Novo Nordisk Overtakes Lilly For Leadership in U.S. Insulin Market; Patients Will Likely Benefit

Just prior to Thanksgiving, IMS Health Inc. (a leading global source for pharmaceutical market intelligence) announced that as of September 2005, Novo Nordisk had overtaken Eli Lilly & Co. in as the market leader in the U.S. insulin market based on the most recent data for total insulin sales volume (see http://press.novonordisk-us.com/internal.aspx?rid=325). Novo Nordisk is already the worldwide market leader, and apparently, the Danish company is now starting to flex its global muscle in the U.S. market, too. The Wall Street Journal (see http://online.wsj.com/article/SB113322202486508503.html) just reported that Novo Nordisk is now working to expand its newfound market leadership in the U.S. insulin market. "We have higher aspirations than just the 40% market share" that Novo Nordisk now has in the U.S., said Martin Soeters, the company's senior vice president for North America. This development is really big news, and what's more, its good news for patients with diabetes!

While some people bemoan the fact that an American pharmaceutical company (Eli Lilly & Co.) has lost market share to a company like Denmark's Novo Nordisk, the reality is that this development is long overdue. Lilly has long treated patients with Type 1 diabetes like little more than a cash cow, a market that should be milked for its money, but not really invested in. The theory behind this rationale is that since insulin is a hormone that patients with Type 1 diabetes lack because of autoimmunity, the core market for insulin is completely dependent on external suppliers of insulin, therefore patients will never have an alternative other than to buy exogenous insulin from manufacturers like Lilly if they wish to survive. Patients are relatively price insensitive and are helpless addicts to their product, insulin. As the market leader, Lilly has long been able to dictate what types of insulins patients have the right to buy. Recently, the company dumped its animal-sourced insulin products (known as Iletin). The company claims it is because demand has been declining, but instead of offering an rDNA origin animal insulin, Lilly has just dropped the products, pushing the company's far more expensive synthetic human insulin products (Humulin and the analog Humalog) instead. Patients with allergies to synthetic human insulin must now seek FDA permission to import animal insulins from the UK and elsewhere in the world.

Since the discovery of insulin in the 1922, Indianapolis-based Eli Lilly & Co. had long dominated the market for insulin in North America. According the IMS, as recently as 1995, Lilly commanded 85% of the U.S. market for retail insulin sold, although this figure drops slightly when insulin used for IV drips at hospitals, etc. are factored into the equation). Over the last few years, Novo Nordisk (and to a lesser extent, Sanofi-Aventis) has clearly chipped away at Lilly's dominance. Novo's most recent announcement is that the Danish company now commands 40% of the U.S. insulin market, and if Sanofi-Aventis commands say 10%, that means Lilly's share has fallen to 40% or less! Its unclear whether Lilly has any long-acting insulin analogs in development, but the company is now the only major insulin supplier in the U.S. market who does not have a complete portfolio of both rapid-acting and long-acting insulin analogs, whereas Novo Nordisk and Sanofi-Aventis have their Novolog/Levemir and Apidra/Lantus products, respectively. Both have accomplished this task by cutting deal with managed care providers, something Lilly was slow to adopt as a sales channel, and it has obviously cost them. My health care provider, United Healthcare/Oxford Health Plans recently mailed me a notice that effective January 1, 2006, Lilly's Humulin and Humalog products would be moved from tier 2 to tier 3 on their prescription drug formulary. This means that while tier 3 drugs are still available, they are available at the highest copayment amount allowed, while Novo Nordisk and Sanofi-Aventis insulins cost considerably less, as they are considered tier 2 drugs. Personally, I switched to Novolog about a year ago and although I'm not sure its a better physiological match for me, I will not really be influenced significantly by this announcement anyway since I had little say in the matter, but Lilly is likely to continue losing share since one of the largest healthcare providers in the U.S. has downgraded their products on their prescription formulary.

The news is likely to be a positive for diabetes patients in North America. With growth in insulin products no longer guaranteed to Lilly by a virtual monopoly, the company will be forced to either see sales continue to slide, or innovate with newer, more innovative products. Novo Nordisk has been a better innovator over the years, having invented NPH, and then migrating to rDNA manufacturing at exactly the same time as Lilly did. What's more, its Novolog (known as Novorapid elsewhere in the world) received FDA approval shortly after Lilly's Humalog insulin analog was approved, and Novo Nordisk is the company responsible for inventing insulin pen dosing devices. Although I'm not a huge fan of managed care, I believe that in the case of the insulin market, managed care is forcing competition in a market that Lilly long just assumed would be theirs for the taking. This is one case where free markets may force welcome changes!