uploads/2015/09/Diabetes1.jpg

How Pricing Affected Sanofi’s Diabetes Franchise in 2Q15

By

Updated

The pharmaceutical segment

The pharmaceutical segment contributed over 83% of total 2Q15 revenues for Sanofi (SNY). We discussed the pharmaceutical segment in depth in the article, The pharmaceutical division is Sanofi’s largest segment. As discussed earlier, the pharmaceuticals segment has six franchises.

Article continues below advertisement

Diabetes franchise

2Q15 revenues for the diabetes franchise were 1,988 million euros, a 3.8% decrease over 2Q14. This was due to lower sales of Lantus in the US markets.

Lantus

Lantus, a long-acting human insulin used to treat type one and type two diabetes, is sold in over 120 countries and is the largest revenue contributor for this franchise. For 2Q15, Lantus sales were 1,709 million euros, which is nearly 86% of the company’s total diabetes sales.

In the US markets, Lantus sales decreased by 15.4% to 1,086 million euros following the increased rebates granted to maintain favorable formulary positions with key payers. Lantus sales form nearly 57% of worldwide diabetes sales and 12.1% of the group sales.

The total sales outside US markets grew 13% following a 21.4% increase in sales from emerging markets, including Latin America, China, and the Middle East, and a 6.1% increase in sales from Western Europe driven by France and Germany.

Article continues below advertisement

Sanofi launched Insulin Glargine biosimilar, a biosimilar of Lantus, in Europe and Japan recently. Lantus competes with drugs like Novo Nordisk’s (NVO) Levemir and AstraZeneca’s (AZN) Byetta. Eli Lilly (LLY) and Boehringer Ingelheim have jointly developed Abasaglar, a biosimilar of Lantus, which is already approved in Europe.

Toujeo

Toujeo is a next generation basal insulin. This was launched in the US markets in March 2015. In the US, 73% of lives are covered by commercial plans that provide an unrestricted access to Toujeo. The company is focused on Toujeo’s Phase IV program studies, which may enhance the future labels or usage in the US markets.

For international markets, Toujeo received EU approvals in April 2015 and was subsequently launched in Germany, the Netherlands, and some Nordic countries. The drug is also approved in Japan, Canada, and Australia markets.

Investors can consider ETFs like the Health Care Select Sector SPDR ETF (XLV) or the VanEck Vectors Pharmaceutical ETF (PPH) in order to divest the risk.

Advertisement

More From Market Realist