UPDATE 1-Astra, Bristol price diabetes drug same as Merck's

* Onglyza priced on par with Januvia at $5.72 per pill

* AstraZeneca, Bristol drug cleared by U.S. FDA late Friday

* Two products will go head-to-head with similar labels

(Adds analyst comment, background)

By Ben Hirschler

LONDON, Aug 3 (Reuters) - AstraZeneca (AZN.L) and Bristol-Myers Squibb's (BMY.N) new once-daily diabetes drug Onglyza will cost the same as Merck & Co (MRK.N) Januvia, setting up a head-to-head battle for U.S. market share.

Onglyza will have a U.S. average wholesale price of $5.72 per pill for both the 2.5 and 5 milligram doses, the same as Merck's medicine, an AstraZeneca spokesman said on Monday in response to inquiries.

The drug was approved by the U.S. Food and Drug Administration late on Friday.

Merck's product is likely to continue to dominate the so-called DPP-4 market, as Onglyza is not significantly different, but the new entrant may slow the growth profile of Januvia, which has so far had the U.S. market to itself, according to analysts.

Both Onglyza and Januvia enhance the body's ability to lower elevated blood sugar levels and are part of a class of drugs known as dipeptidyl peptidase-4 (DPP-4) inhibitors, which are expected to generate billions of dollars in annual sales.

Januvia sold $1.4 billion worldwide in 2008 and Sanford Bernstein analyst Tim Anderson predicts the overall DPP-4 market could be worth more than $7 billion in annual sales by 2015.

Onglyza will be the second product in the class to reach the market in the United States, although Novartis (NOVN.VX) sells a rival treatment called Galvus elsewhere. Takeda (4502.T) is also working on a DPP-4 drug called alogliptin, which analysts believe could launch 2012.

BMO Capital Markets analyst Robert Hazlett forecast Onglyza sales of $60 million in 2009, rising to $450 million in 2011 and around $1 billion over time.

Onglyza is an important new product for AstraZeneca and a vindication of the Anglo-Swedish company's new drug pipeline, following a barren period since the launch of cholesterol fighter Crestor in 2003.

But the U.S. green light had been widely expected and AstraZeneca shares were little changed in early afternoon trade, dipping 0.1 percent to 28 pounds.

UBS analyst Gbola Amusa, who raised his price target on the stock to 35 pounds from 33.5 previously, said the wording on the label approved by the FDA for Onglyza was similar to Januvia.

Januvia's label was "marginally less cautious" on its use with other drugs but, in its favour, Onglyza is a smaller pill and is also expected to be combined into a once-daily pill with the older drug metformin, while Merck's Janumet is twice-daily, Amusa said.

Although there are numerous diabetes therapies on the market, some cause weight gain or other complications and many patients do not reach optimal blood sugar levels, creating an opportunity for new treatments. (Editing by Karen Foster)