Drugmakers line up for tsunami of diabetes

While healthcare professionals foresee in the aging, fattening population a tsunami of diabetes patients over the next decade, analysts see a flood of money for the drug companies with the right medications.

The statistics Jefferies analyst Jeffrey Holford recently shared with clients tell the story. He says the best-selling diabetes drugs and markets will have "sustainable high-single-digit growth," reaching about $54 billion annually by 2020 as the population in the West gets older and fatter and as healthcare reform in the U.S. gets more of them access to new and better drugs, Fox Business reports. Jerzy Gruhn, who heads Novo Nordisk's ($NVO) U.S. operations, told the service that some forecasts see the number of people with diabetes doubling by 2025 to up to 55 million. Much of that is Type 2 diabetes but recent reports have said that between 2001 and 2009 the rate of young people diagnosed with Type 1 diabetes increased 23%.

The recent American Diabetes Association meeting was an indication of how many players are jockeying for position in the market. Among others, research showing certain benefits was released by Novo, Sanofi ($SNY), Eli Lilly ($LLY), Merck ($MRK), Amylin ($AMLN), GlaxoSmithKline ($GSK) and Johnson & Johnson ($JNJ). Novo released data that it said showed that its experimental ultra-long-acting insulin drug degludec outperformed Sanofi's Lantus, while Sanofi said Lantus, its best-selling drug with revenue of $4.9 billion, beat Merck's Januvia. Novo, which has about 80% of its portfolio in diabetes medication, reported that its blockbuster once-daily drug Victoza bested Januvia and Amylin's Byetta.

"Novo and Amylin are really duking it out in this market," Lauren Migliore, a Morningstar analyst says. "The diabetes market is very large and lucrative … it's an area of focus for a lot of firms." Holford predicts that Novo will remain the top diabetes drug player but sees Eli Lilly taking the No. 2 spot from Sanofi by 2017.

While the future of the healthcare reform act is in question, some insurers have said they will keep some of the provisions, suggesting that there will be more money for testing and treating patients.

Novo is preparing for the potential market and has announced that it is expanding its sales organization in the U.S. by 500, Fox Business reports. It also is building a new R&D center in Seattle, and with a research and development budget of $1.5 billion a year is expected to pump out more diabetes treatments. Novo says it sees the biggest challenge coming from the millions of Americans who have or will develop Type 2 diabetes and have yet to be diagnosed.

- read the Fox Business story