By tapping its insulin-manufacturing expertise and taking a page from consumer marketing, Novo Nordisk ($NVO) is enhancing a drug product that has a huge customer base in hopes of enticing those who can to pay more. It's a company-growth strategy with a strong manufacturing element, and it may offer some post-patent revenue protection as well.
The drug is diabetes treatment degludec. Like injectable insulin products in general, the drug will have high upfront manufacturing costs, according to BusinessWeek, something that will likely discourage generics-makers when the time comes.
What differentiates it from other insulin products is alterations to the chemical structure that let the patient absorb the drug more slowly, allowing it to act longer, according to the article. Patients would be able to take it anytime, no longer confined to a strict timetable of injections. Degludec is not yet approved by regulators.
It's a product upgrade in the classic sense, and one that CEO Lars Sørensen hopes will separate the Danish drugmaker from the insulin-supplier pack. "A country like the U.S. ought to be able to offer people the most modern insulins [rather than] Third World insulins," he said in the article.
Clinical trial results show that degludec worked as well as old-school treatment Lantus--the No. 1 diabetes treatment in the world--at controlling blood sugar. The Sanofi ($SNY) drug generated $4.7 billion in sales last year, the article says, compared with Novo Nordisk's $1.3 billion for Levemir. Degludec appears in line to replace Levemir.
Sørensen envisions degludec pricing 30% higher than Sanofi's Lantus. Given the current environment among payers, though, analysts see a "tough battle," the story says--perhaps 10% to 15%.
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