Novo Nordisk's ($NVO) diabetes drugs have been revving up sales in the U.S. But the Danish drugmaker has lost two big supply contracts, and that's likely to put a drag on growth.
In farming out new supply contracts for 2014, pharmacy benefits manager Express Scripts shut out Novo's fast-growing Victoza and top-selling modern insulin NovoLog (sold as NovoRapid in the U.S.). Express Scripts chose to use Eli Lilly's ($LLY) insulin instead of NovoRapid, and Bristol-Myers Squibb ($BMY) and AstraZeneca's ($AZN) Byetta and Bydureon.
Express Scripts controls a big share of the U.S. drug market. As Reuters notes, the PBM's prescription programs cover between 40 million and 45 million people in the U.S., and a DNB Markets analyst estimates that the PBM's business accounted for 15-20% of Victoza's U.S. sales.
Sydbank analyst Søren Løntoft Hansen figures Novo could lose 1-2 percentage points off its market share because of the move. "This is a serious blow for Novo Nordisk," Hansen said (as quoted by Reuters). "I think it will hit earnings per share by closer to 3% in 2014."
Jyske Bank was a bit more sanguine, expecting the contract loss to ding sales by about 1% and operating profits by 1.8%.
Hansen said he was most surprised by Express Scripts' choice to replace Victoza. The drug has been growing at a fantastic rate, with first-half sales up 32% to 5.55 billion kroner, or about $980 million. That's on top of a whopping 58% increase in 2012, to 9.5 billion kroner. Hansen said he expects the drug to keep on a growth track next year, but at not quite the same rate.
- read the Reuters news
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