Worldwide, Lantus has some 80 percent of the market for long-acting, or basal, insulins used to treat diabetes and the product had sales of around $5 billion last year. Now rivals are closing in.

Denmark's Novo has a new insulin called Tresiba, or degludec, that is awaiting a U.S. approval decision by July 29 and could also get a green light in Europe in the second half of the year.

And Lilly's new long-acting insulin LY2605541, though still some years from reaching the market, is already causing a stir after signs in mid-stage Phase II clinical tests it may help patients lose weight.

If confirmed in later trials, that could give it a unique selling point against other therapies for controlling type 2 diabetes, a disease that is closely linked with obesity.

"Even modest - but real - weight loss could be a major commercial advantage over other basal insulins," Mark Schoenebaum, an industry analyst at ISI Group, said.

At the same time, Lantus faces indirect competition from so-called GLP-1 drugs like Byetta and Bydureon from Amylin Pharmaceuticals, Victoza from Novo and several others still at the development stage.

More details on the changing landscape for diabetes treatments will emerge when scientists and doctors discuss progress at the American Diabetes Association annual meeting from June 8 to 12.

LANTUS SLOWDOWN

Tim Anderson of Bernstein believes Lantus revenues, which grew 20 percent a year over 2007-11, will slow to an annual rate of 6.5 percent from 2012-16 - and from 2015 onwards sales of the drug are likely to go into decline, assuming generic "biosimilars" arrive around then.

Consensus forecasts also predict annual Lantus sales continuing to rise to just under $7 billion by 2015 before declining thereafter, according to Thomson Reuters Pharma data.

Sanofi is working to defend its business by developing an improved, longer-lasting formulation of Lantus and a Lantus plus GLP-1 combination product.

But Novo Chief Executive Lars Sorensen believes his firm can turn the tables on Sanofi, although he is prepared for a lengthy battle. He told Reuters last year it would probably take until 2014 or 2015 before Tresiba was in a position to capture the bulk of new patients going on to basal insulins.

Ending Sanofi's 10-year dominance would be a major coup for Novo, whose existing long-acting insulin Levemir has failed to seriously dent the French drugmaker's grip on the market.

Tresiba, however, may have little time in a duopoly with Sanofi's Lantus before Lilly enters the ring with LY2605541, according to Tim Race of Deutsche Bank. Phase III clinical data for the Lilly drug is expected in 2013, suggesting it will be snapping at Tresiba's heels.

International drugmakers are competing fiercely in the type 2 diabetes market as the number of people with the disease worldwide continues to grow rapidly.

Diabetics typically start out on oral medicine but often need to move on to insulin injections to regulate their blood-sugar levels.

One side-effect of taking insulin can be hypoglycemia, when sugar levels become dangerously low. A key selling-point for the new products from Novo and Lilly is that they cause fewer such "hypos".

(Editing by Helen Massy-Beresford)

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