UPDATED: Novo to spend $1.2B, hire 700 for its first major drug plant in U.S.

With a game-changing oral diabetes treatment moving through clinical trials, Novo Nordisk ($NVO) will spend about $1.2 billion on its first API plant in the U.S., a project that is expected to bring 700 jobs. As part of the 5-year project, it will also add a plant in Denmark, for a total investment of about $2 billion.

Novo will build the facility in Clayton, NC, where it already has facilities to fill and package products and where it makes some of its prefilled insulin devices for the U.S. market. With the new plant, Novo will double employment at the site, where it already has 700 workers.

The drugmaker last month reported positive data from its first Phase IIIa trial of a new daily oral version of its once-a-week injectable semaglutide for Type 2 diabetes. In a separate announcement today, Novo laid out its Phase III plan, with trials to get under way next year and eventually providing data from 8,000 patients.

Novo's U.S. operations president Jesper Høiland

"It is a huge investment and the first time we are considering making one outside of Denmark on a big scale," Jesper Høiland, president of Novo's U.S. operations, said in a telephone interview Wednesday. "The U.S. represents half of Novo's business and is a growing market for us."

Høiland said that Novo has done well with the facilities it already has in Clayton and likes the workforce available there, noting more than 20% of Novo employees at Clayton have a military background that he said is particularly suited to the work. The company also is expecting some financial incentives from the state for the project.

The North Carolina facility will manufacture the active ingredients for oral semaglutide and other current and future Novo insulin products, the company said in an announcement. The company also will invest about $800 million on a new production facility in Måløv, Denmark for tableting and packaging of oral semaglutide as well as other future oral products. The investment in Måløv will create roughly another 100 jobs there. Between the Clayton plant and expansion it has done at Novo's massive site in Kalundborg, Denmark, where it has around 2,800 employees, the company said it will have sufficient API capacity for diabetes products well into the next decade.

Novo Nordisk CEO Lars Rebien Sørensen hinted last week to Bloomberg about the company's plans, saying that there was a certain level of expectation from payers and regulators that it would have manufacturing in the U.S. He said having manufacturing here also would help the foreign exchange problems it has had. It is projecting a $850 million loss for the year of a the effects of foreign exchange hedging. Sørensen had said building an API plant in the U.S. is a big step, however, because all of its expertise in that area has been developed in Denmark.

But the drugmaker is expecting big things from the oral version of semaglutide. A so-called GLP-1, it acts as an analog of the hormone GLP-1 to promote the body's natural production of insulin, spurring weight loss and relieving the symptoms of Type 2 diabetes. Novo is betting billions of dollars on the drug, in anticipation of more billions in return. Assuming approval of the oral version, Novo expects most of the sales would be in the U.S.

Høiland reiterated his boss' expectations for the GLP-1 drug, assuming that Phase III trials continue to bear out its benefits. "It is a very important product to Novo. It will be the pinnacle to our future way of doing business in terms of treatment and injections," he said. "This is a big day for U.S., for diabetes and for the U.S. economy. U.S. will remain key to Novo and we are here to stay."

- here's the release

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