PharmAsia News
July 12, 2013
Executive Summary
Although oral anti-diabetic drugs are widely prescribed and used in developing countries, due to their cost and long history, insulin use has huge growth potential. In China alone, patients on insulin treatment could more than double, says Sanofi SVP for diabetes.
French drug maker Sanofi is feeling good about diabetes market growth worldwide, but it is particularly bullish on insulin use in emerging markets, calling it the second largest growth opportunity after the United States.
Already, diabetes is prioritized as one of Sanofi’s core growth platforms, along with emerging markets, vaccines, the orphan drug business of Genzyme Corp., consumer health and animal health.
Out of Sanofi’s €28 billion ($36.4 billion) net pharmaceutical sales in 2012, 20% or €5.8 billion, were drawn from the diabetes business, which grew 17% over the previous year.
While the U.S. still accounts for the lion’s share, contributing €3 billion, emerging markets (€1.14 billion) have surpassed Western Europe (€1.01 billion) to become the second largest region for Sanofi’s diabetes franchise.
The growth rate is also encouraging, according to Pierre Chancel, Sanofi SVP for diabetes, who spoke to investors on a conference call June 24 from the American Diabetes Association annual meeting in Chicago. While Sanofi’s U.S. diabetes sales grew robustly in 2012, up 21.5% year-over-year, sales in emerging markets were even stronger, growing 22.5%, Chancel said.
“This trend is interesting because this corresponds actually to the entire strategy, which is really to push and develop our business in the region or in the areas, in the geographies, where you have this skyrocketing number of people living with diabetes,” he said.
Two-thirds of the world’s population living with diabetes is located in China, India, the rest of Asia and Latin America. And among those diabetics, only one-third are diagnosed, he explained.
Altogether, roughly 370 million patients suffer from diabetes globally, and nearly one in three lives in China, said Xiang Hongding, president of the China Diabetes Association and director of the diabetes center at Beijing Union Hospital, during a July 9 event.
In addition to an estimated 100 million diabetics, China also has 150 million pre-diabetes patients, Xiang noted, pointing to an endemic situation for diabetes prevention and treatment in China.
After China, India has the second highest number of people with diabetes, roughly 50.8 million adults. According to the International Diabetes Federation (IDF), one in eight Indians is either diabetic or at high risk of developing diabetes.
Early Insulin Initiation
Those numbers represent a large opportunity for multinational pharmaceutical companies. Another draw for Sanofi, and other players like Novo Nordisk AS and Eli Lilly & Co., is an expected increase in insulin use in emerging markets. The uptake could be explosive, doubling the current figure, according to Sanofi’s Chancel.
“In China, for instance, today, you've got something like 6 million to 7 million people treated with insulin, and in fact, considering the [epidemiology] and considering the size of the population, it should be today 15 million. So there is a huge source of growth in these emerging countries,” said Chancel.
Insulin is used to treat type 1 diabetes and type 2 diabetic patients whose glucose levels can’t be lowered effectively with oral drugs. In China, type 1 diabetes accounts for 5.6% of patients, and type 2 accounts for more than 90%, according to the China Diabetes Association.
In IDF’s 2012 treatment guidelines for type 2 diabetes, oral metformin, a generic, is recommended as the first-line agent for patients with no kidney-function issues. Sulfonylureas are noted as the second-line, along with alternatives including dipeptidyl peptidase-4 inhibitors, thiazolidinediones and fast-acting insulin. Insulin is recommended as third-line treatment, often in combination with oral drugs.
As a chronic condition, diabetes often requires long-term use of oral drugs. After an extended period of use, these drugs could have reduced efficacy, so a combination of intermediate- or long-acting insulin can boost treatment results, according to the 2011 China Bluebook for Diabetes Prevention and Treatment.
A prospective study conducted by a team led by Yang Wenying at China-Japan Friendship Hospital, found that when type 2 diabetes patients previously uncontrolled with premixed insulin are switched to long-acting insulin glargine, glycemic control is significantly improved. Meanwhile, the study results, released April 2012, also found a low incidence of hypoglycemia.
Those results, compelling for China where premixed insulin has long led the market, should play into Sanofi’s hands as it leads the long-acting insulin market both in China and globally with blockbuster Lantus (glargine). At the same time, it could be bad news for Sanofi’s fierce global rival Novo Nordisk, which leads China’s diabetes market overall due in part to its strength in premixed insulins like Novomix.
Slowing But Still Leading
However, despite the large potential driven by a huge patient pool and the expected increase in insulin use, the long-acting insulin market has become increasingly competitive in China with domestic manufacturers ramping up marketing, especially in lower-tier markets.
Four long-acting insulins are currently approved in China, with Lantus dominating market share at over 60%. Beijing-based Gan & Lee Pharmaceutical Ltd., the only domestic manufacturer of a long-acting insulin glargine, branded as Changxiulin, competes directly with Lantus at a lower price point. In addition, Novo Nordisk markets Levemir (insulin detemir) and Levemir Flexpen, but Novo is only now entering Phase III trials in China for Lantus competitor Tresiba (insulin degludec), which is already approved in Japan and Europe.
According to IMS Health data, Lantus accounted for roughly 70% of China’s long-acting insulin market in 2012, and it retains momentum in 2013, growing 17.4% in the first quarter over the prior year. That growth was achieved despite a 10.6% price cut for Lantus that took effect Feb. 1; Novo’s Levemir was also cut by 9.4%. A large part of the success of Lantus is due to the fact it is now reimbursed in all 31 of China’s provinces, according to the company.
Competing head-on with the formidable Lantus, Gan & Lee has taken a different strategy, Director of Business Development Du Kai told PharmAsia News in an interview.
“We started from the lower-tier market sector because it has been ignored by large players and thus not much competition,” Du said. “From tier-2 and tier-3 cities, we plan to expand to the tier-1 market.”
Following its strategy, Gan & Lee selected two geographies for focused marketing campaigns: China’s Northeastern region and Henan province.
“We have Changxiulin listed in almost all provincial reimbursement lists,” Du said, “And thanks to a regulation requiring ‘one product, two manufacturers’ for hospital formulary listing, we’ve got to enter hospitals along with Lantus.”
Placing a heavy focus on China’s lower-tier market has paid off so far, Du claimed, adding that in Liaoning province, in China’s Northeast, for example, sales have surpassed RMB 100 ($16) million. Now the company is looking to roll out its strategy to Xinjiang, Jiangsu, Guangdong and Shandong provinces.
A lower price point to Lantus has also helped, Du explained. While the average sales price for Lantus is RMB 270, Changxiulin is priced at RMB 200.
In a move to ramp up its R&D capacity, Gan & Lee also hired Wang Minghan, former director of diabetes at Amgen Inc., to become its executive VP.
China’s Changing Long-acting Insulin Market
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Product
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Market Share (Jan. - Dec. 2012 moving annual turnover)
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Market Share (June 2012 – May 2013 moving annual turnover)
|
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Lantus
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69.93%
|
67.68%
|
|
Changxiulin
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19.83%
|
21.33%
|
|
Levemir
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6.99%
|
6.85%
|
|
Levemir Flexpen
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3.24%
|
4.14%
|
|
Source: IMS Health. CHPA>=100 beds
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||
Emerging Market Momentum To Stay
Facing domestic competition, multinational insulin makers
have felt the heat and seen pricing erosion, especially in lower-tier markets.
“We have seen a more active bidding from some of the local
manufacturers” in the human insulin market, cautioned Novo CFO Jesper
Brandgaard during the company’s May 2 earnings call. “In the low end of the
Chinese market there is some activity by local producers, which is slightly
eroding prices, and we still, of course, stand out as the high-quality
offering.”
Nevertheless, Novo predicts 15% growth in coming years for
its China business, which is expected to overtake Japan and become the second-largest
market for the Danish company in 2013.