November 6, 2012

‘Foolish’ Five Companies to Dominate in Diabetes


According to the Motley Fool, a financial-services company with the sole purpose to help the world invest (better), 8% of the U.S. population is affected by diabetes. The top companies poised to profit from this experience are: Novo Nordisk (NYSE: NVO), Snofi (NYSC: SNY), MannKind (Nasdaq: MNKD),  Bristol-Myers Squibb (NYSE: BMY), and AstraZeneca (NYSE: AZN).

In this article, taking the time to distinguish between the players in Type 1 diabetes and Type 2 diabetes earns extra credit in my book. The allure of Type 2 diabetes, being that it swallows 90% of the diabetes population, leaves most Type 1 diabetes hosts discounted, for lack of a better term.

The leading role in Type 1 diabetes treatments is insulin. Novo Nordisk, with NovoLog and Levemir, has earned the blue ribbon in the horse show. Sanofi, with its long-acting Lantus and short-acting Apidra, has placed second. However Lilly still holds a spot in the show but seems more like a lame duck than a front runner.

For the insulin-dependent crowd (Type 1 and Type 2) that shy away from the needle, MannKind still has a silver-lining on the dark cloud. Afrezza is the rapid-acting inhalable insulin the company hopes to get FDA approval. Although it has been twice denied, MannKind is hoping third time’s a charm.

The sexy drug for Type 2 diabetes in yesteryear was Byetta. Amylin was bought by AstraZeneca and Bristol-Myers Squibb. The annual yield of Byetta in 2011 was $518 million. The next step to the Byetta evolution is the once-weekly injection, Bydureon. The drug was approved earlier this year and we’ll see what the market has to say about the approval rating. Off the record, my endocrinologist told me that patients are unhappy about the rather large subcutaneous reservoir in the injection site.

Assuming the daily injections prevail, Byetta and Victoza (Novo Nordisk) are already in the race. Sanofi is training for the competition and should be releasing a contender sometime soon.

This is the first time I’ve seen diabetes treatments referred to as a growth industry. In all fairness, when 8% of the population has it, and estimates show in the next few years 1 in 4 U.S. adults will have diabetes or pre-diabetes, I guess it truly is a growth industry.

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