Approximately 24 million Americans today have diabetes, and another 12 million are expected to be diagnosed by 2020, according to the American Diabetes Association. One survey puts the toll of lost productivity and caring for diabetes patients at $218 billion annually in the U.S. alone.
Yet for investors, the fast-growing diabetes industry suggests something else: opportunity.
Each week seems to bring another development. Earlier this month, Swiss pharma giant Roche Holding AG announced its acquisition of a unit working on a new type of insulin patch.
That development came on the heels of AstraZeneca’s rollout of the new diabetes drug, Onglyza, in India ?? interest in the industry because it allows patients to inject the medicine just once a week, instead of daily, says Andrew Weiss, Bank Vontobel analyst. If approved, the medication eventually could add up to more than $2 billion in peak sales, analysts say.
Eli Lilly and Amylin Pharmaceuticals
Ticker: LLY: 35.05*, +0.04, +0.11%
P/E Ratio: 9.10
Stock price change, YTD: 1.50%
Ticker: AMLN: 19.90*, -0.39, -1.92%
P/E Ratio: N/A
Stock price change: YTD: 43.3%
These two companies are longtime players in the diabetes market, and in 2002 teamed up to produce the injectible Type 2 diabetes drug, Byetta. The newest iteration of Byetta (which is still in development) would be injected once a week.
But the yet-to-be released variant of Byetta hit a stumbling block in March, when the FDA asked for more information and delayed its introduction. The problem: Although weekly Byetta has shown to help glucose-control and weight-loss, it has also been linked to pancreatitis, says Steven Silver, an analyst at Standard & Poor’s in New York. Lilly says it is working to better understand the link between Byetta and pancreatitis.
Separately, Lilly in 2008 ended development of its inhaled insulin drug, citing ???increasing uncertainties in the regulatory environment.??? It followed in the footsteps of Pfizer (PFE: 17.21*, +0.13, +0.76%), which in late 2007 pulled its inhaled insulin product, Exubera, off the market and gave back the drug rights to a partner company, Nektar Therapeutics.
Ticker: NVO: 81.75*, -1.12, -1.35%
P/E ratio: 20
Stock price change: YTD: 24%
NVO blazed a trail in 1923 when it became one of the first companies to market insulin, along with Eli Lilly. Today, the $56 billion firm supplies more than half of the world??es to broaden its diabetes offerings. It has a number of new products in the works, including Lixisenatide, a drug to manage Type 2 diabetes, which just completed a final-stage study.
The $98 billion company continues to expand into other realms, as well. In early April, Sanofi signed a long-term agreement with New Hampshire-based AgaMatrix for the development, supply and commercialization of blood glucose monitoring (BGM) solutions. “There is ample room for growth in the diabetes treatment area, given the size of the market, the unmet medical need, and safety concerns over current treatments,” says Standard & Poor’s Silver.
P/E ratio: 15.73
Stock price change YTD: 8.17%
Denver-based DaVita, with a market cap of $6.6 billion, runs about a third of all dialysis clinics in the U.S. – approximately the same number as Fresnius. In 2005, the company paid $3.1 billion for the U.S. renal care business of Sweden??nagl. Cutting down on the number of new patients, along with discovering ways to grow or implant substitute or artificial organs could hinder the dialysis market, he adds. But ???either one of these things is clearly more than a decade down the line at a minimum right now,??? he says
by Joan R. Magee (Author Archive)