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Analysis: Diabetes Drug Sales to Double

Posted on: Tuesday, 18 July 2006, 18:00 CDT

By STEVE MITCHELL

The market for diabetes therapies will more than double to $35 billion in the coming years, with both big pharma and small-cap companies coming out as the winners, according to an analyst report.

Diabetes looks set to be, in the 21st century, what cardiovascular disease was to the latter part of the 20th in terms of providing opportunities for growth, value and volatility for investors in the healthcare sector, Morgan Stanley analyst Duncan Moore stated in the 93-page report.

We predict a drug market (for type 1 and type 2 diabetes) of $35 billion by 2012 up from $17 billion in 2005, Duncan wrote. The period 2007-10 should see diabetes become one if not the fastest-growing categories in the pharmaceutical market.

The reasons for this anticipated growth is that in addition to the increasing number of diabetes patients, the condition is on the cusp of major change in terms of scientists' understanding of the disease and the way it is treated.

As new therapies emerge, the top companies in this field are likely to change. The current leaders include GlaxoSmithKline and Novo Nordisk, but Duncan's analysis projects that future beneficiaries will be principally Merck and, to a lesser extent, Novartis and Bristol Myers.

The smaller cap companies that will become top players include Amylin, Alkermes and OSI.

Duncan anticipates Merck will become the winner based on its DPP IV inhibitor Januvia, followed by Novartis and Bristol Myers Squibb.

Merck spokesman Chris Loder told United Press International the company recently presented positive data on Januvia at the American Diabetes Association meeting earlier this month in Washington.

In that 52-week study, Januvia significantly reduced blood sugar levels in patients with type 2 diabetes who had inadequate control on metformin. The patients also lost weight and had fewer episodes of hypoglycemia compared to patients on glipizide.

Glaxo will lose market share because growth of the DPP IV inhibitors will come at the expense of some of the growth of the TZDs, Duncan stated. But he noted that Glaxo has its own DPP IV inhibitor in phase 2.

However, Glaxo spokesman Rick Koenig told UPI the company is focused on diabetes and has a number of potential treatments in development, including its DPP IV inhibitor denagliptin.

Type 2 diabetes is reaching epidemic proportions so there's a need for lots of options and therapies, Koenig said.

So the company has a fair number of different approaches in development, with the expectation that some of these can provide some significant options, he said.

Glaxo does not have any sales projections yet for any of the compounds, but Koenig said, Everyone recognizes that given the need there's a considerable market.

Glaxo's compounds in development include the PPAR agonist 677954, which is in phase 2, and the PPAR pan agonist 625019, which is in phase 1.

The company also has a beta-3 adrenergic agonist called solabegron in phase 2 and a sodium dependent glucose transport inhibitor 189075 also in phase 2.

In addition, the company's glucagon-like peptide agonist 716155 is in phase 1.

Duncan said he expects Amylin's GLP-1 acting product exenatide to do well in what he says will become a major category. Amylin is developing the drug, which is intended to mimic the effects of the human incretin hormone GLP-1, with Eli Lilly and Alkermes.

If Lilly's Byetta LAR fails in this category, it would open the way for Novo Nordisk and various others, including Ipsen, Zealand and Conjucherm.

Novo Nordisk is likely to suffer overall, however, due to lower growth in the short-acting insulin market.

OSI will do well because it will derive a royalty payment on all U.S. sales of DPP IV inhibitors, Duncan stated.

Source: United Press International

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