Sanofi, Verily eye diabetes jump-start with $500M venture beyond the pill

Sanofi sign

Diabetes powerhouse Sanofi and Verily, its tech partner, are plowing close to $500 million into a joint venture that will take their digital disease-management research into the real world.

The French drugmaker teamed up with Verily--formerly Google Life Sciences--last year to develop ways to marry the tech giant’s digital expertise with Sanofi’s longtime diabetes research and suite of treatments. It’s part of Sanofi’s bid to move “beyond the pill”--and a potential route toward revitalizing its troubled diabetes franchise.

Sanofi will contribute $248 million to the new venture, dubbed Onduo, while Verily will provide "an equivalent capital contribution," the drugmaker said in an email. "Onduo’s current financing strongly positions the company to execute on our near-term and long-term goals," Sanofi said.

Based in Cambridge, MA’s hotbed of drug R&D, the new company will start out by testing its digital-plus-drug approach with two healthcare systems, to gather intel on how doctors and patients use it and how well it works.

Sanofi depends heavily on diabetes drug sales: Its basal insulin Lantus is the company's No. 1 drug, with $7 billion in 2015 sales--but with biosimilar competition on the way from Eli Lily and Boehringer Ingelheim, and next-gen rivals from Lilly and Novo Nordisk, it won't continue pumping out so much cash. The company has said it expects a recent decline in diabetes sales to continue through 2018 as pricing pressure and new competition erode sales in the U.S., its biggest market. 

The French drugmaker sees digital offerings as a way to electrify sales. For years, Big Pharma has been talking about using services and technology to amp up the effectiveness of drug treatment. Diabetes is one prime target, because the disease requires patients to constantly monitor their blood sugar and make drug dosing decisions based on those numbers. Lifestyle changes--such as diet and exercise--are also important to successful diabetes management, and those changes are difficult to make in the first place, and even more difficult to stick to over the long haul.

Plus, diabetes has long-term health consequences that can be expensive to treat--kidney disease, slow-healing wounds, and, of course, cardiovascular problems. The idea is that pharma companies can augment their drug treatments with digital tech to make them more effective--and, perhaps with outcomes-based contracts, persuade payers to favor their meds.

Integrating “multiple interventions, such as data-driven patient support and devices in addition to treatment, can help improve outcomes,” Sanofi EVP Peter Guenter said in a statement.

Sanofi has experience with outcomes-based payer contracts, with deals pegging rebates to the results of its PCSK9 cholesterol-fighter Praluent, and most U.S. payers are looking to adopt the concept, a recent study found.

The digital devices and services envisioned by Onduo might also be billed directly, creating new revenue streams altogether. “Eventually anyone who pays for healthcare” would pay for Onduo’s offerings, Joshua Riff, the effort’s newly named CEO, told Endpoints News.

In fact, payers say they’re willing to reimburse for beyond-the-pill offerings, according to research by the health economics consultancy Xenda. They’ll want data on clinical effectiveness, however--and Sanofi, with its experience in running clinical trials, would be well-equipped to do that testing.

Onduo “will adopt a more service-centric approach and support doctors in their efforts to treat their patients more effectively," Guenter said. "In addition to developing innovative therapies for diabetes which will remain a key focus for Sanofi, we see these solutions which combine innovative therapies and services as the future for diabetes care.”

It helps that Riff comes from the payer side of healthcare--specifically Optum, United Health’s pharmacy benefits manager, which also offers disease-management programs. He knows exactly what payers are seeking when it comes to covering digital gadgets and services.

Verily brings its obvious expertise in software, data analytics and devices to the party, and some recent developments in diabetes devices offer some hint at where the two partners might go. For instance, Eli Lilly and partner Companion Medical recently won approval of a Bluetooth-enabled insulin pen that communicates dosing information to a smartphone app, to help patients and their providers monitor treatment with Lilly’s basal insulin Humalog.

Continuous glucose monitoring--in which patients use devices to keep track of blood sugar levels throughout the day, rather than with intermittent finger-sticks--can help inform drug treatment. And device-and-drugmaker partnerships are working to develop closed-loop treatment systems, where insulin doses are administered based on readings from those continuous monitors.

Onduo won’t just be about generating and acting upon data about individual patients, however, as its initial partnerships show. It’s teaming up with Sutter Health in California and Allegheny Health Network in Pennsylvania to test Onduo’s platform. By generating data on an entire system’s patients, Onduo can assess which tactics are working best.

Sanofi isn't the only diabetes company to partner up with a tech giant. Novo Nordisk teamed with IBM Watson late last year in a similar partnership focused on machine-learning and big data to improve diabetes care. One idea is developing a "virtual doctor" that could help patients make treatment decisions between office visits. This beyond-the-pill move came as pricing pressure began to take a toll on Novo's diabetes sales.

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