NEW YORK (CNN/Money) -
Two blockbuster diabetes drugs, Actos and Avandia, have locked horns for years in a very lucrative market but an impending shift in corporate partnerships and the introduction of new blockbusters could tilt the balance, industry analysts said.
Actos, produced by Eli Lilly & Co. (Research) and Takeda Pharmaceuticals, and Avandia, produced by GlaxoSmithKline (Research), both went on the market in 1999. The drugs improve the body's use of insulin in people with type 2 diabetes, the most common kind. They are both orally administered pills, which tend to be more popular among diabetics than injectable drugs.
Actos sales totaled $1.5 billion in 2004, while sales for Avandia and an Avandia-generic combination totaled $2 billion.
This dynamic could change in September 2006, when Lilly, a $13.9 billion drug maker based in Indianapolis, ends its partnership with Takeda, a $10.2 billion Japanese drug maker.
Takeda, which maintains a U.S. presence with subsidiary Takeda Pharmaceuticals North America, will be left with the challenge of marketing Actos in the United States, the largest market for diabetes-related drugs, without the help of Lilly's market influence until the patent runs out in 2011.
"I think Avandia will try and take advantage of the situation," said Al Rauch, analyst for A.G. Edwards.
Analysts were mixed as to how Takeda will fare once it takes the reins from Lilly.
- "You wonder if Takeda is going to market [Actos] as well as Lilly did," said Rauch. "Lilly has such a long presence in the diabetes field. They've certainly been a leader in insulin forever."
- "Takeda has been building up the U.S. presence," said Le Anne Zhao, analyst with Caris & Co. "They know the market by now and they should be OK. But the competition is building up."
- "It'll be a challenge for [Takeda] by themselves," said Robert Hazlett, analyst at Suntrust Robinson Humphrey. "Lilly has historically had a very good presence in the diabetes area. But [Takeda] has got a good drug."
Takeda spokesman Matthew Kuhn said his company has taken on a growing responsibility for marketing and producing Actos, and now handles more than 80 percent of the product.
"We have a comfort and a confidence level based on the amount of the work and the quality that has been done," said Kuhn. "We're very confident in our ability to drive our own future."
But Peter Lammers, executive director of the diabetes franchise for GlaxoSmithKline, sees the impending end to the Takeda-Lilly partnership as a positive for his own company.
"I think Lilly's signal of pulling away from the contract is a good sign with GlaxoSmithKline," said Lammers. He said that Takeda will lose the benefit of Lilly's franchise of diabetes-related products.
Takeda recently presented clinical data showing that Actos is better than Avandia in improving the fat profile in the blood and showed better results at reducing cardiovascular risks. But Lammers of Glaxo said Takeda's clinical results pose no threat to his own company because they are not primary uses for Actos and would not add to its sales.
The Lilly-Takeda partnership will end at about the same time that potential blockbuster Muraglitazar could enter the market, analysts said.
The dual-use diabetes drug, produced by Merck (Research) and Bristol-Myers Squibb (Research), is being reviewed by the Food and Drug Administration and the agency could make a decision toward year-end.
Muraglitazar is not in the same class of drug as Actos and Avandia. But if approved, it would be a competitor because it also can lower blood-sugar levels and control lipids, analysts said.
Some analysts believe Actos will also face competition from Byetta, an injectable drug from Lilly and Amylin Pharmaceuticals (down $0.23 to $19.73, Research) that recently entered the market. Byetta controls blood-sugar levels in diabetics but is also in a different class.
Takeda's Kuhn said that Muraglitazar and Byetta pose no threat to Actos.
"Byetta is just on the market and Muraglitazar isn't even out on the market, so from our standpoint it would be a little premature to consider them competitors," said Kuhn.
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None of the analysts interviewed own stock in the companies mentioned here. Their firms have no relation to the companies except for Suntrust Robinson Humphrey, whose affiliate received money from Lilly.