FDA OKs Sanofi's Toujeo. Will a diabetes drug price war follow?

Sanofi SVP Pascale Witz

Sanofi has received the FDA marketing approval it badly needed for the long-acting basal insulin Toujeo, a product designed to preserve its multibillion-dollar franchise revenue from Lantus. But at least one prominent analyst was quick to question its impact, noting that the label will offer little compelling reason for a switch from the established market blockbuster. And that is likely to set up some early price discounting that will further roil the huge and growing diabetes market for all the key players.

Sanofi ($SNY) didn't mention price in its announcement, but said it would roll out the daily treatment in April, just as new CEO Olivier Brandicourt takes the helm. And some analysts expect it to run into a kickback from key payers in the U.S. market--with profound implications for biopharma.

Sanofi billed Toujeo as a convenient insulin that would provide an advantage over Lantus and its rivals with a lower rate of nocturnal hypoglycemia. But Tim Anderson found no mention of hypoglycemia in the label approved for Toujeo. What it does spell out is non-inferiority to Lantus and some variable trends on blood sugar reduction that don't always fall in Toujeo's favor.

That's likely to get this market moving slowly, forcing Sanofi to offer a 15% price reduction to carve out sales, says the analyst. In Anderson's model, that will move €1.3 billion in 2020 sales while the Lantus market shrinks to €3.6 billion – less than combined consensus forecasts.

The whole setup reminds Anderson of the trouble that GlaxoSmithKline ($GSK) ran into as it rolled out Breo as a franchise substitute for Advair. Without any price discounting up front, the migration of patients from one to the other was very slow, disrupting GSK's marketing plan. Lilly ($LLY), meanwhile, may have lost peglispro with its recent delay over liver toxicity, leaving its biosimilar of Lantus to come into the market and further disrupt pricing.

Novo Nordisk, meanwhile, remains on the sidelines with Tresiba, a possible late entry now that could force an even more painful showdown among the big diabetes drug companies as Novo makes a late stab at market share.

The competition among the diabetes companies underscores a new reality for the industry. As investigators discover new and better ways to treat a disease, competitors are quick to hustle along drug programs for therapies that wind up looking remarkably similar to the rest of the new class--and not such an innovative leap over the old one. That leaves the companies competing over price, instead of product profile. And as many of these Big Pharma companies--like Sanofi and Eli Lilly--remain challenged when it comes to developing innovative in-house blockbusters, shrinking franchise revenue adds further pressure on R&D to perform.

Sanofi may have better luck with Toujeo in Europe. Reuters' Ben Hirschler notes that the pharma giant may get a green light soon, possibly opening the door to making a more assertive pitch on Toujeo's performance. Hirschler pulled aside Sanofi SVP Pascale Witz today and asked her about forecasts that Toujeo may win over only 20% of the patients now on Lantus.

"That's a pessimistic view. We think it's going to be more than that," she said. Just how much more, though, she apparently didn't say.

"Nearly 50 percent of people living with diabetes remain uncontrolled," said John Anderson, past president of the American Diabetes Association, in a statement for Sanofi. "Despite the proven efficacy of insulin, ensuring effective titration and maintenance can be a challenge for both patients and healthcare professionals due to hypoglycemia concerns. Toujeo provides a new option that may help patients manage their diabetes."

- here's the release  
- here's the Reuters story

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