U.S. payers have put the screws to diabetes drug prices. New launches have churned up stable drug classes. New outcomes data seem certain to shake things up, too. But diabetes-focused Novo Nordisk ($NVO) just keeps sailing along.
The Danish drugmaker posted a 9% increase in sales for the first 9 months of 2015, and that's without the strong dollar's effects--with that, sales were up 23% to 79 billion kronor, or about $11.6 billion. Operating profit leapt by more than half. Even the blockbuster GLP-1 med Victoza, facing new competition from Eli Lilly & Co.'s ($LLY) Trulicity, stayed on course with 39% growth (21% ex-currency effects), as Novo's prediction of classwide growth held true.
And geographically, Novo's strongest market remained North America, despite pricing pressure that continues to intensify. Sales there grew by one-third, or 10% in local currencies, for the first 9 months of the year, to about 41.2 billion kronor, or $6 billion. For Q3, North American sales hit 14.4 billion kronor, or $2.1 billion.
|Novo CEO Lars Rebien Sørensen|
To hear CEO Lars Rebien Sørensen tell it, Novo faces problems and upsets all over the world--competition from local drugmakers in China, for instance, and stubborn payers in Europe, not to mention the loss of a big U.S. contract for 2016--but the company, like its target illness, will keep on growing.
Novo expects its share of the insulin market to keep growing, delivering 7% volume growth in the long-term, 2 percentage points ahead of the market. Prices may not keep growing at historic rates overall--that would be 3%--but the company's new and forthcoming products can still command premiums, helping to offset declines elsewhere, Novo figures.
That faith led to Novo forgoing that big U.S. contract with an unnamed customer. "This was a deliberate decision on our part not to buy that contract at the price they would accept," Sorensen said during Thursday's earnings call. "It was a significant contract, but we win some and lose some every year. It will have some volume impact on us."
Likewise, things may be tough in China right now--just 5% growth in local currencies there for the quarter--and they'll remain so for a couple of years as local drugmakers steal share with their lower-cost insulin meds, Novo execs said during the call. But after that, the growing pool of Chinese patients and, hopefully, the launch of Tresiba there, will amp up growth again.
And that patience extends to the Tresiba launch, where Novo is content to wait for payers and customers to recognize that the new drug is worth a higher price--10% higher than its own Levemir, Sørensen said. In Europe, that means a country by country rollout, as usual, but perhaps a slower one; the company refused to launch it in Germany because of a pricing dispute. "Tresiba has a high value from a clinical point of view," EVP Jacob Riis said of the European rollout, "we have to have the full innovative value of it acknowledged."
Same goes in the States, Sørensen said. "You should expect a relatively slow ramp of Tresiba in the U.S. … We are not in a panic, we are going to be in diabetes many years in the future, beneficial to us to retain the value rather than cutting the price."
The company kept its full-year sales growth forecast of 7% to 9% in constant currencies, and its preliminary 2016 outlook calls for mid- to high-single-digit revenue growth.
- read the Novo release
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