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Diabetes: New treatments, big bucks
Treating diabetes is projected to be one of the most profitable sectors in the drug industry.
June 9, 2005: 2:16 PM EDT
By Aaron Smith, CNN/Money staff writer
The leading treatments
The companies below have the biggest sellers in the war on diabetes.
CompanyDrug2004 sales
Eli Lilly (LLY)Humulin$1B
Eli Lilly (LLY)Humalog$1.1B
Glaxo SmithKline (GSK)Avandia/ Avandamet$2.1B
Novo Nordisk (NVO)Human insulin$2.2B
Sanofi-Aventis (SNY)Lantus$1B
Sanofi-Aventis (SNY)Amaryl$815M
In the pipeline
Notable new drugs recently launched or on the market.
Eli Lilly/ AmylinByettaFDA approved
Novo NordiskLevemirLaunched in European Union
Pfizer/Nektar/ SanofiExuberaLate-stage testing
MerckMK431Late-stage testing
MerckMuraglitizarLate-stage testing
Source: Bernstein Research

NEW YORK (CNN/Money) - One word: diabetes.

As pharmaceutical companies survey where the most potential will be in coming years, many are settling on diabetes, which is on the rise as America's baby boomers are getting older and the rest of the country battles a growing weight problem.

"Obviously, it's a huge market and it's growing," said Barbara Ryan, analyst for Deutsche Bank North America.

In the United States, 18.2 million people have diabetes, including 13 million diagnosed with the disease and an estimated 5.2 million who don't know they have it, according to the American Diabetes Association and the National Institutes of Health.

Diabetes is the sixth leading cause of death in America and every year another 1.3 million Americans are diagnosed, according to the NIH.

Diabetes is a group of diseases causing defects in insulin production, hampering the ability to turn sugar into energy. More than 90 percent of all cases are Type 2, which can be brought on by aging, obesity, physical inactivity and genetic inheritence. Less than a tenth of all cases are Type 1, the more serious form of diabetes which generally affects juveniles.

Complications from diabetes include diseases of the heart, kidneys and nervous systems, stroke, high blood pressure, blindness and amputations. The toll on the economy is huge. The NIH tallies total medical costs from diabetes at $92 billion in 2002, with an additional $40 billion from work loss, disability and death.

So what does this mean for drug companies?

Sales of diabetes-related drugs exceeded $12 billion in 2004, according to a May 25 report by Bernstein Research. Diabetes-related drug sales are expected to jump 12 percent annually through 2011 worldwide, compared to industry-wide sales growth of 6 percent, said the Bernstein report.

Producing insulin is a big money-maker for the industry. Eli Lilly & Co. (down $0.38 to $56.99, Research) and Novo Nordisk (up $0.21 to $50.63, Research) each made more than $2 billion last year from insulin and Sanofi-Aventis (down $0.50 to $43.80, Research) made $1 billion.

TZDs, pills that help the body make its own insulin, are also profitable. GlaxoSmithKline (up $0.18 to $50.18, Research) made more than $2 billion from TZD sales in 2004 and Takeda Pharmaceutical made more than $1 billion.

Pharmaceutical companies are working on more treatments for diabetes, including specially-tailored forms of insulin that act quicker or last longer than regular insulin. Drug makers will unveil results from clinical trials this week at the American Diabetes Association's annual conference in San Diego.

"The diabetes market appears poised to post accelerating growth over the coming years," wrote Chris Shibutani, analyst for J.P. Morgan, in a Wednesday report.

Inhalable insulin is likely to create the biggest buzz, analysts say, particularly since it does not yet exist on the market. Currently, diabetics must inject insulin or wear automatic insulin pumps to regulate blood sugar levels.

Pfizer Inc. (down $0.19 to $27.46, Research) says that its product Exubera, currently in the most advanced stage of testing, could become the first inhalable insulin. Pfizer has partnered with Sanofi and Nektar Therapeutics to produce Exubera. At least five other companies are testing products for inhaled insulin.

If Exubera is approved by the Food and Drug Administration, Bernstein forecasts $600 million in sales by 2011. The market for all inhaled insulin products could reach $1.7 billion by 2011, according to Bernstein.

The Bernstein report said 90 percent of the growth in diabetes drugs will go to large cap companies, including Pfizer, Merck & Co., Novartis, Lilly, GlaxoSmithKline, Takeda, Sanofi, Novo Nordisk, Bristol-Myers Squibb and Astra-Zeneca.

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