Sector News

Novo Nordisk backs up M&A pledge by appointing deal-minded board chair

March 23, 2018
Life sciences

Just weeks after Novo Nordisk lost out to Sanofi on the chance to boost its pipeline by buying Ablynx, the Danish diabetes giant is sending a message that it’s far from out of the M&A game.

On Thursday, Novo named as its new board chairman Helge Lund, an oil-industry veteran with plenty of deals under his belt. As CEO of Statoil, Lund helmed a $30 billion acquisition of Norsk Hydro in 2007, and before that, he steered the Norwegian engineering company Kvaerner through a merger with Aker Maritime. Lund replaces former board chairman Göran Ando, who opted not to seek re-election.

It’s clear Novo needs to do something to revive its growth prospects. Shortly after its failed Ablynx bid, it announced 2017 revenues that came in 2% below expectations at DKK 112 billion ($18.5 billion). Sales of Novo’s next-generation insulin products did grow 38% during the quarter, but that result fell 14% below analysts’ expectations.

What’s worse, the company warned investors that sales growth for 2018 would come in between 2% and 5%—a bad showing, to say the least, for a company that was pulling in double-digit revenue growth a couple of years ago.

Novo CEO Lars Fruergaard Jørgensen told FiercePharma in an interview after the earnings report that M&A is still very high on the company’s priority list. “The fact that we did not succeed with Ablynx doesn’t change the strategy or intention,” Jørgensen said. “When you go into M&A, there’s no guarantee for success, so we will keep looking.”

Novo CFO Jesper Brandgaard told analysts at the time that the company is looking for acquisitions in the range of $2 billion to $3 billion. Jørgensen said the company is in active discussions with some prospects.

They’ve no doubt been relying on Lund for guidance in those deals. Lund, 55, first served on Novo’s board from 2014 to 2015 and was re-elected last March. He is a member of several other boards, including that of oil giant Schlumberger, another company that’s done its fair share of deals.

But Lund is taking over the board seat amid other challenges for Novo Nordisk. The company recently launched Ozempic, its once-weekly GLP-1 drug that competes directly with Eli Lilly’s Trulicity.

Ozempic does have some advantages, including head-to-head data showing it produces better blood-sugar reductions and weight loss than Trulicity. But Lilly has been preparing for the competition, and Trulicity recently saw its market share soar past 40%. That shows it’s even holding its own against Novo’s existing diabetes blockbuster, Victoza.

Novo is also embarking on some ambitious plans to try to maintain its market dominance in metabolic disease. That includes trying to get obesity recognized as a chronic disease and positioning its newest drugs as tools to help combat it.

Novo is launching a weight-loss trial of Ozempic in 4,500 people, along with another in 12,500 obese patients that will look at cardiovascular outcomes—despite the failures of other companies that have tried to crack the obesity market, namely Vivus, Orexigen and Arena.

By Arlene Weintraub

Source: Fierce Pharma

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