Sanofi offered a bleak assessment of its outlook for diabetes sales on Thursday while rival Novo Nordisk A/S sounded a more upbeat note. Both stocks took a beating.

Paris-based Sanofi, whose best-seller Lantus ranks as the world’s most prescribed insulin, saw shares drop as much as 5.5 percent after it cut its sales outlook, saying diabetes revenue will probably drop between 4 percent and 8 percent in the next three years. Novo of Denmark slid 4.9 percent despite boosting its forecast for sales growth this year and pointing to its new Tresiba insulin as one of the causes of Lantus’s future troubles.

At stake is a shift in the diabetes market all players may soon feel: the advent of a new generation of drugs that can be swallowed rather than injected means more patients can delay the need for insulin shots. Sanofi Chief Executive Olivier Brandicourt, echoing recent comments from an Eli Lilly & Co. executive, spoke of a broad slowdown in demand for long-acting insulin. He pointed to a class of medicines known as SGLT-2 inhibitors, a type of drug that blocks sugar from being absorbed into the kidneys.

Two Sides

“We’ve seen both Lilly make a comment last week and Sanofi today clearly responding,” said Alistair Campbell, an analyst at Berenberg Bank in London. “Both companies saying they are seeing acceleration of oral products like SGLT-2s at the expense of insulin. Novo hasn’t said anything like that but I really can’t imagine that they will be immune.”

Sales of Sanofi’s Lantus, which faces its first generic competition in addition to oral therapies, fell 11 percent overall and 20 percent in the U.S. last quarter. Novo said Tresiba, a new insulin available in 36 countries and scheduled to go on sale next year in the U.S., along with two new-generation insulins saw sales more than double in the same period.

“Sanofi’s franchise is being pressurized from two sides,” Novo Chief Executive Officer Lars Rebien Soerensen told reporters on a conference call. “From the generic side and the innovative side. So that’s probably why their outlook looks negative.”

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.

Price Wars

Some diabetics have a lifelong form of the disease in which they rely on insulin injections several times a day. But a growing majority of people are developing a form that strikes later in life as a result of poor nutrition and sedentary lifestyles. They are the ones who can delay insulin therapy by taking tablets that help the body get rid of sugar through the kidneys. Lilly sells such a pill under the brand name Jardiance, as do Johnson & Johnson, Boehringer Ingelheim GmbH and AstraZeneca Plc.

For moving on to insulin, there’s also the question of price. Sanofi and Novo are locked in a battle in the U.S., forcing each other to offer insurers bigger rebates. In Europe, where Lantus just lost patent protection, it’s a copycat version introduced by Lilly that’s creating pressure on prices that even Novo says it can feel. The Lilly copy cost 15 percent less than the original when it was introduced in the U.K. in August.

“There will be price pressure in the short to medium term from biosimilars, which will influence our ability to take premiums home,” Soerensen said.

Soerensen made the comments as Novo, the world’s largest insulin maker, reported third-quarter earnings that rose 29 percent to 8.38 billion kroner ($1.23 billion), beating analysts’ estimates. Sanofi’s profit for the period also exceeded estimates, rising to 2.1 billion euros ($2.3 billion) from 1.94 billion euros a year earlier.

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