SNY Sanofi

By Denise Roland in London and Inti Landauro in Paris 

Sanofi SA has teamed up with Verily Life Sciences LLC, a unit of Google parent Alphabet, to develop high-tech tools for managing diabetes.

The French pharmaceutical group Monday said the new company, called Onduo, would combine its expertise in diabetes medicine with Verily's knowledge of miniaturized electronics, analytics and software development. The companies didn't disclose the financial details of the deal.

The deal is the latest sign of convergence between Silicon Valley and the pharmaceutical industry as technology companies aim to tap ever-higher demand for health care products from aging populations, while drugmakers seek alternatives to the lengthy and risk-laden process of developing new medicines to treat disease.

Sanofi and Google have already spent a year exploring the potential of high-tech devices to improve diabetes care by for example using microchips to continuously monitor blood sugar levels in patients. Monday's deal is the concrete result of that work, according to a company spokeswoman.

People with diabetes must monitor their food intake and exercise levels as well as sticking to an often complex treatment regimen to manage the disease. Stefan Oelrich, head of diabetes at Sanofi, said Onduo would aim to bring these different aspects of diabetes treatment together in a single product.

Such a product could also attract interest from the governments, employers and insurers who pay for health care by providing a tool for measuring the outcomes of various treatments, he added.

Sanofi said the collaboration would initially focus on type two diabetes, the much more common form of the disease. This affects around 90% of all diabetes patients and occurs when the body produces insulin but is unable to use it effectively. In the early stages it can be managed by switching to a healthier diet and increasing exercise, but as it progresses treatment becomes more complex and expensive, ultimately involving carefully-managed insulin injections.

Paris-based Sanofi is one of the world's biggest makers of diabetes drugs, though that part of the business is under pressure from increasingly cost-conscious health systems. The company expects revenue from diabetes drugs to decline over the coming years as competition between insulin makers intensifies.

Mr. Oelrich said one attraction of the Verily collaboration for Sanofi is that it could yield a new product much faster than traditional drug development. He expects Onduo to launch its first product within two to three years, versus the roughly 10 years it takes to develop a new medicine.

The two companies appointed Joshua Riff, formerly a senior executive at UnitedHealth Group's Optum, as the chief executive of Onduo, which will be based in Cambridge, Massachusetts.

Diabetes, a fast-growing disease expected to affect 592 million people world-wide by 2035, is a hot area for pharmaceutical and tech tie-ups. Last year Novo Nordisk A/S and IBM's Watson Health started working together on a "virtual doctor" that could dispense treatment advice such as insulin dosage. And Verily and Novartis AG are codeveloping a "smart contact lens" to monitor blood-sugar levels in people with diabetes.

Google has joined forces with big pharmaceutical companies across a broad range of disease areas in recent years. Those collaborations include a tie-up with GlaxoSmithKline PLC to develop "bioelectronic" treatments that work on nerve pathways to address medical issues, a collaboration with Johnson & Johnson to develop robots to assist surgeons, and a project with Biogen Idec Inc. to analyze why multiple sclerosis progresses differently from patient to patient.

Write to Denise Roland at Denise.Roland@wsj.com and Inti Landauro at inti.landauro@wsj.com

(END) Dow Jones Newswires

September 13, 2016 02:48 ET (06:48 GMT)

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