Sanofi-Aventis Enters Diabetes Pact With AgaMatrix For Blood Glucose Monitors
This article was originally published in The Pink Sheet Daily
Executive Summary
AgaMatrix will develop a portfolio of blood glucose monitors exclusively for Sanofi-Aventis, which can now market an array of diabetes products.
Sanofi-Aventis struck an agreement with privately held AgaMatrix on
March 31 to co-develop and commercialize blood glucose monitoring
devices, enabling the French pharma to bolster its diabetes
business as new treatments, such as Novo Nordisk's
Victoza
, enter the market. Under the agreement, AgaMatrix will develop a portfolio of blood glucose monitors exclusively for Sanofi, using its novel WaveSense technology meant to improve the accuracy of glucose readings. In return, the company should benefit from Sanofi's global brands and marketing reach. "Sanofi is really the perfect partner in the sense that they have everything we would possibly need," AgaMatrix co-founder Sonny Vu said in an interview. Sanofi is AgaMatrix's largest partner to date and hopes the deal provides name recognition that, ultimately, will sell more products. Financial terms of the agreement were not disclosed, though Vu made clear the five-year contract, as written, does not give Sanofi any rights to acquire or have an equity stake in AgaMatrix. The deal is in line with Sanofi's strategic plans outlined during a year-end earnings call to investors on Feb. 10. At the time, execs said the addition of BGMs and insulin pumps would give their diabetes business a competitive edge. Sanofi's leading long-acting insulin Lantus brought in €3.08 billion ($4.16 billion) in sales in 2009, while its short-acting insulin Apidra brought in sales of €137 million ($185 million). "I believe that everything is, for the time being, open, but I am confident that we will be a little bit faster than Novo Nordisk on blood glucose monitoring," said Hanspeter Spek, President of Global Operations. He added that the pressure is on to best connect devices for diabetes care, such as BGMs and insulin pumps, to complimentary pharma products as market competition grows. Though Novo beat other pharmas to the punch in gaining the first FDA approval for a long-acting GLP-1 analog, Sanofi is working on a combination product using Lantus (insulin glargine injection) with a GLP-1. But Sanofi's Apidra (insulin glulisine injection) could benefit most from the AgaMatrix deal given that the product competes with Lilly's short-acting insulin Humulin and Novo Nordisk's NovaLog ,said David Kliff, founder of the Web site Diabetic Investor. In offering a more comprehensive package of diabetes tools, Sanofi will be better armed to grow product sales, he added. "Sanofi's weak link in the insulin world is short-acting or blending insulin ... and they see that in order to sell more of Apidra they need to do something," Kliff said. "Sanofi sees that if they can give someone a system that has connectivity (between pharma products, devices and patient education) that this is the way diabetes management is going." Sanofi expects to market the first products from the AgaMatrix collaboration in the second half of 2010, but Vu said there is a chance that a launch could be come even sooner. "This deal is something that we've been working on for some time, so we're ready for the fast track," he added. The deal also could give Sanofi leverage should it choose to pursue agreements with larger partners in the diabetes arena, such as Roche or Abbott, Kliff said. "AgaMatrix doesn't have huge presence in the market, so Sanofi can't all of sudden leverage AgaMatrix's market share," he said. But Kliff surmised that in agreeing to partner with a smaller company, Sanofi is showing that it is actively going after diabetes deals, which could influence other negotiations in the works, especially when it comes it price. -Carlene Olsen ([email protected]) |