut sugar produced by the liver. Victoza and Bristol-Myers’ Bydureon and Byetta are in a class called GLP-1 receptor agonists. The drugs spur the body to make more insulin when blood sugar rises, and can also cause weight loss.
Newer drugs, called SGLT2 inhibitors, cause the kidneys to cut excess blood sugar. New Brunswick, New Jersey-based Johnson & Johnson’s Invokana, approved by the U.S. Food and Drug Administration in March, and Bristol-Myers’ Forxiga belong to this class. Lilly and Boehringer Ingelheim GmbH, AstraZeneca Plc (AZN) and Bristol-Myers, and Merck and Pfizer Inc. (PFE:US) are developing related medicines, now in the final stages of testing.
Last year, Novo increased its U.S. sales force 25 percent to introduce a diabetes product called Tresiba. When that drug was rejected by the FDA in February, the Bagsvaerd, Denmark-based company refocused the sales workers on Victoza, raising its revenue by more than a third to $474 million and cutting into sales of Merck’s Januvia, first-quarter revenue of which fell 4 percent to $884 million from a year earlier.
Merck responded by having more of its sales representatives focus solely on pushing Januvia, the first in a new class of medicines when it entered the market in 2006. The company also boosted spending on doctor education efforts, and last month Whitehouse Station, New Jersey-based Merck signed a co-promotion deal with Avanir Pharmaceuticals Inc. to reach patients in nursing and long-term care homes.
“This is the No. 1 priority for Merck in the U.S. and around the world,” Frank Clyburn, Merck’s president of primary care and women’s health, said in a telephone interview. Januvia is the top drug for the company, the second-biggest U.S. drugmaker, and dominates the class with 73 percent of the market for DPP-4 inhibitors.
Bristol-Myers, which co-promotes its diabetes drugs with London-based AstraZeneca, replaced the head of its U.S. diabetes business, Mark Pavao, a decade-long company veteran, nine months after he had been given control of the unit, according to an online resume. In his place, it hired Richard Daly, a former executive at Takeda Pharmaceutical Co., said Ken Dominski, a spokesman. Dominski declined to comment on the company’s strategy.
Onglyza and a related drug, Kombiglyze, generated $202 million in sales for New York-based Bristol-Myers in the first quarter.
“We along with our partner AstraZeneca recognize the need to adequately resource this business and execute better,” Charles Bancroft, Bristol-Myers’ chief financial officer, said on a July conference call.
Merck’s increase in promotional spending hurt Bristol-Myers’ partner, AstraZeneca, as well, said AstraZeneca Chief Executive Officer Pascal Soriot. After Novo started promoting Victoza harder, “the same increase in promotion behind Januvia was applied by Merck,” Soriot said on an Aug. 1 conference call. “Suddenly, the promotional pressure has increased and the market growth is a little bit slower.”
The U.S. market for diabetes is projected to grow as obesity rates increase and more Americans are diagnosed with the disease. Patients typically start on a generic drug such as metformin, then progress to other medications before they eventually may need insulin injections.
“Within the DPP-4s and GLP-1s, we’re going to continue to see a race to arms or at least an increase of effort, because that market is massive and will continue to grow,” Leuchten said.
New medicines will also pressure Januvia. It will be a sales push, though, not because one drug is that much better than another, said Valentina Gburcik, an analyst with market research firm GlobalData who follows the industry.
“The pipeline is filled with me-too drugs, and nothing revolutionary in the next 10 years,” Gburcik said in a telephone interview. “All those me-too drugs will take some share, and it’ll be a marketing battle between the companies.”
Lilly, which hasn’t boosted marketing efforts of its diabetes medicines, says it expects to be able offer a drug in each part of the pre-insulin market, as well as its insulin products.
“We will be the only company that can claim to have a complete, broad offering,” Enrique Conterno, president of Indianapolis-based Lilly’s diabetes unit, said in a telephone interview. “Instead of trying to push a brand, we’re starting the discussion with the physician and the patient and what’s the best solution.”
In the future, a key product will be pills that combine two or more of the different types of drugs. Lilly is developing combination pills of Tradjenta and its experimental compound empagliflozin, Conterno said. Merck made a deal in April to develop a combination of Januvia with Pfizer’s ertugliflozin that may compete with Lilly’s combination product.
“Polypharmacy is the way to go,” said Marshall Gordon, a New York-based analyst with Legg Mason Inc.’s ClearBridge Investments affiliate.
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