Sanofi Won’t Discount Toujeo More Than Lantus Blockbuster

Sanofi's New Diabetes Treatment Toujeo
Sanofi's new diabetes treatment Toujeo won U.S. regulatory approval in February as a successor to Lantus. Source: Sanofi via Bloomberg

Sanofi is caught between a rock and a hard place when it comes to promoting its new insulin.

The French drugmaker believes the new product, Toujeo, is better than its aging diabetes blockbuster Lantus for stabilizing blood-sugar levels but it can’t say so as a result of a recent U.S. regulatory ruling. And now it says it won’t offer a steeper discount to sway pharmacy benefit managers.

“There is no reason to give higher rebates,” Pierre Chancel, head of Sanofi’s diabetes business, said in a telephone interview. “Toujeo is an improvement on something that is already great. We don’t necessarily need to compare it to Lantus.”

The rest of the world might. Sanofi needs Toujeo to replace Lantus, which amassed 6.34 billion euros ($6.72 billion) in sales last year and lost patent protection in February, the same month Toujeo won U.S. regulatory approval. Both products are insulins, a hormone that prevents sugar from pooling in the blood and becoming toxic.

Chancel says Sanofi will start by marketing Toujeo to newly diagnosed diabetics. That represents about 3 percent of the overall market. Analysts have cut their sales forecasts by as much as 9 percent since the U.S. Food and Drug Administration cleared it for sale without mentioning that it offered patients fewer overnight drops in blood sugar than Lantus in the prescribing information. That deprived Sanofi of a key selling point to entice doctors in the world’s biggest pharmaceutical market.

Cannibalizing Lantus

Sales estimates show the new drug won’t be able to make up for the revenue shortfall expected in coming years as Lantus faces the twin threat of generic copies and more modern insulins. Toujeo may reap 124 million euros in sales this year, a number that will gradually swell to 1.2 billion euros in 2020, according to seven analyst estimates compiled by Bloomberg. Meantime, Lantus sales are estimated to sink to 5.1 billion euros that year from 6.7 billion euros in 2015, the data show.

“This is a no-win game,” said Fabian Wenner, an analyst at Kepler Cheuvreux in Zurich. “Everything that Toujeo will garner will be cannibalizing Lantus.”

For analysts at Sanford C. Bernstein & Co., Sanofi should boost demand by offering U.S. payers steeper rebates on Toujeo than Lantus, especially since it will be forced to cut the price of Lantus as soon as a generic appears.

In a report released after the FDA cleared Toujeo, Sanford Bernstein analyst Tim Anderson and colleagues compared the challenge of introducing one treatment without harming the other with the situation GlaxoSmithKline Plc faced in 2013 when it introduced a drug called Breo as a successor to its best-selling allergy medicine Advair.

Silver Lining

That product launch was “painfully slow,” Anderson and colleagues wrote. “Part of Breo’s problem was that Glaxo essentially priced it at parity to Advair, meaning it gave no real incentive for U.S. payers to support the product. It has worried us that Sanofi might do the same with Toujeo.”

Chancel said Sanofi will focus on promoting Toujeo for the 1 million patients who need to start diabetes treatment in the U.S. each year, and for the 50 percent of existing patients whose blood sugar is not controlled by Lantus or other insulins.

Here’s the silver lining: if the FDA skipped the reference to Toujeo’s ability to reduce night episodes of hypoglycemia, a dangerous state in which there’s no longer enough sugar in the blood to keep the body going, it probably will do the same with Novo Nordisk A/S’s rival product Tresiba if and when it is approved, Jo Walton, an analyst at Credit Suisse Group AG, wrote in a Feb. 27 note.

Insulin Pens

The French drugmaker is also unlikely to face the same marketing quandary at home. The European Union panel that recommended approval did include a reference to the drug’s ability to lower hypoglycemic events.

More than 29 million people in the U.S. have diabetes, a disease in which the pancreas fails to produce enough insulin to convert sugar into energy, the American Diabetes Association estimates. Some diabetics have a lifelong form of the disease in which they rely on insulin injections several times a day, whereas a growing number of people are developing a form that strikes later in life as a result of poor nutrition and sedentary lifestyles. They don’t immediately require insulin therapy, but eventually many of them do move to that.

Sanofi also sells insulin injection pens and devices to monitor the level of sugar in the blood. The Paris-based company said in November it expects sales of its diabetes treatments to be flat to slightly growing until 2018, assuming a “substantial” conversion of patients to Toujeo from Lantus, and no copycat Lantus in the U.S. before 2019.

Sanofi’s stock has gained 31 percent so far this year, compared with a 51 percent increase for Novo of Denmark, one of its biggest competitors in the insulin market.

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