Bristol-Myers Squibb Company
) diabetes drug, Xigduo gained approval in the EU. The European
Commission approved the drug for improving glycemic control in
adults suffering from type II diabetes. We note that Xigduo is a
fixed dose combination of Forxiga, a SGLT2 inhibitor, and
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The approval was expected as the European Medicines Agency's
Committee for Medicinal Products for Human Use had rendered a
positive recommendation on Xigduo in Nov 2013.
AstraZeneca has a strong presence in the diabetes care market.
The diabetes franchise is one of the company's five growth
platforms. The company has several diabetes products including
Onglyza and Forxiga (both are approved for type II diabetes) and
has stepped up investment levels in this area.
AstraZeneca and Bristol-Myers signed an agreement last month
under which the former will acquire the latter's global diabetes
business. The deal is expected to close shortly. The pre-existing
collaboration between the companies will be terminated and
AstraZeneca will gain global rights to diabetes products
We are pleased with the approval of Xigduo in the EU. Now that
AstraZeneca will acquire full rights to the drug, it stands to
gain more. However, although AstraZeneca holds a strong position
in the diabetes market, we note that the market is highly crowded
with players like
AstraZeneca carries a Zacks Rank #3 (Hold). Generic competition
has adversely impacted AstraZeneca's revenues over the past few
quarters - this has put significant pressure on the company. In
the near term, we believe that investor focus will be on the
release of its fourth quarter and full year 2013 results (Feb 6,
Some better-ranked stocks in the pharma space include
), which carries a Zacks Rank #2 (Buy).