Once again, Novo Nordisk ($NVO) managed to pull off a paradoxical feat: With a respectable sales increase and profits growth that beat Big Pharma's, third-quarter results still fell short of analyst expectations. The reason: Novo's powerhouse diabetes drug Victoza, which regularly churns up double-digit growth, is slowing down a bit--sales increased by 14%, rather than the 20%-plus seen earlier in the year.
So, is it any coincidence that Novo has stepped up hiring in U.S. sales? CFO Jesper Brandgaard says there's more to the company's plans to recruit 400 new reps. The company will file for a new FDA-approved indication on Victoza at the end of this year, and a new outcomes trial for its diabetes hopeful Tresiba started earlier this month. With luck, Novo could need to field two new marketing efforts by 2015. "It seems prudent to expand the sales force now and build the capabilities of that sales force," Brandgaard told FiercePharma in an interview today.
But it certainly can't hurt 2014 sales. With a sales-force expansion late last year, Novo drove major growth for Victoza, a GLP-1 drug, and modern insulins, including Novolog and NovoRapid. Another burst of hiring, coupled with a direct-to-consumer advertising campaign, could keep that coming, Brandgaard said.
"We are seeing very good momentum delivered by the U.S. sales force in support of modern insulins and, even with the launch of a once-weekly GLP-1 drug this year, we are seeing good momentum with Victoza," he said. "It seems a logical move to continue to invest."
The hiring push comes as analysts worry about slowing growth for Novo. Here's the overall picture. Sales amounted to 20.5 billion kroner, or about $3.76 billion. That's a 10% increase in local currency, but 3% in kroner. Net profit hit 6.4 billion kroner, or about $1.2 billion, for 13% growth. The company affirmed its 2013 forecast--sales growth in the 11% to 13% range, operating profits growth at 12% to 15%--but with a slightly bigger currency hit than previously expected.
But really, it's not this quarter that has Novo analysts worried. It's the Victoza sales trend--and how that might play out next year. The company says it's expecting growth to slow in 2014, in the high single digits rather than low doubles. It's expecting some headwinds in the U.S., now that Express Scripts ($ESRX) has excluded Victoza and Novolog from its new restrictive formulary.
Novo calls that a "more challenging contract environment" in the U.S., and it's not kidding. The company blames that move for a 1-percentage-point hit to sales growth next year. Brandgaard says he's not expecting the Express Scripts change to touch off a series of similar moves; after all, CVS Caremark ($CVS) made a similar, if smaller, shift several months ago. In fact, Novo is hoping that managed care companies won't all sign on to that version of the PBM's formulary. "We are waiting to see what changes we will have, and the degree to which healthcare plans opt in on this," he said.
The reason Victoza's possible slowdown looms large can be summarized in one word: Tresiba. Where Novo's new diabetes fighter was supposed to step in to buoy growth as of now, it's shut out in the U.S., thanks to the FDA's request for an outcomes trial before approval. The EU launch is rolling on, with Sweden added to the mix during the third quarter, but considering the country-by-country nature of a European rollout, Novo isn't expecting sales there to ramp up very quickly. In countries where reimbursement is broad, such as Switzerland and Japan, Tresiba has built 8% market share; in other countries like the U.K. and Denmark, where reimbursement decisions are piecemeal, the launch is moving more slowly.
To Brandgaard, the bigger news on Tresiba this quarter is that the outcomes trial aimed at answering the FDA's safety questions--dubbed DEVOTE--recruited its first patient this month. That's way ahead of the previously announced date of April 2014, which means a resubmission to FDA could come earlier, too. "I think that's really significant, to have achieved this 6 months earlier than anticipated," Brandgaard said.
- read the Novo release
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