Novo, Sanofi go head to head as FDA clears new diabetes drugs

Rivals Novo Nordisk and Sanofi have won U.S. approval for new combination drugs to treat diabetes, sparking a fresh battle for sales in a fiercely competitive market.

Novo's Xultophy and Sanofi's Soliqua both combine a long-lasting insulin with a so-called GLP-1 medicine that stimulates insulin production in the pancreas.

Officials at the Danish and French companies said the rival treatments would be sold at discounts to the combined price of the component ingredients.

The combination products are viewed by analysts as having substantial sales potential and the two drug makers hope they will boost revenue at a time when insulin prices are under intense pressure in the key U.S. market, the world's biggest.

Some 400 million people worldwide suffer from diabetes, with type 2 accounting for more than 90 percent of the total, as rising obesity rates fuel the epidemic in the United States and many other countries.

Jakob Riis, Novo's head of North American operations, said millions of U.S. diabetics were using insulin but around half were not getting satisfactory treatment, so there were lots of patients who could benefit.

Achieving Xultophy's full potential will take time, however, as Novo negotiates reimbursement terms with insurers.

"We will go for a focused launch of Xultophy, which will reflect the fact that not all patients will have access to this product through their insurance. That is something we will develop over time," Riis told Reuters.

The timing of the approvals is broadly in line with expectations for Sanofi but a few weeks ahead of the scheduled decision date for Novo.

Following the green light from the U.S. Food and Drug Administration (FDA), Sanofi said it planned to launch Soliqua in January, while Novo intends to launch Xultophy in the first half of next year.

ONCE-DAILY INJECTIONS

Industry analysts expect Xultophy to generate annual sales of around $1.20 billion in 2021, while Soliqua is forecast to reach $550 million by then, according to consensus estimates compiled by Thomson Reuters.

Xultophy, approved in Europe since 2014, combines Novo's insulin drug Tresiba with its GLP-1 agonist Victoza. Soliqua is a mix of Sanofi's Lantus and the GLP-1 Lyxumia.

Novo said Xultophy would be offered at a 20 percent discount to the combined price of Tresiba and Victoza, while Sanofi said Soliqua would cost about same as a GLP-1 drug.

Both new drugs are given as once-daily injections and are designed to improve glycaemic control in adults with type 2 diabetes.

Jefferies analysts said the most notable aspect of the FDA decisions was that Sanofi had only been granted approval for a single pen device, with one fixed ratio between insulin and GLP-1. The French drugmaker had originally filed for two devices with different ratios but FDA advisers considered this could cause confusion.

Shares in Sanofi's small biotech partner Zealand Pharma, which is entitled to royalties on Soliqua sales, rose 7 percent by 1320 GMT. Sanofi and Novo shares were little changed.