Speaking of moving forward, here's a WSJ article on diabetes. Notice the size and growth of the market:
The Wall Street Journal Interactive Edition -- April 3, 1998
Novo Links With Schering-Plough
To Regain U.S. Market From Lilly
By STEPHEN D. MOORE
Staff Reporter of THE WALL STREET JOURNAL
Novo Nordisk AS of Denmark, armed with a new drug and a new
marketing alliance with Schering-Plough Corp., aims to regain lost ground
in the key U.S. market for insulin.
For decades, the world's $2.3 billion-a-year insulin market has been
dominated by tiny Novo and U.S. drug giant Eli Lilly & Co.
Novo supplies roughly 65% of the insulin used outside the U.S. But in
recent years, Lilly has been gaining ground against Novo in the U.S.
market, where the Indianapolis-based drug maker currently enjoys 80% of
the business.
Recently, the Danish company won approval from the U.S. Food and
Drug Administration for a new medicine called Prandin. Prandin is targeted
at adult-onset diabetes, a less severe, but faster-growing form of the
disease than juvenile-onset diabetes, after which patients need daily insulin
shots to survive.
Peter Laing, a London-based pharmaceuticals analyst with Societe
Generale, expects Prandin (or Novonorm, as the drug is known outside
the U.S.) to attain annual sales of $1 billion by the year 2003.
Even Novo admits that it needs help to get there. Previously, the Danish
company's relatively small U.S. staff of 180 salespeople concentrated on
specialized diabetes clinics. But family physicians prescribe most of the
insulin as well as the drugs against adult-onset diabetes.
That's where Schering-Plough comes in. Analysts predict Novo's new
U.S. ally will provide up to 600 sales representatives for the initial
marketing blitz of Prandin.
Selling Muscle
"What we needed in the U.S. was selling muscle, somebody who knew
the ropes," says Novo Chief Executive Mads Oevlisen. "Our No. 1
priority is to demonstrate that we can do a credible job with Prandin and
in the process lift our insulin-market share."
Lilly plays down the threat. "Diabetes is an attractive market because of
huge, unmet clinical need," says James Harper, president of Lilly's
endocrine unit. "There's plenty of room for both of us."
Investors have lofty expectations for Prandin as well as a rebound for U.S.
insulin sales. Novo's benchmark Class B shares fell 1.6% to 1,170 kroner
($165.56) Thursday in Copenhagen, down 19.5 kroner. However, the
shares are up about 20% so far this year following an 80.5% surge last
year.
Newfound Interest in Diabetes
The battle betweeen Novo and Lilly comes at a time of growing interest
among drug makers in diabetes. Other drug makers have traditionally
steered clear of insulin, a 77-year-old, low-priced drug that generates slim
profit margins, and instead focused on newer medicines.
Now, however, drugmakers see potential for growth in diabetes care. The
World Health Organization predicts that the number of diabetics
world-wide will more than double to 300 million, by the year 2025 from
roughly 135 million people today. The most rapid growth will come in
adult-onset diabetes, where the number of patients world-wide is
expected to hit 215 million by 2010, a 72% jump from 125 million patients
last year.
Companies such as Warner-Lambert Co., Bristol-Myers Squibb Co.,
Novartis AG and SmithKline Beecham PLC are racing to develop new
diabetes drugs. As competition heats up, Lilly can rely on buoyant sales of
other medicines. Insulin accounts for 13% of Lilly's annual revenue, less
than half annual sales of blockbuster antidepressant Prozac.
High Stakes for Novo
But for Novo the stakes are higher. Last year, insulin and insulin-related
products such as high-tech syringes accounted for more than 52% of
group sales. And diabetes gobbles up the majority of Novo's $325 million
annual research budget, about one-fourth of Lilly's annual research outlays.
A few years ago, worried that Novo scientists were spreading their scarce
funds among too many diseases, Mr. Oevlisen narrowed the company's
strategic focus. Noncore operations such as plasma and consumer
medicine were sold and a highly regarded research program in mental
disorders was shut down to conserve cash. "We are determined to show
that a medium-size company can prosper given a proper business focus,"
the Novo chief adds.
That prescription still forces Novo into tricky marriages of convenience
such as the latest link with Schering-Plough and another major alliance in
female healthcare with Rhone-Poulenc SA. But cooperation isn't always
smooth, a fact underlined by the unravelling two years ago of a global
marketing accord between Novo and LifeScan Inc., a Johnson & Johnson
unit that is the world's biggest producer of blood meters used by diabetics.
It seemed like an ideal match but it soon fell apart over the prickly issue
"of who would control whom," says Lars Rieben Soerensen, head of
Novo's health-care division.
Prandin's Success Is Vital
Analysts caution that Mr. Oevlisen can't afford to repeat that mistake with
Schering. "The success of Prandin is vitally important to Novo because
[adult-onset diabetes] is growing so fast and they haven't had much
presence in that area before," says Mr. Laing, the London analyst.
Some of Novo's woes in recent years have been self-inflicted. The Danish
company's U.S. market share plunged in 1994 to 21.6% from 25.7%,
when insulin plants supplying the U.S. were idled for several months by a
clash with the FDA. Desperate to win back those customers, Novo tried a
series of marketing gimmicks and even gave away hundreds of thousands
of pricey, prefilled insulin "pens" which deliver virtually painless shots.
But the bait hasn't worked, at least so far. World-wide sales at Novo's
diabetes division rose 14% last year, but U.S. insulin sales skidded 9%
and Novo's market share at yearend languished at 20.1%.
European-Style Therapy
Part of the problem is that the Danish drug maker is trying to sell
European-style treatment with frequent daily injections instead of the one
to two shots a day American physicians and their patients have
traditionally preferred. Science, at least, seems to be on Novo's side.
A seven-year, $150 million study published in 1993 showed that
European-style "intensive" therapy can dramatically slow progression of
long-term complications to which insulin-dependent diabetics are prone.
Along with benefits for patients, the study suggested that reducing
complications such as kidney failure, blindness and amputations could save
a major chunk of the $100 billion currently spent each year in the U.S.
treating them.
Many U.S. physicians remain skeptical. One reason is that intensive
therapy is more likely than traditional U.S. treatment to trigger abrupt,
perilous plunges in blood sugar levels that can put diabetics into a coma.
Intensive therapy costs more than conventional insulin treatment _ and a
payoff on that investment won't appear in an average diabetic child for
nearly 20 years.
"We realize this is going to take time, but we feel obliged to push on,"
insists Novo's Mr. Soerensen. "We happen to think this is the best way of
treating patients." |
