Seeing the rapid growth in China’s insulin market, Sanofi, Novo Nordisk, and Lilly have been squaring off for a big insulin fight. On June 13h, Eli Lilly announced that its second insulin production and packaging facility – Suzhou East Lake plant, which started construction in 2009 at a cost of $60 million – had finished construction and began operations. Earlier in May, Sanofi China opened a new assembling and packaging facility for prefilled insulin devices in Beijing. This manufacturing facility is a $90 million project, located in the Beijing Economic-Technological Development Area. Both companies are trying to catch up with Denmark based Novo Nordisk, the leading diabetes treatment company in China. Novo Nordisk entered the Chinese market as early as the 1960s, and maintains a dominant 60% of Chinese market share in terms of insulin volume. Currently, Sanofi and Lilly have 15% and 11% respectively, followed by two domestic companies – Tonghua Dongbao 5% and Shanghai Fosun 4%.
Among the various diabetes drugs, the long-acting, or basal insulin drugs are attracting the most attention and companies are competing fiercely in this market subsegment. Currently Sanofi’s blockbuster drug Lantus has about 80% of the market for long-acting insulin worldwide, with total sales of around $5 billion last year. Novo’s new insulin called Tresiba is awaiting U.S. approval by July 29, and is also expected to get the green light in Europe in the second half of the year. Lilly also has a new long-acting insulin, LY2605541, in clinical trials, which may still need years before reaching the market. However, the Phase II clinical tests of LY2605541 showed promising indications of helping patients lose weight, which has caused a stir in the diabetes market, since this could give Lilly a unique selling point and competitive advantage against the other companies.
Since 2011, China has passed Germany as the world’s third largest pharmaceutical market, behind Japan and the U.S., with an estimated growth rate of 20% per year through 2010-2015. China is estimated to have 92 million people with diabetes. Some 40% of them are diagnosed, and only 24% of that population are receiving treatment. The Chinese government is currently implementing healthcare reform – including broadened coverage and benefits, strengthened primary care and rural healthcare services, and improved disease prevention and early diagnosis – in order to improve healthcare accessibility and utilization. Thus, we expect to see tremendous and rapid growth of the diabetes market in China in the coming years. China’s booming diabetes market will bring huge profits for drug-making big pharmas, while investors can expect to see multiple opportunities in related industries like medical devices for diabetes drug delivery and diagnostic sensors and devices.