* French drugmaker banking on improved version of Lantus
* Investing in smart technology to bolster diabetes business
* Novo Nordisk setback an opportunity in competitive market
* Key data on new Sanofi products at ADA meeting this month
By Elena Berton
FRANKFURT, June 7 In a leafy suburb of
Frankfurt, a state-of-the-art plant churns out up to 1 million
insulin pens every day in French drugmaker Sanofi's
drive to keep its no. 2 spot in the $43 billion-a-year diabetes
The facility is part of a hub - nicknamed Insulin City -
dedicated to research and development, production, and smart
technology for diabetes treatments that Sanofi says will help
drive its growth as older blockbusters lose patent protection.
"This site represents an investment of more than 1 billion
euros ($1.3 billion) and clearly shows our dedication to
diabetes," Christian Lerche, head of R&D project direction at
Sanofi's diabetes unit, told Reuters.
It is a critical moment for Lerche and his colleagues: while
arch-rival and market leader Novo Nordisk has
suffered a recent product setback in the United States,
competition is mounting from the likes of Eli Lilly,
Bristol-Myers Squibb and AstraZeneca.
All are eyeing a fast-growing global market in which the
total number of diabetes sufferers is projected to leap to well
over half a billion by 2030.
Lantus, a synthetic insulin developed at the Frankfurt
centre in the 1990s, is currently Sanofi's top-selling drug.
Last year it grew almost 20 percent to generate 5 billion euros
in sales - but is set to lose patent protection in 2015.
To fend off its rivals, Sanofi is testing an improved
version of Lantus in late-stage trials as well as a combination
of the product with Lyxumia, a once-daily injection that
controls blood sugar levels in a different way.
Investors and medics will get an insight into whether Sanofi
has a new winner when data on these studies are made public at
the June 21-25 American Diabetes Association annual meeting in
Chicago. If positive, the results could prove Sanofi is in good
shape to protect its market position.
As part of its plan to broaden its diabetes portfolio beyond
drugs and injection pens, Sanofi has also rolled out new
devices, like a blood glucose meter plug-in for Apple's
iPhone in the United States, which allows diabetics to check
their levels on a smartphone. It is currently testing more
advanced versions that would e-mail readings to the doctor.
Drugmakers are competing fiercely in the type 2 diabetes
market as the number of people with the disease, which is linked
to obesity, continues to grow rapidly - including in emerging
markets where middle classes are switching to a Western diet.
An estimated 371 million people worldwide are living with
diabetes, with China now topping the list, according to the
International Diabetes Federation. It predicts as many as 552
million may have the disease by 2030.
Diabetics typically start out on oral medicine but often
need to move on to insulin injections to regulate their
One side-effect of taking insulin can be hypoglycaemia, when
sugar levels become dangerously low.
The new formulation of Lantus promises to last longer and
reduce the incidence of hypoglycaemia seen with the old version
- a drawback that Novo Nordisk has highlighted when touting its
big new product hope, a novel insulin called Tresiba.
Although Tresiba is approved in Europe, Novo Nordisk
suffered a setback in the United States where concerns over
potential heart side effects mean new tests are needed, delaying
a U.S. launch by several years.
That delay could play straight into Sanofi's hands, provided
the improved version of Lantus avoids similar safety issues.
Deutsche Bank analysts expect the latest clinical trials to
confirm a good profile for the Sanofi product, increasing
investors' confidence that the French group can not only protect
but also grow its diabetes business beyond 2016.
Sanofi shares have outperformed the European drugs sector
by 16 percent over the past 12 months on growing
optimism that the company will find new growth drivers, in
diabetes and elsewhere, to offset loss of patent protection on
Still, the pressure is on. Sanofi needs to make its new
Lantus a success because it is likely to face competition from a
so-called biosimilar version of the original Lantus made by Eli
Lilly, the world's no. 3 insulin maker.
Because Lantus is a complex biological drug, it is difficult
to make chemically identical generic versions but rivals can
develop a product that is very similar.
"Since Eli Lilly is an established diabetes player, that's
quite a threat," said Valentina Gburcik, a healthcare analyst at
consulting firm GlobalData.
At the same time, Sanofi faces indirect competition from the
growing class of injectable GLP-1 medicines that stimulate
insulin production when blood sugar levels become too high.
Sanofi's own Lyxumia is just such a product but the GLP-1
landscape is becoming increasingly crowded. Novo Nordisk is
pushing its top-seller Victoza hard in the face of competition
from Byetta and Bydureon, which are now sold jointly by
Bristol-Myers and AstraZeneca, after they bought out Amylin
Pharmaceuticals. Several others are waiting in the wings.
Having launched Lyxumia in Europe, Sanofi is working to
develop a pen that would deliver a combination of the treatment
"Lyxumia will take a small market share by itself, but it
may grab considerable market share from Lantus biosimilars
because the combination shows a much better profile than Lantus
alone," Gburcik said.
There is plenty of work to keep the diabetes team in