Tuesday, January 16, 2007

The Business of Diabetes: Insulin Manufacturer News

Listed below are some fairly recent articles (one from mid-December, the other from earlier last week) about two of the leading players in the North American insulin market, Novo Nordisk and Eli Lilly and Company.

Apparently, Novo Nordisk's Levemir long-acting insulin analog sales are not doing nearly as well as the company forecast. I would venture to guess that the big reason for this is the fact that Levemir was late to enter the market, as Sanofi-Aventis' Lantus analog had already established a market leadership position that made it hard for Levemir to waltz in and gain market share. Meanwhile, the chief financial officer for the company said that the hiring of the larger sales force in the U.S., which was originally unveiled in November, should be completed by the end of the second quarter 2007 but that the full effect on sales wouldn't be seen until the fourth quarter. Of course, at least Novo Nordisk has a long-acting insulin analog, the same cannot be said for rival Lilly. In today's insulin market, Lilly is really a one-trick pony, offering only Humalog but no long-acting analog to address patients other physiological needs. At recent investor presentations, there is also no indication that Lilly even has a long-acting analog in development.

Lilly's insulin business is apparently in far worse shape than management would have us believe (I suggested as much a few weeks ago, see my previous post here for details). Last week, Lilly announced that they were shelving plans for a new insulin factory to be built in Virginia because demand simply was not there. The current demand for Eli Lilly's insulin products can be met at existing sites and a facility being built in Italy, company officials said. According to Scott Canute, Lilly's president of manufacturing operations, Lilly continues to expect growing worldwide demand for its insulin products and insulin delivery devices, but not at levels projected when plans for the Prince William County, Virginia site were put in place in 2003. Other factors impacting this decision are ongoing productivity gains, quality improvements and investments at existing sites currently manufacturing insulin products that allow the company to meet expected demand.

"Our commitment to insulin and to diabetes is unchanged and shouldn't be misinterpreted because of this," said Lilly spokesman Phil Belt. "The best way to describe it is a reallocation of resources."

While that's a nice spin on things, we cannot forget that in December, Lilly executives announced plans to boost the insulin sales force at the company by 40% to sell several new insulin pen products, including slick new Humapen Memoir as well as a long-awaited pen for Symlin. Most Wall Street analysts suspect that the real reason was in response to Novo Nordisk's announced plans to increase its own sales force by 800, bringing the total to somewhere around 1,900 in the U.S., leaving Lilly with little option if it hoped to compete. Lilly management did reiterate the company's committment to the insulin business, but the reason may be because insulin, as well as Zyprexa and Evista collectively account for over half of the company's worldwide sales. Whether the Humapen Memoir is sufficient to save Lilly's insulin franchise remains to be seen. Personally, I would not be shocked if Lilly decided to abandon the insulin business altogether, but we'll have to see on that. The company lost the giant United Healthcare account last year, and Novo and Sanofi are aggressively pushing their complete analog portfolios, something Lilly cannot do. Meanwhile, Lilly's near-term drug pipeline is relatively bare except for prasugrel, an anticlotting agent that analysts think can be a blockbuster. Lilly hopes to file for approval of the drug by the end of the year. Lilly hit two major research roadblocks. Last August, the FDA declined to approve Arxxant, its drug for diabetic retinopathy without further studies, and in December, it had to shut down a brain cancer drug trial when its investigational therapy looked unlikely to meet its primary endpoint.

However, I thought my readers might find the news interesting reading!!

DJ DANISH PRESS: Novo Nordisk Doesn't Reach US Sales Targets
Source: Dow Jones
Date: 12/18/06

12/18 03:37 DJ DANISH PRESS: Novo Nordisk Doesn't Reach US Sales Targets

COPENHAGEN (Dow Jones)--U.S. sales of Novo Nordisk A/S's (NVO) diabetes drug Levemir don't live up to the company's targets, Boersen reported Monday, citing analysts.

Citigroup Inc. (C) analyst Peter Verdult told the newspaper he thinks the market is overvaluing the sales of Levemir by 30% to 40% for 2007 and 2008.

However, Novo Nordisk Executive Vice President and Chief Operating Officer Kaare Schultz told the newspaper: "We were hoping to get 10% of new prescriptions after a year. Now we have more than 6%, so we will be very close."

Levemir was launched in the U.S. in March this year.

Newspaper Web site: http://www.borsen.dk

-Copenhagen Bureau, Dow Jones Newswires; +45-3311-1524

Eli Lilly Halts Insulin Plant Construction
Dow Jones
Date: January 11, 2007

INDIANAPOLIS (AP)--Eli Lilly & Co. (LLY) said Thursday it will halt construction of a Virginia-based insulin plant as part of a shift in the drugmaker's focus toward biotech products.

Lilly said it will stop building the Prince William County, Va., center because production can be handled by existing plants and a center being built in Italy. All 120 employees in Prince William will be given a chance to transfer or will receive severance packages.

The company also will offer exit packages to up to 250 employees at its small molecule, active ingredient plant in Lafayette, Ind. The plant has about 1,000 employees.

Lilly will make significant investments in its facilities in Kinsale, Ireland, and Indianapolis to expand biotech operations to meet the goal of launching one biotech product per year beginning in 2010. Biotech drugs and drug candidates currently make up about 30% of the company's portfolio. The expansions are part of a $1.5 billion investment in biotech at Lilly.

The company said it plans to take about $155 million to $185 million in charges as a result of the shift. The charges will be split between the fourth quarter of 2006 and the first quarter of 2007.

"Lilly is continuing to transform its operations to compete and win in a more challenging business environment," said Scott Canute, Lilly president of manufacturing operations, in a statement. "As a part of these efforts, Lilly is making several changes to its global manufacturing operations to ensure the company has the right capacity in the right places. This requires investing in new growth areas and reducing resources in others."

Lilly shares rose 37 cents to $52.03 in recent trading on the New York Stock Exchange.

(END) Dow Jones Newswires

01-11-07 1100ET


Lili said...

It seems to me that they'd have more success selling Levemir if more people knew about it. I've also heard many reports of people who want it and can't get it - some because their doctors haven't even heard about it.

BetterCell said...

Hi Scott... I have tried both Lantus and Levemir as Basals.
I find that Glargine(Lantus) does have a peak in its action overnight even-though the company says that it does not.
My feeling about Levemir is that even-though it came on the Market late, it might be more of a "better" insulin to use as a Basal because it is effective once opened for 42 days compared to Glargine of 28 days. So if "saving $$" is of a concern, Levemir is better. Also, Novo Nordisk has very good Customer Service.

Scott S said...

Thank you both for your comments. Its true that the way each person responds to a particular insulin is very personal, and you are right about Novo being much better at customer service. I would refer to that as "commitment". I would venture to guess that Lilly will need to add even more salespeople to the insulin business if they hope to retail the market share they now have!

hogboy said...

some things that should be widely known about the difference between levemir and lantus. Lantus long term action is obtained by injection, then crystallization, and slow release from these crystals. rubbing, or at night, rolling around on your injection site, or a hot shower, or other factors at the injection site can change the rate, cause peaks...etc. Levemir is completely different. Levemir molecule binds to fat in skin layers, or fat in the blood. you can rub (I mean up to a point, you don't want to intentionally grind on your injection site) and not affect the release rate of levemir. you can occasionally hit a blood vessel and some levemir goes right into the blood, but it will immediately bind to the fat in the blood. for this reason levemir is more predictable and consistent in it's delivery. Lantus has a low PH, Levemir is neutral. You will experience far less site sting injecting levemir if any at all. lantus is almost guaranteed to sting, being acid. both are great basal insulins, but I feel levemir is better technically, and better in real use. everyone's mileage varies. I am a type 1 and am able to maintain 4.6 HbA1C with pens...levemir 1 time at night, and novolog with carbs. yes I do go low sometimes but I know when that will happen, so I pop a cookie or two. my 2 hour after-meal blood sugar is usually 110-90. sometimes 130. if I am 90 after eating then yes I know I will need a cookie in 1 hour. but that is it. anyhow, I am a competitive cyclist so I don't loaf around, I never cheat on my diet, (never eat snacks or have orange juice or carbs unless I match it with novolog) have occasional brewskis (and these times are when i risk going low really fast, so I always carry glucose tabs if i am cracking a beer) and I guess I am lucky to have stable sugars easy to control. I don't fixate on control, it just happens. But if I got above 5.0 HbA1C I would definitely freak and change something to bring it back. anyhow, levemir rocks the house...it makes lantus seem so retro, even though lantus is still sorta 'new' . anyhow, if you gotta be a type 1, these are great times because of the existence of levemir. a lot of pumpers out there probably would never have gone to the pump if levemir existed when they were diagnosed. BUT, i say all this assuming you who take insulin do everything you are supposed to do. exercise all the time, don't ever cheat on the diet, and not only aim for, but maintain, better than non-diabetic HbA1C. no matter who you are, if you have high A1C, you are just gonna rot as you age, there is no free pass. I do understand everyone's pancreas is in a different state, and may have other digestive problems, or for some, no pancreas at all. for these people I wish you the best of luck with keeping control no matter how you have to do it. but if you are overweight, i have no sympathy. you just don't respect your own body if you aren't doing everything you can. what do i know ? I am type 1 and will die without daily injections. so, given the fact I have to use the tools science provides (insulin and blood meters) I damn well use the best, and do my best.