4Q16 and 2016 Diabetes and Obesity Industry Roundup – Industry growth driven largely by GLP-1, SGLT-2; Next-generation bright spot in insulin; CGM sales near $1 billion (+29% YOY); pumps grow 6%; BGM drops another 6% in 2016 – April 17, 2017

Based on results from the nearly 30 public companies with revenue that we regularly track, this Roundup provides the industry’s high-level business and financial trends from 4Q16 and 2016.

This report is divided into four sections: (i) overall industry highlights; (ii) diabetes therapy; (iii) diabetes technology; and (iv) obesity. Each includes sub-section analysis by therapeutic area, followed by charts with current and historical sales figures, growth, and market share estimates. We note that the data represent our best estimates in many cases since a number of companies do not disclose financial information in great detail. Please let us know if you feel an estimate could be improved!

Overall Industry Performance

1. Global diabetes revenue across branded drugs (excluding generics) and devices grew 4% year-over-year (YOY) to an estimated $12.5 billion in 4Q16; full year 2016 sales grew 5% YOY to ~$47.6 billion. Notably, this only includes companies that report revenue publicly for branded products and does not include companies like BI (though we include estimates of BI revenue for Lilly-partnered products) or the many biosimilar insulin manufacturers in emerging markets. We’re glad to see the diabetes industry return to growth in 2016, following flat YOY growth in 2015 on sales of ~$45.5 billion. Newer diabetes therapies and technologies drove growth of the industry in 4Q16 and 2016. In 2016, GLP-1 agonists contributed 39% of growth, SGLT-2 inhibitors contributed 34%, DPP-4 inhibitors contributed 14%, CGM contributed 8%, and insulin pumps contributed 5%. As expected, insulin and BGM saw continued pressure throughout 2016, though next-generation basal insulins were a bright spot.

Diabetes Therapy

2. The overall insulin market (basal, rapid-acting, and human insulins) fell 1% YOY in 4Q16 and full year 2016 to $5.6 billion and $21 billion, respectively. Within this, the basal insulin market rose 1% YOY to $2.7 billion in 4Q16 and remained flat at $10 billion for the full year. We attribute the relatively modest decline in the insulin market to impressive growth in next-generation products: combined sales of the next-generation basal insulins, Sanofi’s Toujeo and Novo Nordisk’s Tresiba franchise comprised 18% of the basal insulin market by value in 4Q16, with sales almost tripling YOY to $499 million in 4Q16 – for context, the total sales from 4Q16 alone outstrip total global sales for full year 2015. For full year 2016, combined next-generation sales surpassed the $1 billion mark, rising nearly 3.5-fold to $1.3 billion, from $395 million in 2015. The rapid-acting insulin market fell 2% to $1.7 billion in 4Q16 and fell 5% to $6.1 billion in 2016, and the human insulin market was flat at $810 million in 4Q16 and rose 1% to $3.2 billion in 2016. 

3. The GLP-1 agonist class grew a remarkable 25% YOY to nearly $5 billion in 2016, from a high base at that – sales rose 21% YOY to $3.9 billion in 2015. Sales in 4Q16 were also impressive, up 24% YOY to $1.4 billion. This class is growing fast from a higher base than SGLT-2 inhibitors, the only competition for largest margin of growth in 2016. By our calculations, GLP-1 agonists were responsible for 45% of full-year growth in the market for branded diabetes drugs, and captured 28% of this market by value (which is an increase from 26% of the market in 2015).

4. SGLT-2 inhibitors, including J&J’s Invokana, AZ’s Farxiga/Forxiga, and Lilly/BI’s Jardiance, posted $2.9 billion in sales in 2016, which represents 44% YOY growth. Pooled revenue was $841 million in 4Q16, which marks 48% YOY growth. There’s no question that SGLT-2 inhibitors are the fastest growing class of diabetes drugs, but growth has lagged behind post-EMPA-REG OUTCOME expectations.

5. Pooled DPP-4 inhibitor sales totaled $9.7 billion in 2016, a modest 4% YOY rise from $9.3 billion in 2015. Revenue in 4Q16 grew 2% YOY but declined 4% sequentially to $2.4 billion. On the whole, DPP-4 inhibitors have experienced fluctuating sales in the past couple years due to competition from GLP-1 agonists and SGLT-2 inhibitors, as well as US pricing pressures affecting diabetes. That said, we’re happy to note sustained growth in 2016, however small. We still see a very important role for DPP-4 inhibitors to play in diabetes care on account of their safety, tolerability, and familiarity factor.

6. Sales of branded TZDs presumably continued their downward trajectory in 2016, as all companies have ceased reporting results for these agents. This is not surprising as the class has been generic for some time now and has been plagued by safety concerns for years now, though recent clinical trial evidence and thought leader commentary on pioglitazone in particular has been more positive in 2016.

Diabetes Technology

7. Pooled global revenue for the “Big Three” BGM companies (Roche, J&J, and Abbott) totaled an estimated ~$1.2 billion in 4Q16 (down 6% YOY) and ~$4.6 billion in 2016 (down 6% from 2015). Both performances came against easy comparisons to the prior year, as revenue declined an estimated ~10% in 4Q15 and ~12% for the full year 2015. Pooled Big 3 sales have now fallen for five consecutive years. Abbott’s business is the steadiest on the strength of FreeStyle Libre.

8. The worldwide CGM market grew to a record-high ~$272 million in 4Q16 (up 20% YOY) and a notable ~$956 million in 2016 (up 29% YOY). Dexcom propelled the category yet again, with a string of record-high sales driving 80% of the field’s growth in 2016. As the field gets bigger, of course, the law of large numbers is kicking in: 29% growth for the year was the lowest we’ve seen for the category since 2013.

9. We estimate the insulin pump/delivery devices market grew ~5% YOY in 4Q16 (~$617 million) and ~6% in 2016 (~$2.3 billion). International sales drove an estimated ~66% of the industry’s growth in 2016. Insulet contributed an estimated ~57% of the field’s gains in 2016, propelled by strong 31% YOY worldwide OmniPod growth for the year. Medtronic had a tough year in the US (2% sales decline) and only provided 26% of the overall industry’s growth in 2016 (solely from international sales).

Obesity

10. Saxenda continues to drive the vast majority of the obesity market’s growth. Pooled revenue for all major obesity drugs totaled $118 million in 4Q16, up 2% YOY and 28% sequentially. The obesity market totaled $371 million for the full year, rising 140% from $153 million 2015. Without including Saxenda, the market would have totaled only $137 million in 2016, a 10% decline from 2015.

1. Overall Industry Performance

• Global diabetes revenue across branded drugs (excluding generics) and devices grew 4% year-over-year (YOY) to an estimated $12.5 billion in 4Q16; full year 2016 sales grew 5% YOY to $47.6 billion. By geography, US sales rose 1% to $24.6 billion and ex-US sales rose 5% to $22.1 billion in 2016. Notably, this only includes companies that report revenue publicly for branded products and does not include companies like BI (though we include estimates of BI revenue for Lilly-partnered products) or the many biosimilar insulin manufacturers in emerging markets. We’re glad to see the diabetes industry return to growth in 2016, following flat revenue in 2015 at $45.5 billion. That said, the growth occurred against an easy comparison, as 2015 was one of the most challenging years for the diabetes market since we began tracking its performance in 2004.

Figure 1: Overall Quarterly Market Revenue (1Q12-4Q16) – Diabetes Drugs and Devices

Figure 2: Annual Diabetes Industry Revenue (2006-2016)

• Newer diabetes therapies and technologies drove industry growth in 4Q16 and 2016. Below, see our table of share of industry growth by class for 2014, 2015, and 2016. Notably, insulins went from driving nearly half of the growth of the industry in 2014 to not contributing any growth in 2015 and 2016, while SGLT-2 inhibitors and GLP-1 agonists have been the clear growth drivers in the last two years.
  
  • GLP-1 agonists accounted for ~43% of industry growth in 4Q16 and ~39% of growth in full year 2016. The class grew 25% YOY in 2016, reaching nearly $5 billion. 4Q16 sales rose 24% YOY to $1.4 billion.
  • SGLT-2 inhibitors drove ~45% and ~34% of industry growth in 4Q16 and 2016, respectively. The class grew 48% YOY to $841 million in 4Q16 and 44% YOY to $2.9 billion for full year 2016.
  • DPP-4 inhibitors contributed ~14% of industry growth in 2016. The class grew 4% YOY from a high base to $9.7 billion for the year. DPP-4s did not contribute to growth of the industry in 4Q16, falling 1% YOY to $2.4 billion.
  • CGM drove ~8% of industry growth in both 4Q16 and in full year 2016. Revenue for the class rose 20% YOY to ~$272 million in 4Q16. Full year sales neared a billion at $956 million, a 29% YOY increase from 2015.
  • Insulin pumps contributed ~5% of industry growth in both 4Q16 and 2016. Sales grew ~6% YOY in both 4Q16 (~$617 million) and 2016 (~$2.3 billion).

Figure 3: Share of Overall Industry Growth by Class

• On the other hand, as expected, the insulin and BGM markets saw continued pressure in 2016. Insulin was flat in 4Q16 at $5.6 billion and fell 1% for 2016 overall to $21.2 billion. Within this, basal insulin sales actually rose 1% YOY in 4Q16 to $2.7 billion and were flat for 2016 at $10 billion. Revenue was buoyed by impressive growth in the next-generation insulin analogs (Novo Nordisk’s Tresiba [insulin degludec] franchise and Sanofi’s Toujeo [U300 insulin glargine]). Next generation insulins surpassed the $1 billion mark in 2016, rising nearly 3.5-fold to $1.3 billion. On the other hand, 2016 saw the continuation of the challenges that have been faced the rapid-acting insulin market for a number of years, with sales falling 5% overall to $6.1 billion. Ongoing pressure in BGM also continued in 2016, with pooled global revenue for the “Big Three” BGM companies (Roche, J&J, and Abbott) down an estimated 6% YOY in both 4Q16 ($1.2 billion) and 2016 ($4.6 billion). This is the fifth consecutive year of falling BGM revenue, yet another reminder of how competitive bidding has crushed the field and likely harmed patients in the process.
• In diabetes therapy, the continued strong growth GLP-1 agonists, SGLT-2 inhibitors, and next-generation basal insulins is partly driven by increasing recognition of the benefits of these agents beyond glucose-lowering. All three classes offer substantial benefits on outcomes beyond A1c: GLP-1 agonists and SGLT-2 inhibitors promote weight loss and all three classes can reduce hypoglycemia risk as well as glucose variability. Concurrently, we’ve seen increased advocacy in the field from patients, providers, and other stakeholders for greater consideration of outcomes beyond A1c. Further, we’ve witnessed growing awareness of the potential cardioprotective benefits of SGLT-2 inhibitors and GLP-1 agonists in 2016: LEADER results for Novo Nordisk’s GLP-1 agonist Victoza (liraglutide) reported at ADA 2016 to great fanfare, Lilly’s SGLT-2 inhibitor Jardiance (empagliflozin) won an expanded label indication for CV death in December, and both liraglutide and empagliflozin were preferentially recommended for patients with existing CV disease in the latest ADA Standards of Care update. In our view, these agents have the potential to delay intensification to insulin therapy and we expect that they will continue to drive diabetes industry growth for years to come. Indeed, innovations on the horizon in GLP-1 agonists (such as oral semaglutide and implantable ITCA 650) could push the class from “first injectable” status to potential second-line status, after metformin. For patients that do require insulin, we’re pleased to see uptake of next-generation products, which can make this life-saving agent safer by reducing severe and nocturnal hypoglycemia. We’re also very optimistic about the prospects of GLP-1 agonist/basal insulin fixed-ratio combinations (following approval of Novo Nordisk’s Xultophy [insulin degludec/liraglutide] and Sanofi’s Soliqua [insulin glargine/lixisenatide] in November). These agents offer an opportunity to manage postprandial glucose with a single injection, without basal-bolus therapy, and even come with a side of weight loss and hypoglycemia benefits. All in all, we’re glad to see the continued growth of drug classes that have the potential to meaningfully improve both patients’ glucose control and quality of life. The performance of DPP-4 inhibitors and rapid-acting insulin analogs is more measured. That said, DPP-4 inhibitors still contributed meaningfully to the growth of the industry in 2016 and we expect to see them used increasingly among newly-diagnosed, elderly, and renal-impaired patients due to their benign safety/tolerability profile and ease of use. On the other hand, we expect that currently-available rapid-acting insulin analogs are unlikely to recover substantially. The insulin class should receive a near-term boost with the launch of Novo Nordisk’s next-generation agent Fiasp (faster-acting insulin aspart), along with continued strength from new basal insulins; we also see great potential for faster-acting agents in pumps and closed loop systems.
• In diabetes technology, CGM has the clearest upside to expand far beyond its near-$1 billion in annual sales right now (Dexcom + estimated Medtronic + Senseonics). We see this category’s growth only accelerating as sensors get smaller, cheaper, more connected, and far more useful (e.g., driving decision support and closed loop systems). The recent non-adjunctive indication for Dexcom’s G5, followed by Medicare’s decision to reimburse it, definitely brings clear upside for the field. In pumps, 2016 saw solid growth (+6%), and we expect growth to stay at this level or even accelerate in 2017 as many patients get on the MiniMed 670G hybrid closed loop (broader launch starting in June). It will be fascinating to watch what percentage of patients opt of automated insulin delivery, particularly MDIs, in the early days. Overall, we expect crossing the chasm from early adopters to the majority will take a few years at least. Finally, BGM sales have been under significant pressure for half a decade now, and while this ~$4.6 billion class isn’t going away, the growth prospects don’t look great under the traditional models. However, we are glad to see several new players forging ahead with new BGM-driven/app-enabled coaching models – could these approaches salvage the field?
• Saxenda continues to drive growth of the obesity market, which more than doubled YOY to $371 million in 2016. 4Q16 revenue for the obesity market totaled $118 million, up 2% YOY and 28% sequentially. However, not including Saxenda, the rest of the obesity market posted only $137 million in revenue in 2016, a 10% decline from 2015. As in 2015, non-Saxenda obesity drugs continued to face intense pressure in 2016 and stand in stark contrast to Saxenda success. That said, we’ve heard increased advocacy for combination approaches to tackling obesity, including use of medication in tandem with non-pharma approaches like Virta and Omada. We’re optimistic that the obesity market will continue to grow, given force-of-nature Novo Nordisk and its stated continued commitment to establishing the nascent field.

2. Diabetes Therapy

Insulins – Overall

• The overall insulin market (basal, rapid-acting, and human insulins) fell 1% YOY in 4Q16 and full year 2016 to $5.6 billion and $21 billion, respectively. Within this, the basal insulin market rose 1% YOY to $2.7 billion in 4Q16 and remained flat at $10 billion for the full year, the rapid-acting insulin market fell 2% to $1.7 billion in 4Q16 and fell 5% to $6.1 billion in 2016, and the human insulin market was flat at $810 million in 4Q16 and rose 1% to $3.2 billion in 2016. For comparison, the overall insulin market fell 5% in 2015 – we attribute the slower decline in the insulin market in 2016 to the growth of next generation insulin analog products (more on this below). Of the three major insulin manufacturers, only Lilly experienced YOY insulin revenue growth in 4Q16 (4%), whereas sales decreased for Novo Nordisk (-4%) and Sanofi (-1%). This trend persisted for the full year 2016, where Lilly’s insulin revenues grew 2% YOY, versus flat sales for Novo Nordisk and sales falling 3% for Sanofi. Lilly’s performance was buoyed by a more modest decline in its flagship Humalog (-3% for full year 2016), plus impressive growth of its new biosimilar insulin glargine (Basaglar, now launched in the US) and modest growth of its human insulin portfolio (5% for full year 2016). In comparison, 2016 saw far greater sales declines for Sanofi’s flagship Lantus (-11%) and Novo Nordisk’s modern insulins (Levemir, NovoLog, NovoMix; -5%) – these declines from a high base were not entirely negated by impressive growth for Toujeo and Tresiba. As it stands in 2016, Novo Nordisk holds 44% market share by value, followed by Sanofi (36%) and then Lilly (20%).
  
  • The insulin market remains extremely challenging, with competitive pricing – particularly in the US – as the major obstacle. The pricing controversy over insulin reached a fever pitch in 2016, with the ADA issuing a resolution and petition calling for increased transparency and access solutions from all stakeholders in the insulin supply chain, the Endocrine Society calling for collaboration among stakeholders to address the diabetes drug pricing crisis and Senator Bernie Sanders going as far as to call for a Department of Justice investigation into possible insulin price fixing. Insulin manufacturers are beginning to take action: we were impressed by Lilly’s December announcement of a new program to provide discounted insulin directly to patients in a collaboration with online platform Blink Health and Novo Nordisk’s position statement to address diabetes drug affordability in America, though both companies committed to only single-digit price increases annually for their drugs. One potential push forward for the basal insulin market is the excitement brewing over basal insulin/GLP-1 agonist combination products, including both Sanofi’s Soliqua (insulin glargine/lixisenatide) and Novo Nordisk’s Xultophy (insulin degludec/liraglutide), which could bolster sales for both drug classes – although the possibility remains that these more advanced combination products will cannibalize basal insulin sales further. This is something we will be watching closely in 2017, now that Soliqua and Xultophy have been FDA approved. Furthermore, 2017 will mark the first year in which a basal insulin analog – Lantus – will be excluded from some formularies. Formulary exclusions were first introduced to the rapid-acting insulin field in 2012, but the position of basal insulins on formularies was largely protected until the launch of biosimilar Basaglar and the decisions from both CVS Health and UnitedHealthcare to exclude Lantus in favor of Basaglar for 2017.

Insulins – Basal Analogs

• The basal insulin market rose 1% YOY in 4Q16 and full year 2016 to $2.7 billion and $10.3 billion, respectively. The growth for both the quarter and the full year occurred against very easy comparisons – basal insulin sales fell 9% and 8% in 4Q15 and 2015, respectively. Basal insulin growth has experienced a slight upward trend over the past year: sales fell 9% YOY in 4Q15, remained flat in 1Q16 and 2Q16, and grew 2% in 3Q16 – this is especially impressive given the large base for this category and the substantial declines for Sanofi’s Lantus throughout the year (-11% overall in 2016), which have been driving down revenue for the entire category and, indeed, the insulin market as a whole. We expect this is a reflection of growth in next-generation basal insulins (Sanofi’s Toujeo and Novo Nordisk’s Tresiba) and biosimilar insulin glargine (Lilly’s Basaglar) coupled with expected weakness in traditional basal insulins Sanofi’s Lantus and Novo Nordisk’s Levemir. Indeed, combined Lantus and Levemir sales fell 12% YOY in 4Q16 to $2.1 billion and fell 9% YOY in full year 2016 to $8.9 billion (from $9.8 billion in 2015). On the other hand, combined sales of next-generation products Toujeo and Tresiba almost tripled YOY to $499 million in 4Q16. For full year 2016, combined next-generation sales rose nearly 3.5-fold to $1.3 billion, from $395 million in 2015. All in all, ~$1 billion loss in older basal insulin market was almost entirely accounted for by a nearly $1 billion gain in the next-generation market.

Figure 4: Basal Insulin Market (1Q06-4Q16)

• Sanofi continued to lead the basal insulin market in 4Q16 with its flagship Lantus accounting for 58% of the market by value and its next-generation counterpart Toujeo capturing 9%. Meanwhile, Novo Nordisk held 30% of the basal insulin market by value: Levemir holds 22% and new-generation insulins (Tresiba, Xultophy, Ryzodeg) hold 9%. Lilly’s Basaglar (biosimilar insulin glargine) captured 1% of the market, although we anticipate this will increase rapidly as Basaglar becomes more established in the US market – we still haven’t heard many reviews. Launched in mid-December, Basaglar generated an impressive $15.8 million in US revenue in 4Q16, with only two weeks of sales to report.
• Combined sales of the next-generation basal insulins, Sanofi’s Toujeo and Novo Nordisk’s Tresiba comprised 18% of the basal insulin market by value in 4Q16, and showed more impressive growth than the rest of the basal insulin market throughout 2016, albeit from a smaller base. Combined sales of this sub-class (including Xultophy and Ryzodeg sales) almost tripled YOY to $499 million in 4Q16 – for context, the total sales from 4Q16 alone outstrip total global sales for full year 2015. For full year 2016, combined next-generation sales surpassed the $1 billion mark, rising nearly 3.5-fold to $1.3 billion, from $395 million in 2015. Not including Xultophy and Ryzodeg sales, Toujeo held 51% of the market share by value among standalone new-generation basal insulins in 4Q16, though Tresiba’s $222 million in sales for 4Q16 is quickly catching up with Toujeo’s 4Q16 sales of $253 million. For the full year 2016, Toujeo posted sales of $718 million, up 4-fold from 2015. This compares to $601 million for Tresiba, though notably, Toujeo benefits from an additional year on the US market compared to Tresiba, and Tresiba is very early in its US launch cycle in comparison. Tresiba currently holds an edge over Toujeo in terms of new-to-brand prescriptions (NBRx), with 15% and 10% NBRx share, respectively. 
• Novo Nordisk outlined the shifting dynamics of the US basal insulin market in terms of prescription volume during its 4Q16 earnings update. As of December 2016, Lantus held 35% of the new-to-brand prescription (NBRx) share (down sharply from nearly 50% at the beginning of 2016). On the other hand, Sanofi’s combined basal insulin franchise (with Lantus and Toujeo) still leads the market with 45% NBRx share. Tresiba’s steep uptake curve over 2016 has been particularly impressive – despite launching a year later than Toujeo, Novo Nordisk’s next-generation insulin has surpassed Toujeo in terms of NBRx share with 15% in December 2016, compared to 10% for Toujeo. We also found the rapid uptake of Lilly/BI’s newly-launched Basaglar (biosimilar insulin glargine) impressive – the product was only launched in mid-December 2016 and already won 9% of the NBRx share – nearly as much as Toujeo’s 10% share – after only two weeks on the market. In our view, this is clearly an indication of the demand for lower-cost insulin analogs, also reflected in the immense public frustration over rising insulin prices throughout 2016 in the US – this was not such a big deal, of course, when patients were not paying for as much of their care as they are now.

Insulins – Rapid-Acting Analogs

• The rapid-acting insulin market fell 5% YOY to $6.1 billion in 2016, down from $6.4 billion in 2015. In 4Q16, the class fell 2% YOY to $1.7 billion, though it grew 16% sequentially. Notably, this sequential growth comes against an easy comparison, as the market dropped 5% between 2Q16 and 3Q16. By product, 4Q16 sales rose 3% YOY to $820 million for Lilly’s Humalog (insulin lispro), fell 3% to $795 million for Novo Nordisk’s NovoLog/NovoRapid (insulin aspart), and fell 9% to $101 million for Sanofi’s Apidra (insulin glulisine). For the full year 2016, NovoLog revenue totaled $2.9 billion (-4% YOY), closely followed by Humalog at $2.8 billion (-3%) with Apidra trailing at $487 million (-2%). As of 4Q16, Lilly’s Humalog (insulin lispro) now leads with 48% of the market by value, followed by Novo Nordisk’s NovoLog/NovoRapid (insulin aspart) at 46% and Sanofi’s Apidra (insulin glulisine) at 6%. Interestingly, 4Q16 marks the first quarter in several years where Humalog has surpassed NovoLog in terms of market share, posting $820 million vs. NovoLog’s $794 million. Indeed, Lilly management emphasized Humalog’s growing share of total mealtime insulin prescriptions (TRx) during the company’s recent 4Q16 earnings call – increasing from 45% to 49% between January 2016 and January 2017 – and highlighted Humalog as a main growth driver in the company’s 2017 guidance. That said, none of these three major rapid-acting insulin products has experienced stable growth in 2016 and we expect the instability will continue into 2017 and beyond.

Figure 5: Rapid-Acting Insulin (1Q06-4Q16)

• The tough pricing environment surrounding diabetes drugs in the US has been a hurdle for rapid-acting insulins for a number of years.  For instance, NovoLog experienced a 9% decline in US revenue for 2016, whereas ex-US revenue actually rose 4%.  Humalog followed suit with a 5% drop in US sales for 2016, versus a 1% increase in ex-US sales.
• The rapid-acting insulin class continues to face intense competitive pressure from the increased uptake of GLP-1 agonist and SGLT-2 inhibitor therapy to address postprandial excursions, a challenge that will only grow with the launch of basal insulin/GLP-1 agonist combinations (like Sanofi’s own Soliqua and Novo Nordisk’s Xultophy). In our view, the GLP-1 and SGLT-2 classes offer compelling alternatives to insulin therapy for many patients – not only do these newer, more advanced agents improve glycemic control, but their benefits extend to outcomes beyond A1c, including reduced body weight, lower risk of hypoglycemia, and potential cardioprotection and kidney protection. There hasn’t been as much innovation in rapid-acting insulin as there has been in basal insulin, either: Even with Novo Nordisk’s next-generation prandial insulin Fiasp (faster-acting insulin aspart), phase 3 trials showed more of an incremental benefit vs. current mealtime insulins rather than a truly disruptive advance (at least compared to next-generation basal insulins Tresiba and Toujeo vs. older basal analogs and certainly compared to first-gen insulin analogs compared to human insulin and NPH).
• We are curious to see how Fiasp will impact the rapid-acting insulin market. Novo Nordisk has resubmitted its NDA for Fiasp, with an approval hopefully expected by the end of 2017. The FDA had previously issued a Complete Response Letter for the product in October 2016 and management characterized its December meeting with the FDA over the letter as “constructive.” Coming out of the meeting, management shared that Novo Nordisk and the FDA are now “totally in agreement” with regards to the assay for assessment of faster-acting insulin aspart and that the required new data is already available. As such, management express optimism that a US approval of the product would be possible in the second half of 2017. Given this timeline, faster-acting insulin aspart will be the first-to-market next-generation rapid-acting insulin analog to reach the US market. Fiasp is already approved in the EU and Canada and has launched in Canada, the UK, and Germany. It is the only ultra-rapid acting insulin currently available, and likely will remain so for the foreseeable future given Lilly’s termination of its partnership with Adocia for phase 3-ready ultra-rapid insulin BioChaperone Lispro, which will delay the phase 3 program for BioChaperone Lispro until Adocia secures a new partner.

Insulins – Human

• Sales of human insulin from all three insulin manufacturers were flat YOY in 4Q16 at $810 million and rose 1% to $3.2 billion for the full year 2016. By product, 4Q16 revenues totaled $421 million for Novo Nordisk’s human insulin (+6% YOY), $355 million for Lilly’s Humulin (-1%), and $33 million for Sanofi’s Insuman (-18%); full year revenues were $1.7 billion (-1%), $1.4 billion (+5%), and $156 million (-9%), respectively. In 2016, Novo Nordisk’s human insulin led the human insulin market with 53% market share by value, followed by 42% market share for Humulin and 5% for Insuman.

GLP-1 Agonists

• The GLP-1 agonist class grew a remarkable 25% YOY to nearly $5 billion in 2016, from an already high base (sales rose 21% YOY to $3.9 billion in 2015). Sales in 4Q16 were also impressive, up 24% YOY to $1.4 billion. This class is growing fast from a higher base than SGLT-2 inhibitors, and GLP-1 agonists are the single largest driver of growth within the entire diabetes drug and device market, accounting for 38% of overall growth in diabetes. Within branded diabetes drugs only, GLP-1 agonists were responsible for 45% of full-year growth in the market, capturing 28% of this market by value (which is an increase from 26% of the market in 2015). According to Novo Nordisk’s 4Q16 earnings presentation, GLP-1 agonists captured ~10% of the overall market for diabetes pharmacotherapy (including generics) in November 2016 vs. 8% one year earlier, in November 2015. Use of these advanced agents is highest in the US, where GLP-1 agonists account for nearly 12% of all diabetes medicine sales, and in Europe, where they account for nearly 10%. Use remains low in other regions such as China and Japan, where GLP-1 agonists comprised 1% and 5% of all diabetes medicine sales in November 2016, respectively (this share of the overall diabetes drug market was flat in China, also at 1% in 2015).

Figure 6: GLP-1 Agonist Sales (1Q06-4Q16)

• Globally, there’s still plenty of room for increased uptake of GLP-1 agonists, and we count 2016 as a major class victory – the field grew faster from a higher base again! We continue to believe that these agents are under-utilized in diabetes care, and indeed, a recent Diabetes Care paper pointed out that only 5% of type 2 diabetes patients in the US were on a GLP-1 agonist in 2013. This has grown since then, of course, and there are of course valid reasons for the lower number in 2013, starting with high cost (~$20-25/day) and lower than optimal reimbursement, but we’re glad to see spurred growth. We note a few factors that contributed to the strong showing from GLP-1 agonists in 2016:
  
  • CV outcomes are becoming more central to best practice diabetes management, and positive results from LEADER and SUSTAIN 6 highlight cardioprotective benefits to GLP-1 agonist therapy. It’s too early to establish cardioprotection as a class effect based only on data from Novo Nordisk’s Victoza (liraglutide) and semaglutide (plus, SUSTAIN 6 was a small trial and the company will likely initiate a larger one post-FDA approval to support a label update), especially given the neutral results for Sanofi’s Adlyxin (lixisenatide) in the ELIXA trial and for Intarcia’s ITCA 650 in the (albeit small) FREEDOM-CVO trial. Nonetheless, the positive CVOTs have undoubtedly left an impact on thought leaders and are starting to push the needle toward greater use of GLP-1 agonists and other agents with demonstrated CV benefit. It’ll help that the ADA explicitly recommends Victoza to reduce CV risk in adults with type 2 diabetes in its 2017 Standards of Care, a document with national and global influence. If the FDA approves a label update to Victoza reflecting LEADER data, we imagine this will be another boost to the franchise and to the class as a whole. Similarly, we’re eager for upcoming CVOT readouts for GLP-1 agonists to lend more clarity to the class effect question. Upcoming GLP-1 agonist CVOTs include EXSCEL for AZ’s Bydureon (exenatide once-weekly) expected to complete in April 2018, REWIND for Lilly’s Trulicity (dulaglutide) expected to complete in April 2018, and HARMONY for GSK’s Tanzeum (albiglutide) expected to complete in May 2019. We also look forward to full results from FREEDOM-CVO for Intarcia’s ITCA 650 (implantable exenatide mini pump) – while topline results indicated non-inferiority, we’re eager for a post-approval trial designed to assess potential CV superiority.
    • In addition to CV benefits, both Victoza and semaglutide have demonstrated impressive benefits on renal endpoints as well. To date, no diabetes drug has been labeled for a renal indication yet and it’s quite possible that a separate, renal trial would be required to support such an indication. Nonetheless, there is tremendous interest in the renal findings from LEADER and SUSTAIN 6 among endocrinologists and nephrologists.
  • GLP-1 agonists offer benefits on several outcomes beyond A1c, which are accumulating attention in the diabetes field. In addition to the potential for improvements in “hard” outcomes like cardiovascular or renal events, GLP-1 agonists also offer day-to-day benefits like weight loss and reduced hypoglycemia. As we push for more consideration of outcomes beyond A1c – which also include lowering incidence of hypoglycemia, weight loss, decreasing blood pressure/lipid levels, limiting postprandial glucose excursions, and improving patient quality of life – it follows that patients/providers would increase uptake of advanced agents like GLP-1 agonists that aim to do more than lower glucose.
  • GLP-1 agonists offer ease of titration and ease of use compared to insulin, which likely contributed to their 2016 performance. Lilly’s once-weekly, patient-friendly IDEO-designed Trulicity catalyzed growth of the entire GLP-1 agonist class when it came on the scene in 2015. We expect that new GLP-1 formulations including Novo Nordisk’s once-weekly semaglutide (thought to be more potent than existing GLP-1 agonists) and Intarcia’s ITCA 650, if approved, will sustain high class growth going forward. ITCA 650 is being positioned in part as a solution to the challenges of medication adherence, since the implantable mini pump provides continuous subcutaneous release of exenatide for three-six months. In our view, this unique contribution to the GLP-1 agonist class has the potential to expand the market overall, as Trulicity did. Looking even further down the line, the oral formulation of semaglutide is on the horizon and we expect GLP-1 in pill form will expand the patient population for this class even further.
• Novo Nordisk’s Victoza was once again the frontrunner by value among GLP-1 agonists, capturing 60% of pooled revenue in 2016 and 57% in 4Q16. Lilly’s Trulicity was the runner-up, responsible for 19% of pooled revenue in 2016 and 25% in 4Q16. AZ’s Bydureon held 12% of the market by value in 2016 and 10% in 4Q16. AZ’s Byetta (exenatide twice-daily) held 5% of the market by value in 2016 and 4% in 4Q16. GSK’s Tanzeum held 3% of the market by value in 2016 and in 4Q16, and lastly, Sanofi’s Adlyxin/Lyxumia held 1% of the market by value in both 2016 and 4Q16. While there are observations to be made about Victoza losing market share to Trulicity – for comparison, Victoza held 61% of the market by value in 3Q16 vs. Trulicity’s 19% – we don’t see this as a major concern given the terrific underlying class growth of GLP-1 agonists. Novo Nordisk management even attributed Victoza’s momentum to whole class growth during the company’s 4Q16 earnings call. Victoza’s patent will be the first of the two to expire, and Teva Pharmaceuticals filed an abbreviated New Drug Application for generic liraglutide in February. However, we emphasize again: We see plenty of room for multiple GLP-1 agents to do quite well commercially, a trend we think will continue with more innovative options on the market like Intarcia’s implantable exenatide mini pump and Novo Nordisk’s oral semaglutide (currently in phase 3). Increased uptake of GLP-1 agonist products could improve patient outcomes and could strengthen all five existing GLP-1 agonist businesses, plus the ones to come.
  
  • Notably, Trulicity continued to drive the majority of GLP-1 agonist class growth, accounting for 76% and 63% of growth in 4Q16 and full year 2016, respectively. That said, market leader Victoza continued to drive substantial growth as well, responsible for 17% of growth in 4Q16 and 27% of growth in 2016. GSK’s Tanzeum rounded out the growth of the class with 7% in 4Q16 and 10% of growth for 2016 – this product is still rather early in its launch cycle so it’s not surprising that it is still contributing growth, though its performance certainly hasn’t been as impressive as that of fellow newcomer Trulicity.
• After much anticipation and unfortunate FDA delays, two basal insulin/GLP-1 agonist combination products were approved for the US in 4Q16. This new class of injectable therapy includes Novo Nordisk’s Xultophy (insulin degludec/liraglutide) and Sanofi’s Soliqua/Suliqua (insulin glargine/lixisenatide), and we’re very excited to see how both products fare. Soliqua appears to be a main priority for Sanofi Diabetes, and the company was swift to launch the product in US pharmacies soon after FDA approval. Novo Nordisk, on the other hand, is taking a slow-and-steady approach to Xultophy. Company reps have cited unfamiliarity as a limiting factor to broad uptake of Xultophy (which was EMA-approved in 3Q14) – not only is the concept of a fixed-ratio basal insulin/GLP-1 combo new for many patients/providers, but insulin degludec (branded individually as Tresiba) is also relatively new-to-market (especially compared to the insulin glargine or Lantus component of Soliqua). In line with this, management has suggested that Tresiba and Victoza will continue to be the top priorities over Xultophy. Thus far, Novo Nordisk has reported Xultophy revenue as part of its new generation insulin portfolio (alongside Tresiba and Ryzodeg). We’re eager to see if/how Sanofi reports Soliqua revenue come April 28, during the company’s 1Q17 earnings call.

SGLT-2 Inhibitors

• SGLT-2 inhibitors, including J&J’s Invokana (canagliflozin), AZ’s Farxiga/Forxiga (dapagliflozin), and Lilly/BI’s Jardiance (empagliflozin), posted $2.9 billion in sales in 2016, which represents 44% YOY growth. Pooled revenue from SGLT-2 inhibitors was $841 million in 4Q16, which marks 48% YOY growth. By value, this class of advanced agents held 16% of the market for branded (non generic) diabetes drugs in 2016 (up from 13% in 2015) and held 18% of this market in 4Q16. Importantly, these calculated values are based on our estimates for total Jardiance revenue, since only Lilly’s share is publically reported (there is thus some degree of speculation in these numbers). We approximate Lilly’s share of Jardiance revenue at ~33%, based on a comparison between Lilly’s reported portion of full-year 2015 Jardiance revenue ($60 million) and total global net sales of Jardiance for 2015 from BI’s diabetes update (€165 million, or ~$183 million). Regardless, there’s no question that SGLT-2 inhibitors are the fastest growing class of diabetes drugs – this isn’t entirely surprising, given that they also make up the newest class of glucose-lowering medicines on the market. Following the groundbreaking EMPA-REG OUTCOME results presented at EASD 2015, many (including us) anticipated a more dramatic boost to the SGLT-2 inhibitor class. Sales growth has certainly been impressive, but has lagged behind these post-EMPA-REG OUTCOME expectations. Lilly management even expressed some disappointment in slower-than-expected growth for the Jardiance franchise during the company’s 3Q16 earnings call. All this said, we have reason to believe that SGLT-2 inhibitors might return to higher growth margins in 2017:
  
  • (i) In December, the FDA approved a new indication for Jardiance for the reduction of CV death. Busy providers surely rely on product labels to inform their practice. This label change came pretty late in 4Q16 and only launched in early 2017, so we will be watching Lilly’s 2017 quarterly updates closely to glean a sense of the update’s impact on prescriptions or sales.
  • (ii) A number of diabetes treatment guidelines have been updated to reflect a preferred position for Jardiance in patients with type 2 diabetes and existing CV disease, most notably the ADA 2017 Standards of Care. Again, we can’t emphasize enough the value of up-to-date treatment algorithms and drug labels that reflect the latest clinical evidence, given how much endos and PCPs have to juggle in managing diabetes (among other conditions).
  • (iii) The CANVAS trial for Invokana is slated to report at ADA 2017 in June. A second SGLT-2 inhibitor CVOT with positive results would add evidence for a possible cardioprotective class effect.
  • (iv) The CVD-REAL study recently presented at ACC 2017 found an impressive 39% risk reduction for heart failure hospitalization and 51% risk reduction for all-cause mortality associated with SGLT-2 inhibitors vs. other agents (p<0.001 for both comparisons). This AZ-sponsored trial provides real-world evidence on the benefits to SGLT-2 inhibitor therapy, whether Invokana, Farxiga, or Jardiance, and also demonstrates these benefits in a primary prevention population – 87% of CVD-REAL participants had no established CV disease at baseline, whereas EMPA-REG OUTCOME participants were high-risk for CV events at baseline. Due to limitations of real-world, retrospective research, it’s unlikely that CVD-REAL would support any FDA-sanctioned label changes, but these findings still provide critical information for prescribers and we believe they will do much to sway more patients/providers to consider SGLT-2 inhibitor therapy.

Figure 7: SGLT-2 Inhibitor Sales (1Q13-4Q16)

• Invokana continues to lead the class by value, with 49% of the market in 2016 and 44% in 4Q16, though J&J’s SGLT-2 inhibitor is losing share to AZ’s Farxiga and Lilly/BI’s Jardiance. Farxiga held 29% of the market by value in 2016 and 28% in 4Q16. Jardiance (based on our estimates of total revenue) held 21% in 2016 and 27% in 4Q16. Invokana’s portion of pooled revenue has been on a steady decline, from 54% in 1Q16 and 2Q16, to 47% in 3Q16, to 44% in 4Q16. We wonder how much these market dynamics have been affected by ongoing safety concerns, including heightened risk for lower limb amputations associated with Invokana in interim CANVAS data and strengthened warnings for acute kidney failure on the labels of Invokana and Farxiga (but not Jardiance, which actually showed renal protection in EMPA-REG OUTCOME – that said, empagliflozin treatment in the trial was also associated with an initial drop in eGFR before stabilizing throughout the duration of the trial; it’s possible that canagliflozin and dapagliflozin will demonstrate similar long-term renal protection in their outcomes trials). In our view, careful monitoring and strong patient education could control these risks while allowing more people to benefit from the A1c-lowering and weight loss efficacy of SGLT-2 inhibitors. We expect AZ’s fixed-dose combination Qtern (dapagliflozin/saxagliptin), recently approved by the FDA after resubmission, to further boost the company’s SGLT-2 inhibitor business in 2017 and beyond. While it’s true that Lilly/BI’s Glyxambi (empagliflozin/linagliptin) hasn’t gained much commercial traction, we feel AZ is uniquely positioned to make a combo product in this class successful – AZ’s diabetes portfolio is smaller than Lilly/BI’s, and AZ management seems wholly committed to the Farxiga franchise which now includes Qtern, even willing to let SGLT-2 inhibitor sales cannibalize some DPP-4 inhibitor (Onglyza) sales.
• Farxiga leads the SGLT-2 inhibitor class by volume according to AZ’s 4Q16 update, with 42% of total prescriptions (TRx) as of November 2016, when Invokana and Jardiance both held ~25% TRx. AZ management highlighted Farxiga’s volume stability “even in the face of growing competition,” which is definitely noteworthy. Given that Invokana sales were flat YOY in 2016 and that Farxiga and Jardiance drove SGLT-2 class growth, it appears that Invokana is primarily losing market share to Jardiance. Farxiga’s first-to-market status ex-US is also a highly-plausible reason for its stronghold on volume share, and indeed, CVD-REAL showed that first-to-market status has a major impact on prescription volume: 92% of European participants on an SGLT-2 inhibitor were taking Farxiga, while 76% of US participants on an SGLT-2 inhibitor were taking Invokana (first-to-market in the US).

DPP-4 Inhibitors

• Pooled DPP-4 inhibitor sales totaled $9.7 billion in 2016, a modest 4% YOY rise from a high base of $9.3 billion in 2015. Revenue in 4Q16 grew 2% YOY but declined 4% sequentially to $2.4 billion. By our calculations, the DPP-4 inhibitor class was responsible for 16% of YOY growth for the overall market of branded (non generic) diabetes drugs in 2016. In contrast, pooled class revenue declined last year and thus DPP-4 inhibitors made no contribution to overall market growth in 2015. Importantly, these values are based on our estimates of total Tradjenta franchise sales, since only Lilly’s portion of revenue is reported publically. We estimate Lilly’s share of revenue at ~36% based on Lilly’s reported Tradjenta franchise sales for 2015 ($357 million) and global net sales for the franchise in 2015 (€909 million, or ~$1 billion) as reported in BI’s diabetes update. On the whole, DPP-4 inhibitors have experienced fluctuating sales in the past couple years due to (i) competition from GLP-1 agonists and SGLT-2 inhibitors, and (ii) US pricing pressures affecting diabetes. Our pooled analyses from 1Q16, 2Q16, and 3Q16 showed similar, single-digit YOY growth for the class – we’re glad to see this sustained growth, however small, because we still see an important role for DPP-4 inhibitors to play in diabetes care. These agents have demonstrated strong safety and tolerability over time, and they boast a familiarity factor among patients/providers that isn’t yet matched by the newer classes of GLP-1 or SGLT-2 products. The oral formulation of DPP-4 inhibitors makes them preferred treatment over GLP-1 agonists for some patients, including many people with recently-diagnosed type 2 diabetes. Their safety profile makes them a preferred choice over SGLT-2 inhibitors for individuals with renal impairment, and thought leaders including Dr. Robert Ratner have defended DPP-4 inhibitors for elderly patients. In line with this, Novartis management has outlined a three-pronged marketing strategy for Galvus (vildagliptin), promoting the product (i) to the elderly, (ii) to individuals with impaired renal function, and (iii) to all type 2 diabetes patients earlier in the course of disease. Merck also remains highly-committed to the Januvia franchise (fitting, since Januvia leads the DPP-4 inhibitor class in sales, and is in fact the most profitable branded diabetes drug on the market) for its efficacy as well as its safety features. The company filed with the FDA to include TECOS data on the Januvia label, which would have put to bed safety-related concerns surrounding heart failure, though this request was unfortunately met with a Complete Response Letter (CRL) – we await more details during Merck’s 1Q17 earnings call on May 2.

Figure 8: DPP-4 Inhibitor Sales (1Q07-4Q16)

• Merck’s Januvia (sitagliptin) held 63% of the DPP-4 inhibitor market by value in 2016 and held 64% in 4Q16. In a distant second, Novartis’ Galvus (vildagliptin) held 12% of the market by value in 2016 and held 13% in 4Q16. Lilly/BI’s Tradjenta (linagliptin) held 12% in both 2016 and 4Q16, AZ’s Onglyza (saxagliptin) held 7% in 2016 and 6% in 4Q16, and Takeda’s Nesina (alogliptin) held 5% in both 2016 and 4Q16. Note that these value share estimates are based on our calculations for total Tradjenta revenue, since only Lilly’s share (and not BI’s) is reported publically.TZD
• The negative sales trajectory for the thiazolidinedione class (TZDs) continued in the second half of 2016. This class no longer drives much revenue due to its generic status and long list of safety concerns over bladder cancer, heart failure, and bone fractures. Takeda’s Actos (pioglitazone; revenue split with Lilly) is the only major brand accruing revenue in the class and both Takeda and Lilly appear to be diminishing attention to this drug: Takeda only released Japanese revenue for Actos in 1Q16 (sales declined 32% YOY and 35% sequentially to $13 million [1.5 billion JPY]) and stopped breaking out Actos sales altogether in 2Q16; Lilly ceased breaking out Actos sales with its 1Q16 update.
• The waning popularity and revenue of TZDs is not unexpected due to the class going generic, despite positive clinical evidence for pioglitazone in 2016. In 1Q16 the IRIS trial demonstrated that treatment with the generic TZD pioglitazone produced a relative risk reduction of 24% for the composite primary endpoint of fatal and non-fatal stroke and MI (HR=0.76; CI: 0.62-0.93, p<0.007). Secondary endpoint analyses presented at ADA in 2Q16 demonstrated a 52% risk reduction for progression to type 2 diabetes and reductions in insulin resistance and fasting plasma glucose (FPG) with pioglitazone in patients with elevated insulin resistance and high cardiovascular risk. Furthermore, we have heard significant optimistic commentary on the TZD class at recent meetings, particularly in relation to pioglitazone’s role in Dr. Ralph DeFronzo’s very successful triple therapy trial and as a NASH therapy. We do think there is still significant class overhang given the move to generic status – historically, the weight gain and rest of the side effect profile have been major negatives for consumers though we have heard multiple experts say that if patients can take a lower dose, some of this dissipates. Of course, we would expect the majority of patients to choose generic pioglitazone rather than branded Actos at this point, meaning that the downward trend in Actos revenue is unlikely to change course. Given the generic status of the TZDs and lack of public financial information on sales of the branded formulations, we will no longer be including TZDs in our earnings roundups moving forward.

3. Diabetes Technology

BGM

• Pooled global revenue for the “Big Three” BGM companies (Roche, J&J, and Abbott) totaled an estimated ~$1.2 billion in 4Q16 (down 6% YOY) and ~$4.6 billion in 2016 (down 6% from 2015). Both performances came against easy comparisons to the prior year, as revenue declined an estimated 10% in 4Q15 and 12% for the full year 2015. Pooled Big 3 sales have now fallen for five consecutive years, and this is the second time since we began tracking over a decade ago that full-year Big Three revenue has dropped below the $5.0 billion mark. As the chart below shows, the field is still on a generally downward trend, and since the peak in 2011, has declined >30%. In that time period, Abbott’s yearly revenue has fallen the least at -16% overall (-27% if estimated FreeStyle Libre sales are subtracted) while J&J and Roche have both seen estimated sales fall in excess of 30% (-36% for J&J and -32% for Roche). On the plus side, the chart below suggests that the BGM market may be recovering after a low point in 1Q16. 

Figure 9: Pooled BGM Sales by Geography (1Q12 – 4Q16)

Figure 10: Estimated BGM Sales by Company – Roche, Abbott, J&J (1Q12 – 4Q16)

• Where will the Big 3 be in two to three years? Abbott is investing in FreeStyle Libre, Roche is moving increasingly into CGM (though also doubling down on BGM with the Accu-Chek Guide BGM system), and J&J announced on its 4Q16 earnings call that it will explore “strategic options” for its Diabetes business (operating partnerships, joint ventures, strategic alliances, or a sale of the businesses. Will these companies continue to invest and innovate in BGM? J&J is certainly the most difficult to predict – if the business does remain, perhaps the WellDoc partnership will bolster sales. Meanwhile, privately held Ascensia, which boasts a line of very accurate meters, appears to be quite committed to BGM (new Contour Plus and One system launches, Glooko partnership). Meanwhile, One Drop, mySugr, Livongo are pushing forward with subscription coaching/support models – all three are still very small at this stage, however.
• We’d note that these BGM numbers are highly estimated, since none of the Big Three disclose BGM-only sales. The J&J and Roche numbers in this section exclude our estimates for their insulin pump sales. Abbott’s numbers in this section do include FreeStyle Libre.
• Declines in the US have driven the category’s weakness, no doubt a continued byproduct of pricing pressures and CMS’ competitive bidding program. In 4Q16, pooled US sales fell an estimated 20% to just $298 million on an easy comparison to an 11% decline a year ago. For the full year, pooled sales of ~$1.1 billion fell 19% YOY from ~$1.7 billion in 2015. Roche had the roughest 4Q16 in the US, as BGM sales fell ~44% YOY, though J&J’s 4Q16 US BGM sales fell an estimated 7% and Abbott’s fell 14%.
  
  • Since the second round of competitive bidding took effect in July, J&J and Abbott have actually seen US sales rise sequentially relative to 1H16. There are at least two possible explanations for this: (i) the slight improvement is just part of the businesses’ natural seasonality, and the effects should be more well-defined in the coming quarters; or (ii) the first round of the program was very impactful, and the further reduction in cost and suppliers in the second round only had marginal deleterious outcomes. Still, the program continues to harm people with diabetes, according to a recent AADE report, which found that Medicare beneficiaries have diminished choice and access: (i) BGM brands carried by competitive bidding mail order suppliers have fallen nearly 50% since the start of competitive bidding; (ii) the number of BGM models available under mail order suppliers is down to 36, less than half the number available in 2009; and (iii) most suppliers do not meet the benchmark of providing brands/models that covering 50% of the market. We wonder if and when CMS will acknowledge the accumulating evidence that competitive bidding is sacrificing quality, patient choice, and likely short- and long-term outcomes. Improved access and choice should improve patient outcomes in the long run (saving the Medicare money) and build a more sustainable commercial environment that rewards meaningful innovation.
• The Big Three fared better internationally, where estimated pooled 4Q16 BGM revenue of $904 million was flat against an easy comparison (sales fell 12% in 4Q15). Pooled international sales of ~$3.5 billion were also flat on an annual basis. J&J (down 3% YOY in 4Q16; down 4% in 2016) and Roche (down 4% YOY in 4Q16 and down 3% in 2016) both performed better outside of the US, but that’s not saying much, as both still saw negative growth. Abbott, on the other hand, saw 16% operational growth for both 4Q16 and 2016 driven by FreeStyle Libre sales.
  
  • If conservatively-estimated FreeStyle Libre sales of ~$145 million in 2H16 are excluded, then pooled Big Three international revenue fell ~4% in 2H16 (vs. flat when Libre is included). Similarly, pooling only J&J and Roche international sales suggests BGM sales declined 4% YOY outside of the US in the second half of the year. FreeStyle Libre sales back out conservatively to ~$55-$70 million in 3Q16 and ~$75-$90 million in 4Q16.
• Abbott yearly sales of ~$1.1 billion grew 2% relative to 2015 sales. As noted in the above graph, the company’s sales have been the steadiest of the Big Three over the past few years, even now as it invests more and more in FreeStyle Libre. We wonder if sales will see an upward trajectory in the next few quarters, assuming Libre continues to expand in the EU (over 250,000 users as of 4Q16 – we’re looking forward to an update on the 1Q17 call) and possibly enters the US market in 2H17 (per the 4Q16 call; it was filed with FDA in 3Q16). The flip side of significant Libre uptake is that YOY comparisons are going to become more difficult – will the product hit a saturation point? In addition, the BGM business is much less healthy in reality, if FreeStyle Libre is excluded. We hope Abbott continues to share Libre’s user base – or, better yet, revenue – so we can continue to conceptualize the health of both franchises.
• J&J LifeScan yearly estimated sales of ~$1.6 billion fell 8% YOY, and the company is exploring strategic options for the diabetes business as of the 4Q16 call. In our 4Q16 report, we explore potential acquisitions and partnerships for the business as well as any move’s impact on current J&J partners. We imagine the 1Q17 call (Tuesday, April 18!) will clarify J&J’s position on a potential transaction. A little over a year ago, J&J launched the Bluetooth-enabled OneTouch Verio Flex BGM in the US, but no sales metrics have been shared. A month later, the company partnered with WellDoc to integrate BlueStar software into the OneTouch Verio Flex BGM and Reveal App – the integration has been cleared by FDA and a launch was expected in 1Q17, though now that it’s April, we assume that did not happen.
• Plagued by a 29% YOY BGM sales decline in North America, Roche saw worldwide sales fall to an estimated ~$1.9 billion in 2016 (down 8% globally vs. 2015). North America has been particularly challenging for Roche – 2009 was the last time that full year revenue grew. Estimated BGM sales outside North America dropped 3% YOY in 2016 to ~$1.6 billion. The US declines were not only felt in BGM, but presumably also pumps ­– Roche ceased pump sales in the US effective January 1, 2017. Challenging environment aside, we’re glad to see Roche still investing in the pipeline. The Accu-Chek Guide BGM system has launched in Denmark, Switzerland, and Australia, and was slated to launch in the US, Italy, and Germany in 1Q17. The Accu-Chek Instant BGM launched in Europe in February. Roche has also established two very smart BGM partnerships: (i) an “exclusive” agreement with Medtronic to develop a dedicated Bluetooth-enabled blood glucose meter that will communicate with Medtronic's future Bluetooth-enabled insulin pumps and (ii) a global partnership with mySugr to directly integrate the Accu-Chek Connect meter into the world’s most popular diabetes app, mySugr Logbook (940,000+ users). The latter positions Roche to sell more strips to high frequency testers and leverage external innovation from an app expert.

CGM

• By our estimates, the worldwide CGM market grew to a record-high ~$272 million in 4Q16 (up 20% YOY) and a notable ~$956 million in 2016 (up 29% YOY). This figure includes Dexcom, an estimate for Medtronic, and Senseonics. As expected, the Q4 and 2016 performance were both all-time records in our CGM model, cruising through the previous quarterly record (~$241 million in Q3) and annual record (~$740 million in 2015). The CGM field fell just shy of hitting $1 billion in sales in 2016, which would have been a major milestone for what is still a young field – we’ll have to wait another year! Dexcom propelled the category yet again, with a string of record-high sales driving 80% of the field’s growth in 2016. As the field gets bigger, of course, the law of large numbers is kicking in: 29% growth for the year was the lowest we’ve seen for the category since 2013 (back when Dexcom’s sales really hit an inflection point). [Note: Abbott’s FreeStyle Libre is not included in these estimates, as the company has not shared specific sales figures yet.]

Figure 11: Pooled CGM Revenue, Estimated (1Q12 – 4Q16)

• We estimate that ~76% of CGM sales came from the US in 2016 (consistent over time), and the US drove ~77% of the field’s growth. This likely reflects: (i) Dexcom’s sales are still heavily US-weighted (~87%) and are driving the majority of the category’s growth; (ii) there is less reimbursement for CGM in Europe than in the US (though it’s gradually improving and 2017 could see an uptick, particularly with Germany); and (iii) FreeStyle Libre is potentially cannibalizing some CGM sales in Europe (now 250,000+ users). 

Figure 12: CGM Sales – Dexcom + Medtronic Estimated + Senseonics (1Q12-4Q16)

• Dexcom sales hit a record-high $171 million in 4Q16 (up 31% YOY) and $573 million in 2016 (up 43% YOY). Crossing half a billion dollars for the first time was a major annual milestone and hit the upper end of 2016 guidance ($550-$575 million). Dexcom has now seen record-high sales in seven out of the past nine quarters, though for the third straight quarter, saw its lowest YOY quarterly growth since 3Q12 – a clear reflection of the large sales base and the very difficult year-over-year comparisons. The company’s worldwide installed base is now ~200,000 users, a ~40% rise from ~140,000-150,000 shared at JPM 2016. The outlook for 2017 is positive, albeit at slightly lower expected growth rates: 25%-30% YOY sales growth ($710-$740 million) and 35% YOY patient base growth (~270,000). We wonder if there is upside given the Medicare reimbursement win in March and several upcoming launches: (i) new G5 touchscreen receiver (approved in March); (ii) an Android version of G5 (launched expected by mid-year); and the one-touch inserter and lower profile transmitter, G5x (FDA questions received in February). On the other hand, Dexcom will likely face its toughest US competition ever in 2017 – Medtronic plans to launch the more competitive Guardian Sensor 3 (in the MiniMed 670G and in the standalone Guardian Connect CGM), while Abbott may launch FreeStyle Libre consumer in the US in 2H17 (assuming it secures approval). Read our Dexcom 4Q16 report.
• We estimate Medtronic’s worldwide CGM sales totaled ~$100 million in 4Q16 (up ~6% YOY) and ~$382 million in 2016 (up ~13% YOY). [These are estimates and could be off in magnitude and direction. Medtronic told us in late 2015 that roughly 20% of its Diabetes sales come from CGM. The mix likely varies from quarter to quarter.] Assuming Medtronic’s geographic CGM sales split is broadly consistent with overall sales, US CGM revenue was an estimated ~$62 million in 4Q16 (up ~6% YOY) and ~$228 million in 2016 (up 8% YOY) vs. international revenue of ~$38 million in 4Q16 (up ~6% YOY) and $155 million in 2016 (up 20% YOY). We expect 2017 will be Medtronic’s strongest CGM year yet, with Guardian Connect (standalone mobile CGM) and the MiniMed 670G/Guardian Sensor 3 bringing substantially improved products to the US. Medtronic expects mid-to-high-single digit Diabetes growth to start calendar 2017, accelerating to double-digit growth from May 2017-April 2018 (FY18) once the 670G/Guardian Sensor 3 fully launches (starting in June). As of the 4Q16 call, Guardian Connect underwent “pilot launches in major European markets” and remains under FDA review, with a US launch expected in May-October. Read our Medtronic 4Q16 report.
• Senseonics reported 4Q16 and 2016 sales of ~$300,000 following the first commercialization of the Eversense implantable CGM, on-body transmitter, and mobile app in Sweden, Germany, and Norway. As of February, there were ~110 patients using Eversense in Germany (11 clinics, ~10 patients per clinic), and the number of clinics in Sweden starting patients doubled in Q4. Revenue in 1Q17 is expected to “roughly double” that of 4Q16 (~$600,000), with full year 2017 revenue ambitiously expected to accelerate to $6-$7 million. FDA approval of Eversense is expected in October, roughly 12 months following submission. Cash is definitely the company’s biggest concern in 2017: current financial resources of ~$25 million are only expected to last through the end of September. Obviously another raise will be needed to fund US commercialization, assuming FDA approval comes through late in the year. On the pipeline front, the 55% smaller, water resistant next-gen transmitter received a CE Mark in 4Q16 and is now available in Europe. A CE Mark for a 180-day indication is also expected in the next few months (submitted in 2Q16).
• Abbott has not officially reported sales for FreeStyle Libre, but shared in 4Q16 that there are over 250,000 users in Europe. EU Libre sales back out to ~$90 million if all patients are using two sensors per month (~120 euros per month) – we estimate sales are probably closer to $75-$90 million in light of samples, not all using two per month, etc. [We have not included any estimates for FreeStyle Libre sales in the CGM category sales noted above.] This is very impressive uptake just over two years into the launch, putting Libre’s EU installed base larger than Dexcom’s global installed base. Growth would obviously pick up if FreeStyle Libre consumer is approved by FDA this year (submitted in 3Q16). Read our Abbott 4Q16 report.

Estimated CGM Market Shares by Sales (4Q16)

• Dexcom had an estimated ~71% share of the US CGM market by sales in 4Q16, up from ~66% in 4Q15 and similar to 3Q16. This seems in the ballpark based on Dexcom’s 78% share in 4Q16 in the diabetes market research company dQ&A Diabetes Connections USA patient panel (contact CEO Richard Wood) and 73% share of the T1D Exchange registry (per a presentation at the T1D Exchange’s fall 2016 Annual Meeting).
• We estimate that Medtronic held ~64% of the international CGM market by sales in 4Q16. This was down slightly from both ~68% in 3Q16 and ~69% in 4Q15. In our model, Medtronic has seen a steady downward trend in its international market share (by sales) from our estimate of 90%+ a few years ago. Dexcom is definitely providing more EU competition than in years past as it expands its team outside the US. On the plus side, Medtronic should see broader CGM uptake outside of the US as Guardian Connect launches to court MDIs.

Insulin Pumps and Patch Delivery Devices

• We estimate the insulin pump and delivery devices market grew ~5% YOY in 4Q16 (~$617 million) and ~6% in 2016 (~$2.3 billion). This includes sales from Medtronic (estimated), Insulet, Tandem, Animas (estimated), Roche (estimated), Valeritas (included for the first time), and Cellnovo.
• International sales drove an estimated ~66% of the industry’s growth in 2016, driven by 9% YOY international growth for Medtronic and 78% YOY international growth for Insulet’s OmniPod. Geographic growth was more balanced in 4Q16, with the US providing ~59% of industry growth vs. ~41% outside the US – both were again driven by Medtronic and Insulet. In looking at the chart below, the US seems to be accelerating and driving most of the field, though the underlying numbers for the overall year still suggest OUS sales are driving the field. Looking ahead, we assume 2017 will be more US-driven as Medtronic launches the MiniMed 670G.
• Insulet drove an estimated ~57% of the pump industry’s growth in 2016, propelled by strong 31% YOY worldwide OmniPod growth for the year. Medtronic had a tough year in the US (2% sales decline), so only provided 26% of the overall industry’s growth in 2016 (solely from international sales). Tandem was next in line, providing 12% of industry growth in its weakest year of growth since launching.

Figure 13: Pooled Insulin Pump Revenue, Estimated (1Q12 – 4Q16)

• Medtronic’s estimated worldwide insulin pump sales were ~$401 million in 4Q16 (~6% growth YOY) and ~$1.5 billion in 2016 (~2% growth YOY). [Medtronic confirmed with us late in 2015 that roughly 80% of its overall Diabetes sales come from pumps, with the remaining 20% from CGM. This likely varies from quarter to quarter and year to year.] Q4 saw record-high Diabetes sales, including 6% growth in the US (on MiniMed 630G uptake) and 6% growth outside the US (on MiniMed 640G uptake). For 2016, we estimate the company’s international pump sales grew ~9%, while US pump sales declined ~2% – the first year with an estimated US pump sales decline since 2011. While some likely reflects competition from Insulet and Tandem, some of it is certainly pent up demand for those waiting on the MiniMed 670G hybrid closed loop. The system is currently undergoing a limited launch (customer training phase) with >700 users, and one rep at ENDO estimated that ~25,000 patients will be awaiting a 630G to 670G upgrade once the broader launch begins in June. Management expects to maintain mid- to high-single digit growth in the upcoming quarter, with double-digit growth expected in FY18 (May 2017-April 2018) once the 670G fully launches. Read our Medtronic 4Q16 report and our coverage of the 670G customer training phase.
• Insulet’s OmniPod saw record-high 4Q16 sales of $84 million (up 21% YOY) and 2016 sales of $302 million (up 31% YOY). The Q4 performance was encouraging in both the US ($63 million, +17% YOY) and outside the US ($21 million, +35% YOY), and both were all-time highs for the third straight quarter. 2016 was also the first time worldwide OmniPod sales exceeded $300 million in a year, a nice milestone under the new management team. Management guided for ~14% growth in the US OmniPod business ($257-$265 million) in 2017 and ~36% growth in the international OmniPod business ($94-$101 million) – both are a downtick from 2016’s performance, though we’d note that sales almost always exceed guidance under this management team. At the end of 2016, Insulet’s estimated worldwide OmniPod installed base was ~105,000-110,000 “active users,” reflecting ~26% growth vs. ~85,000 users at the end of 2015. 60%-65% of these patients are in the US, while an estimated 35-40% are outside the US. The worldwide base is expected to grow 20% in 2017, while the US installed base is again expected to increase by ~15%. On the pipeline side, the new Bluetooth-enabled OmniPod Dash PDM and pod is still expected to launch later this year, though it will be a “limited market release” that goes into 1Q18. Two feasibility studies of the OmniPod Horizon Automated Glucose Control System are now complete, totaling over 50 adults and children (down to age six years). A launch of the system is still expected in late 2019, well behind Medtronic and potentially others. Read our Insulet 4Q16 report.
• Tandem’s sales totaled $25 million in 4Q16 (a 15% YOY decline) and $89 million in 2016 (up 21% YOY). The 4Q16 performance was Tandem’s first-ever YOY decline, though it was an extremely challenging YOY comparison (63% growth in 4Q15) and sales did reach their second highest point ever. Still, headwinds included a much more competitive market (e.g., MiniMed 630G, 670G, strong momentum for Insulet) and UnitedHealthCare’s exclusive agreement with Medtronic. Tandem shipped 4,418 pumps in 4Q16, a 29% YOY decline. On the plus side, the installed base is now over 50,000 users, and approximately half of 2016 shipments were to MDIs. Sales for 2017 are estimated at $100 million-$107 million, reflecting slower 12%-20% YOY growth from 2016. Revenue will be back-loaded, given seasonality and three incremental revenue sources: (i) Tandem’s first pump renewals from early customers (~6,500 pumps shipped in 2013); (ii) a mid-2017 expected launch of the t:slim X2 with Dexcom G5; and (iii) sales of the new t:lock infusion sets. On the cash front, Tandem completed a public stock offering late last month, raising gross proceeds of $22.5 million. This augments the company’s $56 million in cash as of December 31, which should extend financial runway roughly a year or perhaps even further. Read our Tandem 4Q16 report.
• We’re not sure of J&J Animas’ pump sales or growth. This roundup estimates sales were roughly flat YOY at just over ~$50 million in 4Q16 and slightly over ~$200 million in 2016. These could be off in both magnitude and direction, as J&J does not disclose these numbers. For context, combined LifeScan/Animas sales declined 4% in 4Q16 and declined 11% YOY in 2016, though most of that is likely from challenges in BGM. The big unknown for J&J is what it will do with the Animas, LifeScan, and Calibra businesses – the 4Q16 call shared it is exploring “strategic options,” including operating partnerships, joint ventures or strategic alliances, or a sale of the businesses. In the pipeline, FDA and Health Canada approved J&J’s OneTouch Vibe Plus insulin pump with Dexcom G5 integration in December. J&J is “evaluating launch timing,” and given the recent commentary on the business, we’ll be interested to see if it might launch in 2017. The OneTouch Via (formerly Calibra Finesse) bolus-only insulin delivery patch device is now expected to undergo a “focused” US launch in 1H17 – this continues to get pushed back. Read our J&J 4Q16 report.
• We’re not sure of Roche’s pump sales or growth. This roundup estimates sales were flat YOY at just under ~$50 million in 4Q16 and ~$175 million in 2016. These could be off in both magnitude and direction, as Roche does not disclose these numbers.  For context, worldwide Roche Diabetes sales declined 11% YOY in 4Q16 and declined 5% YOY in 2016. Effective the beginning of 2017, Roche discontinued pump sales in the US to focus efforts on the launch of the Accu-Chek Guide BGM. This did not come as a surprise to us, but is a reminder of the fragile pump ecosystem and competitive environment. The biggest Roche pipeline launches are focused on glucose monitoring – the Accu-Chek Insight CGM in Europe and the Accu-Chek Guide BGM in EU and US – and we’ll be interested to see what the company does with its insulin pump franchise moving ahead. Read our Roche 4Q16 report.
• Sales of Valeritas’ V-Go insulin delivery device totaled $4.8 million in 4Q16, rising 4% YOY and falling 2% sequentially from 3Q16. Full year sales grew 8% YOY to $19.6 million. This is the first roundup that includes Valeritas in this section, following the alternative public offering last year that took the company onto the OTC markets. In March, Valeritas priced its IPO re-filing on the NASDAQ, seeking to raise $52.5 million. If successful, the IPO will bring in much needed financing, as cash stood at just $9.9 million at the end of 4Q16, reflecting an ~$6 million burn in the quarter. Valeritas’ market cap currently stands at ~$43 million. It’s a challenging time in the insulin delivery device field, and though this product has a lot of upside (see here), there is also a lot more competition. Read our Valeritas 4Q16 report.
• Cellnovo’s sales totaled €0.36 million in 4Q16 (up 21% sequentially) and €1.4 million in 2016 (up 133% YOY). We look more at the sequential trend rather than YOY growth, given the low sales base in these early days of commercialization. The company shipped 109 new pumps during the quarter, up from 68 in 3Q16 and bringing total shipments to 629 since launch. Continuing to scale pump shipments and sales is major priority, as cash is running thin: €10.7 million remained at the end of Q4, enough for roughly two more quarters at the current burn rate of ~5 million euros per quarter. In March, Cellnovo announced plans to raise €8.9 million from an equity line and ~€10 million in debt financing. This should give the company some breathing room to execute near-term. Read our Cellnovo 4Q16 report.

4. Obesity

• Pooled revenue for all major obesity drugs totaled $118 million in 4Q16, up 2% YOY and 28% sequentially. The obesity market totaled $371 million for the full year, rising 140% from $153 million 2015. Without including Saxenda, the market would have totaled only $137 million in 2016, a 10% decline from 2015. Novo Nordisk first began breaking out sales of Saxenda in 1Q16, nearly a year after its 2Q15 launch, and the product’s performance has only improved throughout 2016. Novo Nordisk’s Saxenda (liraglutide 3.0 mg) had a fantastic 4Q16, with revenue more than doubling YOY to $77 million. Full year 2016 sales of Saxenda, at $234 million, more than tripled YOY compared to 2015. Most other major obesity drugs experienced YOY declines or only modest growth in 4Q16: Vivus’ Qsymia (phentermine/topiramate extended-release) fell 21% YOY to $11 million and Orexigen’s Contrave (naltrexone/bupropion extended-release) grew 6% YOY to $14 million. Arena/Eisai’s Belviq (lorcaserin) was the exception with a 92% YOY rise in revenue to $15 million – an encouraging recovery, albeit against easy comparisons, from several consecutive quarters of negative growth. Overall, the trends apparent in 4Q16 – widespread challenges in the obesity market (to which Saxenda appears immune) – were recapitulated in the full year of 2016 as well. With the exception of Saxenda, all major obesity drugs experienced significant negative growth in 2016: Belviq revenue fell 12% to $39 million, Qysmia revenue fell 11% to $48 million, and Contrave revenue fell 7% to $50 million. Meanwhile, Saxenda revenues totaled $234 million for the drug’s first full year on the market – singlehandedly more than doubling the size of the $153 million 2015 obesity market. which would have fallen 10% in 2016 without Saxenda’s impact.

Figure 14: Total Obesity Market Sales (1Q13-4Q16)

• In terms of market share, Saxenda is the indisputable frontrunner, capturing 66% of the market by value in 4Q16, 63% for the full year. In 4Q16, Belviq captured 13% of the obesity market by value, followed by Contrave with 12% and Qsymia with 9%. In 2016, Contrave and Qysmia trailed Saxenda with 13% each of the obesity market value share, with Belviq close behind at 11%. Saxenda is clearly differentiated from the rest of the market due to its mechanism (particularly not crossing the blood brain barrier) as well, of course, as being a product manufactured by the powerhouse Novo Nordisk, which understands patients and providers so well. There is also the relative impact of liraglutide’s potency vs. the marketing that’s gone into Saxenda since it’s relatively recent US launch in 2Q15 to consider. Although the high cost of Saxenda contributes in part to remarkable franchise revenue for liraglutide, it’s still only a very small part of GLP-1 sales – and could be much larger. Novo Nordisk management has expressed confidence in Saxenda and has previously stated its commitment to developing the product further in the short- and long-term. This only sharpens our expectation that Saxenda’s indisputable stronghold of the obesity drug market will continue in 2017. Saxenda’s success also derives from its strong clinical profile. Cumulatively, presentations and publications from the SCALE program (seen at major conferences including ADA, EASD, and Obesity Week) have shown that liraglutide 3.0 mg leads to clinically-meaningful weight loss, maintenance of weight loss over at least three years, improved quality of life, and reduced incidence of new-onset type 2 diabetes. Together, these are tremendously valuable outcomes from both an individual and a broader public health perspective. It’s comforting, given the challenges that plague the obesity drug arena and the persistent lack of adequate treatment options for people with obesity, to see a chronic weight management agent doing well commercially. That said, we’d love to see greater uptake of the other agents in the class as well, perhaps in combination with Saxenda. It’s clear that obesity is an extremely complex, multi-faceted disease and we increasingly believe that combinations of multiple therapies or therapy with non-pharma approaches like Virta and Omada are necessary for truly effective treatment.
• What’s working against Belviq, Contrave, and Qsymia? We hesitate to suggest that these downward sales trends will continue in 2017, because there has been a push from thought leaders encouraging providers to be more open-minded about pharmacotherapies for chronic weight management – lifestyle intervention won’t suit everyone, and even when it works can be supplemented by an effective obesity medication. That said, there are many obstacles that will have to be addressed in order to see greater uptake of all available medications for obesity: poor reimbursement of obesity therapies, stigma, under-diagnosis, patient/provider reluctance to consider non-lifestyle intervention approaches, and the list goes on. We’ve heard incredible insights from obesity experts including Dr. Donna Ryan (Pennington Biomedical Research Center, Baton Rouge, LA) and Dr. Bartolome Burguera (Cleveland Clinic, OH) on how to capitalize on available therapies, how to overcome the provider bias that obesity is “too difficult to treat,” and how to circumvent some of the other challenges in obesity care. But we have yet to see solutions take root. At Obesity Week 2016, Pittsburgh’s Mr. Ted Kyle (ConscienHealth, PA) presented compelling data to show how few people think obesity care will be covered by their insurance, which demotivates people from seeking treatment in the first place. It seems that many of these obstacles are interconnected – better reimbursement won’t come until patients and providers advocate with payers on the benefits of obesity products, advocacy won’t come until we tackle societal stigma, and stigma won’t disappear until we spread greater awareness of the genetic/environmental causes for obesity as well as the available treatment options endorsed by healthcare professionals (don’t worry, we’re overwhelmed by this complex web, too). Ultimately, this terribly complicated challenge in obesity care will require a deliberate and multifaceted solution – this is absolutely worth pursuing, despite our low success rate so far. Obesity rates are only rising, and the associated health complications are spiraling.

Appendix: List of Companies Included in Analysis

• Abbott
• Arena
• AstraZeneca
• Baxter
• Bayer
• BD
• Cellnovo
• Daiichi Sankyo
• Eisai
• Enteromedics
• GI Dynamics
• GSK
• Insulet
• J&J
• Lilly
• Merck
• Novartis
• Novo Nordisk
• Orexigen
• Roche
• Sanofi
• Takeda
• Tandem
• Valeritas
• Vivus

--by Adam Brown, Abigail Dove, Helen Gao, Brian Levine, Payal Marathe, and Kelly Close