Is a price war imminent when Sanofi's Lantus patent falls?

Sanofi ($SNY) has had a good long run with Lantus, one of the best-selling drugs in the world at $7.6 billion in 2013 sales. But the diabetes drug's days are numbered, and it faces threats from multiple competitors plotting avenues of attack. Sanofi is not going to just roll over for competitors, so what is its most likely counterattack? Maybe a fire sale for Lantus and diabetes products.

"To combat the various market threats, Sanofi will most likely have to focus on competitive pricing for its products, as the company currently does not have any other innovative products in its pipeline, apart from the Lantus-franchise safeguards, Toujeo and LixiLan," GlobalData Senior Analyst Valentina Gburcik explained in recent report.

Toujeo is Sanofi's experimental longer-acting insulin that it is positioning as a successor to Lantus, which loses patent protection next year. Trials have shown fewer low blood sugar events in patients taking Toujeo than for Lantus. It said Tuesday that the FDA was reviewing the drug. LixiLan is a combo drug of Lantus and the GLP-1 agonist Lyxumia, a type 2 diabetes treatment, from Zealand Pharma. Sanofi has been trying to assure the markets that those drugs will help it maintain much of the revenue that Lantus generates, but they are not a sure-fire bet in that regard.

Sanofi pulled its NDA for Lyxumia in the U.S. last year to await additional results on heart risks, a particular area of concern for the FDA around diabetes drugs. The combo drug is not expected before 2017, GlobalData said. That should allow Novo Nordisk ($NVO) to get well established with its own insulin/GLP-1 combination drug, which "will pave its path to domination beginning in 2015." Meanwhile, Eli Lilly ($LLY) has both a GLP-1 agonist that has been throwing off good results and a long-acting insulin. On top of that, Lilly and Boehringer Ingelheim have gotten a recommendation for approval in the EU for its biosimilar of Lantus, although litigation by Sanofi will hold it off in the U.S. until 2016.

Sanofi has been able to hike prices on Lantus in recent years, but given the building pressure against its and Sanofi's other diabetes drugs, GlobalData thinks the French drugmaker's reps will be given some price discounts to work with once the current threats are near reality. "If we consider the increasing cost pressures in health systems worldwide, this is probably the best strategy that the company can undertake," Gburcik said.

- here's the GlobalData assessment