Merck’s Mighty Januvia: The Diabetic Investor Explains a Huge, Obscure Market for Drugs

In case you failed to leaf through the calendar, November is National Diabetes Month. And what better way to celebrate than to invite David Kliff, the Diabetic Investor, to share his thoughts on the competitive state of the diabetes market? In this piece, he explains why many drug makers are likely to struggle with their current strategies and what ought to happen next:

While I have never been a big fan of the Januvia franchise, there is no denying the power of the pill. Last week, Merck (MRK) reported another quarter of strong results, which should send a clear message to everyone else in the DPP4 market. Januvia sales were up 15 percent, while Janumet sales increased 16 percent for the quarter. To fully appreciate the dominance Januvia enjoys, consider this: Januvia racked up $975 million in sales while Janumet brought in another $405 million. By comparison, Onglyza, Januvia’s closet rival, brought in $178 million.

The reason I mention this is to dispel any thoughts by analysts or investors that Bristol Myers Squibb (BMY) and AstraZeneca (AZN), which sells Onglyza, and Eli Lilly (LLY), which does not provide sales figures for its DPP4 Tradjenta, have made much ground against mighty Januvia. Listening to the various earnings calls, one just might get the impression that these Januvia competitors are actually gaining ground and even cutting into the drugs massive lead. As the numbers clearly show when it comes to DPP4 drugs, though, there is the Januvia franchise and really nothing else. The harsh reality is the others must be content to pick up the scraps Januvia leaves behind.

MRK Chart

MRK data by YCharts

We also believe that there is a lesson to be learned here by the many companies who are looking to enter the GLP-1 market. Years ago, there were two blockbuster diabetes drugs from the same class of drugs: Avandia and Actos. Before the Avandia controversy took hold or we learned about Actos and bladder cancer, many believed there really wasn’t much difference between the two drugs and looking at their respective sales numbers, it seemed as though both drugs were doing quite nicely.

However, it’s also fair to state that both drugs also forever changed the nature of the type 2 drug market; a market that will never be the same.

To read the remainder of this article, please go to Pharmalot.

Ed Silverman is the editor of Pharmalot and a contributor to YCharts, which includes the just-released YCharts Pro Platinum for professional investors.

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