Eli Lilly has faced no shortage of trouble in diabetes recently, but the company now faces a new threat from rival Sanofi. The latter company won tentative FDA approval for a biosimilar to Lilly’s Humalog, putting billions in insulin sales at risk for the Indianapolis drugmaker.
Sanofi won provisional approval for its biosim Admelog on Sept. 1, according to an FDA letter. Also a top player in diabetes, the French drugmaker now has 45 days to notify Lilly of the news, Bernstein analyst Tim Anderson wrote in a note to clients.
Humalog was Eli Lilly’s top seller last year, bringing in $2.76 billion around the world; what the drugmaker does in response to the Sanofi approval could change the potential launch timeline for the biosim, Anderson continued.
Humalog itself is out of patent protections, but Lilly could win up to 2.5 years of additional exclusivity if it chooses to sue for infringement on its remaining patent covering the KwikPen injection device, the analyst noted. The risk, however, is that it could run into trouble for filing a frivolous lawsuit. The risk if it doesn't is that Sanofi might launch much sooner. Alternatively, the parties could settle on a “mutually agreeable” launch date, Anderson wrote.
That patent issue aside, on Thursday, Lilly announced a significant round of job cuts—3,500—as it looks to save $500 million in annual expenses. The drugmaker will take a $1.2 billion hit to pay for site closures plus severance and retirement expenses. The cuts amount to more than 8% of the company’s global workforce.
Marking new CEO David Ricks’ first major overhaul of the company, Thursday’s round of cuts come as Lilly struggles in diabetes due to increasing pressure from payers. In recent years, its ability to realize price increases has suffered from tough negotiations as payers pit rival diabetes drugmakers against each other.
On the patent front, the drugmaker is dealing with more than just the Humalog threat. Lilly is also losing protection on Cialis and Effient, drugs that brought in $2.4 billion and $535 million last year, respectively. Analysts expect sales for erectile dysfunction drug Cialis to fall sharply after generics hit, but the drugmaker recently struck a patent deal to keep the drug’s protections until September 2018. Cialis was previously expected to lose protections in November.
To combat those losses, Lilly is working to boost its fortunes with drugs such as new psoriasis entrant Taltz and cancer candidates abemaciclib and ramucirumab.