Sanofi has news for all of the payers, providers and patients who thought the French drugmaker would discount its newly approved insulin Toujeo to get it established in the market. Think again.
That is the word from Pierre Chancel, who heads Sanofi's ($SNY) diabetes business. "There is no reason to give higher rebates," Chancel told Bloomberg. "Toujeo is an improvement on something that is already great. We don't necessarily need to compare it to Lantus."
Toujeo is Sanofi's successor to Lantus, the top selling insulin in the world and Sanofi's top selling drug. Lantus brought in about $7 billion for last year but it also lost patent protection in February. While Sanofi has got a Lantus biosimilar from Eli Lilly ($LLY) and Boehringer Ingelheim tied in patent litigation for now, it is on the horizon. Novo Nordisk ($NVO) is also awaiting FDA approval for Tresiba, its competitor to Toujeo and Lantus, which could hit the market this year, putting more pressure on sales of Toujeo.
Chancel said Sanofi will start by targeting the product to newly diagnosed diabetics, who have no loyalty to Lantus, as well as those patients for whom Lantus does not do that good a job. There are 29 million people with diabetes in the U.S. and about 3% are newly diagnosed, according to Bloomberg. Toujeo's selling point is that data showed it did a better job than Lantus at preventing low blood sugar episodes at night. European regulators included that claim in the drug's label but for whatever reason, the FDA did not. That makes it harder for Sanofi to use that as a differentiator in the larger market.
Sanford Bernstein analyst Tim Anderson thinks Sanofi is making a mistake if it refuses to discount Toujeo to Lantus to suck up market share before competition gets intense. He pointed out in a note to investors that approach didn't work well for GlaxoSmithKline ($GSK) when it launched Breo, the follow-up to its superblockbuster asthma drug Advair. "Part of Breo's problem was that Glaxo essentially priced it at parity to Advair, meaning it gave no real incentive for U.S. payers to support the product," Anderson wrote. "It has worried us that Sanofi might do the same with Toujeo."
Sanofi is caught between the horns of a pricing dilemma. It has already projected essentially flat sales of its diabetes treatments through 2018. Analysts have estimated sales of Toujeo might reach €124 million ($131 million) this year and grow to €1.2 billion ($1.7 billion) by 2020. But that it not enough to make up for the projected loss in sales of Lantus, which is forecast to fall from €6.7 billion to €5.1 billion by 2015. Any additional discounts Sanofi makes will widen that revenue gap.
"This is a no-win game," Kepler Cheuvreux analyst Fabian Wenner told Bloomberg. "Everything that Toujeo will garner will be cannibalizing Lantus."
- read the Bloomberg story
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