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As a subscriber you can listen to articles at work, in the car, or while you work out. Subscribe NowShares in Novo Nordisk A/S, Eli Lilly and Co. and other makers of diabetes therapies sank Tuesday after Sanofi CEO Chris Viehbacher said competition on prices in the United States will hurt sales next year.
Bagsvaerd, Denmark-based Novo shares dropped 5 percent to close at 254 Danish kroner. Indianapolis-based Lilly stock fell 3.5 percent Tuesday before rebounding slightly, to $64.25
Merck & Co. shares eased 2.6 percent, to $55.01, and Paris-based Sanofi slumped 11 percent, to 74.53 euros, recording the steepest decline since 1999.
“You’ve seen a number of people entering this field who generally have lower market shares but are trying to gain share,” Viehbacher said by phone Tuesday. “There has been a kind of chain reaction for a number of months: Some people trying to offer more rebates to gain market share.”
Drugmakers are rushing to develop new treatments for diabetes, a market that may be worth more than $58 billion by 2018, according to a Standard & Poor’s estimate. Sedentary lifestyles and obesity are swelling the ranks of patients with type 2 diabetes, a chronic form of the disease in which the body becomes resistant to insulin or doesn’t make enough of the hormone to manage the level of sugar in the blood.
New treatments and new drug classes, such as so-called SGLT-2 and DPP-4 inhibitors, are adding to competitive pressure in the industry. GlaxoSmithKline Plc CEO Andrew Witty said on an Oct. 22 conference call with analysts that diabetes is one of the areas where competitors are “prepared to start bidding on price.”
Novo Nordisk last year lost a contract to provide insulin and Victoza, another diabetes therapy, to Express Scripts Holding Co., the largest U.S. processor of prescription drug claims. A spokeswoman for Novo declined to comment on the company’s Insulin pricing strategy when contacted by phone.
“The pricing environment has been deteriorating over recent quarters as competition ratchets up, and as payers try to control their drug spend in increasingly aggressive ways,” Timothy Anderson, an analyst at Sanford C. Bernstein & Co. in New York, wrote in a report to clients Tuesday.
Viehbacher said earlier today the French drugmaker cut prices for its best-selling product, the Lantus insulin, last quarter to get on U.S. drug benefit managers’ reimbursement lists in the face of competition from Novo Nordisk, the maker of the Levemir and Tresiba insulins.
Sanofi’s sales of diabetes products probably won’t grow next year because of mounting price competition in the U.S., Viehbacher said. Diabetes products account for more than 20 percent of the company’s sales.
“Sanofi has the most to lose in an insulin price war, followed by Novo, while Lilly should be a share-taker — but likely from a less profitable position,” Seamus Fernandez, an analyst at Leerink Research, wrote in a note to clients.
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