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Lilly suffers another bruise from Novo

March 9, 2011

Novo Nordisk A/S seems to have Eli Lilly and Co.’s number again. The Danish company has been scoring a victory on points in recent years against its erstwhile rival in the diabetes business, Indianapolis-based Lilly.

On March 3, a Lilly-sponsored study of its Bydureon against Novo’s Victoza showed that the latter drug did a slightly better job reducing blood glucose levels in diabetes patients. The news sent shares swooning for the two companies partnering with Lilly on the drug—San Diego-based Amylin Pharmaceuticals Inc. and Massachusetts-based Alkermes Inc.—although Lilly’s stock remained flat.

Bydureon is a once-a-week injection of the same drug that Lilly now sells under the name Byetta, which requires two injections per day. Bydureon has yet to be approved for the U.S. market after the Food and Drug Administration demanded in October another study of its effects on patients’ hearts.

The results of the study, called Duration 6, roiled Lilly’s marketing plans for Bydureon. If Bydureon was as good as Victoza, which requires a daily injection, Lilly figured the once-a-week Bydureon would be far preferable to patients who like to minimize the number of injections.

Now, however, the marketing case is not so clear-cut, which gives physicians and patients more reasons to choose Victoza over Bydureon—even if it does mean more painful pricks of a needle.

"The DURATION study was needed in [Europe] to support premium pricing, reimbursement & access in Europe relative to NVO’s Victoza." wrote Citi pharmaceutical analyst John Boris in a note to investors. He added, "We believe that DURATION-6 could make it more difficult with local US payors to support our 35% premium Bydureon pricing to Victoza. Further, uptake may be slower than we are modeling."

However, Boris noted that Bydureon still has two marketing advantages.

Once Bydureon hits the market, Lilly could do another study to see whether patients adhere to their scheduled doses on the once-weekly Bydureon compared with the once-daily Victoza.

Also, Bydureon appears to have fewer side effects than Victoza. In the recent study, released March 3, half as many Bydureon patients suffered nausea and diarrhea as patients on Victoza. Also, one-third as many Bydureon patients suffered vomiting.

Victoza has been gaining market share at the expense of Lilly’s Byetta since its introduction in early 2010, now claiming about 2.5 percent of the diabetes market to Byetta’s 3.5 percent, according to a Novo slide presentation.

Studies have shown patients having larger reductions in their blood glucose on Victoza than on Byetta.

Byetta, introduced in 2005, was the first diabetes drug known as a GLP, which stands for glucagon-like peptide. It generated sales last year of $710 million.

Lilly had hoped to launch Bydureon this year, but the FDA’s surprise demand of a new trial of the drug set things back until 2012. Analysts had forecast the drug’s sales to top $1 billion a year and possibly approach $2 billion.

Novo also outmaneuvered Lilly in the past decade after France-based Sanofi-Aventis SA introduced a long-acting insulin called Lantus. Novo was able to counter with its own-long-acting insulin, called Levemir, while Lilly has never created its own long-acting insulin.

As a result, Novo maintained its global insulin market share of about 51 percent, according to a February slide presentation by Novo, which cites data from IMS Health. Meanwhile, Lilly’s global insulin market share fell from 30 percent in late 2005 to 22 percent at the end of 2010, according to the presentation.

Lilly’s insulins—Humalog and Humulin—had global sales last year of $3.1 billion, an increase of 6 percent driven by the rising incidence of diabetes.

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