July 9 (Bloomberg) -- AstraZeneca Plc and Bristol-Myers Squibb Co. are preparing to introduce their new diabetes drug Onglyza to the German market in the third quarter as U.S. regulators continue their review of the medicine.

The U.K. and U.S. drugmakers, which plan to jointly market the product as part of a diabetes partnership they began in January 2007, may offer patients a treatment with fewer side effects than current therapies, said Bristol-Myers’s German chief Han Steutel in a press briefing in Frankfurt late yesterday.

“The products which are currently on the market have side effects” such as weight gain and a lower than normal level of glucose in the blood, said Steutel. Onglyza does not have such side effects, he said. The drug won the backing of a European Medicines Agency panel last month, a recommendation that is typically followed by European Commission approval within about three months.

Onglyza, also known as saxagliptin, would compete with Merck & Co.’s Januvia, which had $1.4 billion in sales last year. Taken orally, the medicine will be used during the early stages of the disease to prevent it from worsening. Citigroup Inc. analyst Kevin Wilson estimated peak U.S. sales for Onglyza of $1 billion in a note to clients yesterday. Steutel declined to give a forecast for the medicine.

Onglyza belongs to a class of drugs known as DPP-4 inhibitors, which include Januvia and Takeda Pharmaceutical Co.’s alogliptin. These drugs spur the pancreas to make more insulin and signal the liver to produce less glucose, or blood sugar.

FDA Delay

The U.S. Food and Drug Administration will decide whether to approve Onglyza by July 30, three months later than expected because the agency needed more time for review, London-based AstraZeneca and New York-based Bristol-Myers said in April.

Germany is the biggest European market for anti-diabetes drugs and the first country in Europe where Onglyza would be marketed, AstraZeneca Germany head Henning Wrogemann said.

“With a minimum of six million patients there is a gigantic growth potential,” he said.

The companies are also working on the experimental diabetes drug dapagliflozin, which is in the second of three sets of clinical trials required for regulatory approval. That medicine should reach the market by 2012, Steutel said.

The number of people afflicted by diabetes will rise from currently 246 million to 380 million worldwide, according to the companies. In Germany, as many as 8 million people were suffering from the disease in 2004, they said.

To contact the reporter on this story: Cornelius Rahn in Frankfurt at crahn2@bloomberg.net

Last Updated: July 9, 2009 04:00 EDT