Diabetes diagnosis rates are skyrocketing around the world, with about 382 million patients currently. That figure is projected to approach 600 million by the year 2038 on its current growth curve. With that in mind, Eli Lilly and Company (LLY) said on Thursday that it is investing more than $700 million to expand its global insulin manufacturing capacity at its headquarters in Indianapolis as well as facilities in Puerto Rico, France and China. China leads the world with more than 92 million people having diabetes, according to the International Diabetes Federation. India ranks second with 63 million patients, followed by the U.S. with 24.1 million.
Lilly timed its announcement to be released today, World Diabetes Day and the day that the IDF released its latest report on the state of the diabetes industry. The IDF estimated the global economic cost of diabetes to be a whopping $548 billion in 2013, representing 11 percent of all health care expenditures.
The additional investment boosts Lilly’s commitment to in excess of $1 billion to address the mushrooming global diabetes epidemic. The company previously said it was spending $320 million on expansion of its Indianapolis facility for additional insulin-active-ingredient and drug manufacturing. 90 years ago, Lilly introduced the first commercially available insulin, a key medication for many people with diabetes to manage sugar in the bloodstream. The biotech firm currently has 14 drugs in clinical development addressing diabetes and related complications, including three that have filed New Drug Applications and another in a late-stage trial.
Breaking down the investments, Lilly plans to put $120 million into France and $350 million into China for expanded insulin cartridge manufacturing and $245 million into Indianapolis and Puerto Rico to enhance insulin-active-ingredient and delivery device manufacturing. Lilly, one of the top three insulin makers along with Sanofi SA (SNY) and Novo Nordisk AS (NVO) controlling 90 percent of the market, only makes the active ingredients for insulin in Indianapolis and Puerto Rico. The other facilities are focused on insulin pens.
In 2012, the company opened its Lilly China Research and Development Center in Shanghai as part of its efforts to address the huge market in the country.
"The burden of diabetes knows no boundaries," said Jacques Tapiero, senior vice president and president, Lilly Emerging Markets. "In particular, our ongoing investment in China will help Lilly bring medicines to the country with the largest population of people with diabetes—and which is projected to rise to more than 142 million by 2035."
Shares of LLY were only ahead about 2 percent in 2013 through Wednesday’s close at $50.55, as the company has been battling a series of patent expirations that are allowing generic competitors to cut into sales. With recent cost-cutting measures and hopes pinned to some new drug approvals, Lilly believes it can return to growth in 2015. Shares have edged ahead in early Thursday action, trading up one-half a percent at $50.81.
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