Sanofi SA (ADR) (NYSE: SNY)
Sanofi has launched its new Toujeo insulin for diabetics in the United States; and while the launch is expected to be a big hit; however, the company is still headed for a bit of a problem. The current dominant insulin on the market is Sanofi’s Lantus. According to an incredible article on Seeking Alpha, Lantus brought in more than $7 billion last year; driving profitability for the company. Unfortunately, next year, Sanofi’s patent on Lantus will expire; leading to generic choices hitting the market, lower prices, and lower profits! So, what is Sanofi to do? Well…
That’s Where MannKind’s Afrezza Comes In
MannKind Corporation (NASDAQ: MNKD)
If you follow biotech at all, you know about Afrezza. Afrezza is a new inhaled insulin that type 1 diabetics use before meals. Early on, physicians have quite a bit of positive feedback surrounding the drug; leading to an increase in the company’s target price at Jeffries. However, it’s important to remember that MannKind isn’t the only company with their hands in this basket of golden eggs; Sanofi is playing a huge role as well. While Afrezza is created and produced by MannKind, it is licensed to Sanofi with regard to promotion and distribution. This means that as Afrezza becomes the major hit investors, analysts, and other experts expect it to become, gains from Afrezza could offset losses from generic versions of Lantus for Sanofi; leading to maintained revenue and profits!
What To Expect From SNY And MNKD Moving Forward
Moving forward, I’m expecting to see great things out of both companies. However, I do have to say that there is much more potential for growth in MNKD than in SNY in my opinion. While Afrezza will positively affect Sanofi, Lantus will definitely see some losses over the next year or two. However, MannKind has nothing to lose and all to gain; so we should see big long term gains from the stock.
What Do You Think?
Where do you think Sanofi and MannKind are headed? Let us know in the comments below!