Lilly makes big push into devices to protect diabetes sales

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Eli Lilly's headquarters

Eli Lilly has unveiled its device-driven strategy for weathering the competitive and pricing pressures faced by its diabetes unit. The Big Pharma is working on insulin delivery devices that move it onto Medtronic’s turf and has teamed up with Dexcom to add continuous glucose monitoring systems to its arsenal. 

Lilly has quietly worked on an automated, wearable insulin delivery device and smart pen injector at a lab it opened in 2015, The Wall Street Journal reports. The facility in Cambridge, Mass., employs about 40 people with backgrounds far outside of Lilly's traditional core competencies, such as mechanical engineering, material science and industrial design. Lilly has bolstered the capabilities of its team by enlisting the support of an R&D group run by the inventor of the Segway scooter. 

The Big Pharma set up the unit after intuiting that the future of the diabetes market will belong to companies that monitor patients and deliver drugs rather than the businesses that make insulin itself.

“Do we want to be just an insulin provider that just goes into a system, or do we want to be the integrator of the system?” Enrique Conterno, head of Lilly’s diabetes business, told the WSJ. “To me, it’s clear where the business is going.”

As Conterno sees it, failing to diversify beyond insulin and into drug delivery systems would lead to Lilly’s diabetes business becoming “obsolete.” 

The doomsday prediction comes ahead of the arrival of biosimilar competitors to Lilly’s Humalog and follows the toughening of payer negotiating tactics in the U.S. After a period in which diabetes was a cash cow for drugmakers, payers in recent years have demanded deep discounts in exchange for exclusive spots on their formularies.

This has affected all makers of diabetes drugs. Novo Nordisk responded by seeking to lessen its reliance on diabetes with a big R&D push into obesity, NASH and other indications. Lilly has gone the other way, doubling down on diabetes by investing in areas of the market it expects to grow in the coming years.

RELATED: Medtronic’s long-awaited ‘artificial pancreas’ makes U.S. debut

That, like all R&D, is something of a risk, especially because it moves Lilly onto unfamiliar territory colonized by big businesses. Medtronic won FDA approval for an automated insulin delivery device last year and a clutch of other small and large medical technology companies are giving chase.

Lilly’s entrant to the race, at least at the prototype stage, is a “disk about the size of a shoe-polish tin,” the WSJ reports, which contains a three-day supply of insulin that is pumped into the patient as needed. The deal with Dexcom gives Lilly access to continuous glucose monitoring devices that provide data to support this automated delivery process. And the Big Pharma quietly bought Class AP last year for algorithms that decide on the insulin injection regimen. 

The next step is to move the most advanced of the devices into the clinic, something Lilly expects to do by the end of the year. Lilly thinks it will take two to three years to get the first of its devices to market.