Novo Nordisk is facing a future of price decreases and pressured profits in the U.S., but the organization is equipped to thrive in such a hostile pricing environment, CEO Lars Sørensen insists. It will do that by calling on its experiences jousting with price regulators in Europe.
“We have been used to operating in such an environment in the EU, and in Japan,” Sørensen insisted today, pointing to two markets that for years have been tight-fisted in reimbursements while the U.S. was a haven of growth.
The answer came in response to a question posed point-blank to execs today during a call with analysts, as they reported that Novo’s operating profit fell 1% in Q3 2016 and for the year is now expected to be half of what the company had projected 8 months ago, 5% instead of 10%. That news whacked share prices 15% in early trading. An analyst wanted to know if the Danish company required a different structure and different people to make money in a tough market. Sørensen said that it did, insisting its commitment to the U.S. market was steadfast.
But Sørensen will not have to fight the battles there any longer. He is stepping down at year-end and is being replaced by Lars Fruergaard Jorgensen, who’s currently the company’s EVP and head of corporate development.
Jorgensen acknowledged that the U.S. market will be extremely tough in the near term, but growth in China and other parts of the world will help compensate until the U.S. market starts to turn around in 2018, he said.
“When we look across the world, the change in the operating environment is mainly in U.S. … We have to acknowledge we are not fully satisfied with the U.S. operations,” Jorgensen said. But the company has the right portfolio for a turnaround there and with “a restructuring in the U.S. operations, we will get a grip,” Jorgensen insisted.
That restructuring was announced in September, with 1,000 people worldwide being let go due to cut costs. Cuts will also come in R&D, although R&D spending will remain at about 13%, as the Danish drugmaker focuses on more innovative products that payers will cover. The job cuts will also hit the headquarters in Bagsvaerd, near Copenhagen, as well as the company’s commercial operations worldwide.
There were some bright spots in today’s report. Tresiba, the company’s new longer-acting product, grew 187% and sales of its GLP-1 drug, Victoza, were up 13%. There is also Saxenda, Novo’s entry in the weight-control market. In fact, Bernstein analyst Ronny Gal told investors today that Saxenda accounted for 16% of growth in the first 9 months and that it will be an “increasingly important product” going forward.
Like Novo, Gal told his clients that he expects strong growth going forward for GLP-1 meds, a market Novo shares with competitors. Novo and Sanofi are both developing new weekly combo meds in that category, although both have had consideration of their drugs delayed by the FDA.
He says it is reasonable to assume such growth but points out that Novo was not considering the “worst case scenario.” While Novo execs said they did not expect payers to go to a “single source market” for GLP-1 drugs to extract deeper discounts, Gal does not rule it out. “If there is another cut to expectations this is likely where it comes from,” he told investors, suggesting that a really rocky midterm market for Novo could still get rockier.
By Eric Palmer
Source: Fierce Pharma
CureVac and the University of Texas’s MD Anderson Cancer Center have announced a co-development and licensing agreement to develop novel messenger ribonucleic acid (mRNA)-based cancer vaccines. The strategic collaboration will focus on the development of differentiated cancer vaccine candidates in selected haematological and solid tumour indications with high unmet medical needs.
FUJIFILM Corporation is planning to invest $1.2 billion to expand the planned FUJIFILM Diosynth Biotechnologies manufacturing facility in Holly Springs, North Carolina, US. This news follows the organisation’s announcement of a $2 billion investment in the facility in March 2021. This additional financial boost totals the investment to over $3.2 billion, FUJIFILM confirmed.
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