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Novo Nordisk: Pushing Ahead

Written by: | chris.truelove@medadnews.com | Dated: Wednesday, October 11th, 2017

 

Novo Nordisk executives believe that the company is on a path that will create growth in 2017 and beyond.

 

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Novo Nordisk A/S

Novo Allé, 2880
Bagsværd, Denmark
Telephone: +45 4444 8888
Website: novonordisk.com

 

Best-Selling Products

Product 2016 Sales 2015 Sales
Victoza $2,980 $2,680
NovoLog/NovoRapid $2,965 $3,080
Levemir $2,539 $2,720
NovoLog Mix/NovoMix $1,558 $1,656
Norditropin $1,304 $1,162
Tresiba $603 $189

All sales are in millions of dollars and were translated using the Federal Reserve Board’s average rate of exchange in 2015: 6.7276.

  

Financial Performance

  2016 2015
Revenue $16,615 $16,042
Net income $5,637 $5,182
Diluted EPS $2.22 $2.01
R&D $2,165 $2,023
  1H2017 1H2016
Revenue $8,486 $8,126
Net income $2,989 $2,887
Diluted EPS $1.20 $1.13
R&D $996 $986

All sales are in millions of dollars and were translated using the Federal Reserve Board’s average rate of exchange in 2015: 6.7276.

 

 

Goran Ando, chairman of the board at Novo Nordisk, is blunt in his assessment of the past year for the company: “2016 was not a good year.”

“We started the year on a share price of 399.9 kroner and ended on 254.7,” Ando says. “That is the brutal fact.”

According to Ando, the drop was caused by lowered growth expectations for Novo Nordisk’s business in the United States, which accounts for around half of the company’s total sales, and the resulting revision of the company’s long-term financial targets.

“What we experienced in the U.S. in 2016 was the interplay of several related developments; with the large and increasing number of people with diabetes in the U.S., diabetes care has become a major cost driver for insurers and health plans which, in turn, are pushing hard for better deals with healthcare providers and pharmaceutical companies in order to curb costs,” Ando says.

Two factors particularly highlight Novo Nordisk’s bargaining power: the consolidation of pharmaceutical benefit managers, which increased their negotiating clout; and competition in the diabetes care space as new products entered an increasingly crowded market. Consequently, Novo Nordisk’s contract negotiations for 2017 resulted in higher-than-anticipated rebates to obtain broader coverage for the company’s products.

“Due to the uncertainty it created regarding Novo Nordisk’s growth prospects in the U.S. in the coming years, this was not well received by investors,” Ando says.

As a result, Ando says, management took several measures “aimed at prioritizing the activities and innovative products with the greatest potential for making a positive change for the people whose lives and well-being depend on our medicines.”

Oh, and booting the CEO.

On Sept. 1, 2016, Novo Nordisk’s board of directors genteelly showed longtime CEO Lars Rebien Sørensen the door with his retirement announcement. Sørensen retired Dec. 31, passing on the baton to Lars Fruergaard Jørgensen.
Jørgensen, who had been with Novo Nordisk since 1991, was executive VP, Corporate Development.

Ando says the board “had been planning the CEO succession for some years, carefully evaluating a number of candidates for the role.”

“If we fail to discover and develop new and better products for people with diabetes and other serious chronic conditions, we will not be successful,” says President and CEO Lars Fruergaard Jørgensen.

 

Two other personnel changes in September 2016 took effect immediately: Jakob Riis, then executive VP and head of Region China, Pacific & Marketing, was appointed executive VP and head of North America Operations, and Maziar Mike Doustdar, then executive VP and head of International Operations, continued in that role, but with responsibility for all territories except for North America.

Following these changes, two executives VPs, Jesper Høiland and Jerzy Gruhn, left to pursue careers outside of Novo Nordisk. Høiland became CEO of Radius Pharma in July 2017. Gruhn, who had been demoted to senior VP and head of Europe under Doustdar, departed quietly.

Former CEO Sørensen, before he departed the company in December 2016, put a more positive spin on Novo Nordisk’s results.

“We ended the year growing sales by 6 percent and adjusted operating profit by 6 percent, both in local currencies,” Sørensen says. “This was within the range we had announced at the beginning of the year, when we predicted sales growth of 5 to 9 percent and adjusted operating profit growth of 5 to 9 percent both in local currencies.”

However, Novo Nordisk was still compelled to lay off nearly 1,000 employees last fall. “This was a difficult decision, but with employee costs being by far the largest cost item at Novo Nordisk, there was no way of avoiding it,” Sørensen says.

In tackling Novo Nordisk’s challenges in 2017 and beyond, current president and CEO Jørgensen believes that the company needs to be more agile.

“We have grown tremendously over the past decade, and with that comes new procedures, new governance bodies, new this, new that, all well intended, but at some point it just becomes too much,” Jørgensen says. “In the process, individual accountability risks getting lost and decision-making processes risk becoming too long. One of my priorities for 2017 is to simplify our way of working and thereby make the organization more agile.”

Since September 2016, Jørgensen says he has had many meetings with employees, patients, healthcare professionals, policymakers, investors and professional organizations around the world “to understand how they see us and what they expect from us going forward.”

“It was a very rewarding experience,” he says. “Despite the current challenges, it left me in no doubt that Novo Nordisk is a very special company and that one of my key responsibilities is to keep it that way.”

For Novo Nordisk to remain successful, Jørgensen believes that while he is CEO, Novo Nordisk must solidify its position as the world’s leading diabetes care company; be the world’s leading company within medical treatment of obesity; be among the leading companies in hemophilia; and “be recognized by our employees, the patients we serve, our shareholders and other external stakeholders as an outstanding company, both for what we do and how we do it.”

The key to Novo Nordisk’s future success, Jørgensen says, is product innovation.

“If we fail to discover and develop new and better products for people with diabetes and other serious chronic conditions, we will not be successful,” he says. “I acknowledge that there is an increasing unwillingness to pay for innovation in cost-pressured healthcare systems, but this should not be an excuse for halting innovation, because there is a huge need for better medical treatments.

“It does, however, have other implications for us: we have to ‘raise the innovation bar’ – focusing on projects with the highest chance of delivering break- through innovation, we have to source more innovation from outside our own organization through collaborations with academia and biotech companies.”

Additionally, Novo Nordisk has to innovate the way the company commercializes its products. “Not only pharmaceutical companies but healthcare providers in general are being met with demands from payers to link the prices of their products and services to documented, improved health outcomes for patients,” Jørgensen says. “Creating such outcomes-based contracts is easier said than done, but we are working on it.”

Novo Nordisk’s partnerships with technology companies such as IBM Watson Health and Glooko should also be seen in this light. “These partnerships aim to improve diabetes care via insights from real-time, real-world evidence of the clinical benefits of Novo Nordisk’s diabetes treatments and devices,” Jørgensen states.

In 2016, Novo Nordisk recorded sales of DKK 111.78 billion ($16.62 billion), 4 percent more than in 2015. Executives say sales growth was realized within both diabetes care and biopharmaceuticals, with the majority of growth originating from Tresiba, Victoza, Saxenda, and Norditropin while sales of modern insulin and NovoSeven declined.

The company’s net income in 2016 was DKK 37.93 billion ($5.64 billion), 8.8 percent more than in 2016. Diluted earnings per share were DKK 14.96 ($2.22), 10.7 percent more than in 2015.

In the first half of 2017, Novo Nordisk reported sales of DKK 57.09 billion ($8.49 billion), 4.4 percent more than in the first half of 2016. Net income totaled DKK 20.11 billion ($2.99 billion), 3.5 percent more than the same period last year. Earnings per share were DKK 8.07 ($1.20), 5.8 percent more than in first-half 2016.

“We are well on track to deliver on our targets for 2017 based on sales growth driven by our new, innovative products within diabetes and obesity care and a continued focus on cost control,” Jørgensen says. “Although the formulary negotiations in the USA reflect the tough competitive environment, we remain confident that our long-term financial growth targets are achievable.”

Novo Nordisk executives say all regions contributed to sales growth in 2016 but the United States was the largest contributor with 37 percent share of growth measured in local currencies, followed by International Operations and Region China contributing 32 percent and 19 percent respectively. Sales growth of 4 percent in the United States was positively impacted by approximately 1 percentage point primarily due to non-recurring adjustments to rebates in the Medicaid patient segment related to Norditropin.

Sales growth in International Operations of 14 percent measured in local currencies was positively impacted by approximately 2.5 percentage points due to the significant inflationary effects in Argentina and Venezuela.

Novo Nordisk’s top-selling products in 2016 were Victoza, NovoLog/NovoRapid, Levemir, NovoLog Mix/NovoMix, and Norditropin.

Victoza sales in 2016 increased by 11 percent to DKK 20.05 billion ($2.98 billion). Sales growth was driven by the USA and International Operations. The GLP-1 segment’s value share of the total diabetes care market increased to 9.8 percent compared with 8 percent in 2015, and Victoza (liraglutide) is the market leader in the GLP-1 segment with a 58 percent value market share.

In the first half of 2017, Victoza recorded sales of DKK $11.53 billion ($1.71 billion), 21 percent more than in the first half of 2016.

Victoza, Novo Nordisk’s best-selling product, is the market leader in the GLP-1 segment with a 58 percent value market share.

 

No. 2 in 2016 sales was the modern insulin NovoLog/NovoRapid. The product had sales of DKK 19.95 billion ($2.97 billion), 3.7 percent less than in 2015. In the first half of 2017, NovoLog/NovoRapid generated DKK 10.4 billion ($1.55 billion), an increase of 9 percent from the same period in 2016.

NovoRapid (insulin aspart) is a mealtime insulin analog indicated for the treatment of diabetes mellitus in adults, adolescents and children aged 2 years old and older.

 

The modern insulin Levemir was Novo Nordisk’s third-best selling product in 2016, generating DKK 17.08 billion ($2.54 billion), 6.7 percent less than in 2015. Levemir sales in the first half of 2017 were DKK 7.61 billion ($1.13 billion), 12 percent less than in the same period of 2016.

Coming in at No. 4 in terms of 2016 sales was NovoLog Mix/NovoMix at DKK 10.48 billion ($1.56 billion) compared to 2015 sales of DKK 11.14 billion ($1.66 billion). Novo Nordisk did not detail sales of NovoLog Mix/NovoMix in its first-half 2017 financial report.

The fifth best-selling product for Novo Nordisk in 2016 was the growth hormone therapy Norditropin, at DKK 8.77 billion ($1.3 billion), registering 12 percent more sales than during the previous year. Executives say the sales growth was primarily derived from the United States, reflecting a significant positive non-recurring adjustment to rebates in the Medicaid patient segment relating to the period 2010–2015. Novo Nordisk did not break out sales of Norditropin in its reported financials in the first half of 2017.

The growth hormone therapy Norditropin was Novo Nordisk’s fifth best-selling product in 2016 at DKK 8.77 billion ($1.3 billion), 12 percent more than the previous year.

 

In 2016, sales of diabetes and obesity care products increased by 4 percent in Danish kroner to DKK 88.95 billion ($13.22 billion). Novo Nordisk is the world leader in diabetes care with a global value market share of 27 percent, executives say.

Sales of insulin increased by 3 percent measured in local currencies and were unchanged in Danish kroner at DKK 63.06 billion ($9.37 billion).

Sales of new-generation insulin (Tresiba, Xultophy, and Ryzodeg) reached DKK 4.46 billion ($663 million) compared with DKK 1.44 billion ($214 million) in 2015.

Sales of Tresiba (insulin degludec), the once-daily new-generation insulin, reached DKK 4.06 billion ($603 million) compared with DKK 1.27 billion ($189 million) in 2015.

Executives say the roll-out of Tresiba continues and the product has been launched in 52 countries. In the United States, where Tresiba was launched broadly in January 2016, the feedback from patients and prescribers is encouraging, and the product has achieved wide commercial and Medicare Part D formulary coverage. By the end of 2016, Tresiba had captured a 5.5 percent market share of the U.S. basal insulin market measured by weekly total prescriptions.

In Japan, where Tresiba was launched in March 2013 with similar reimbursement as insulin glargine U100, its share of the basal insulin market has grown steadily, and Tresiba has now captured 39 percent of the basal insulin market measured by monthly value market share.

Similarly, Tresiba has shown solid penetration in other markets with reimbursement at a similar level to insulin glargine U100, whereas penetration remains modest in markets with restricted market access. In the first half of 2017, Tresiba sales increased 155 percent to DKK 3.69 billion ($548 million).

A once-daily single-injection combination of insulin degludec and liraglutide, Xultophy (IDegLira) is marketed in nine countries. According to company management, launch activities are progressing as planned. During November 2016, Xultophy 100/3.6 was approved by the U.S. Food and Drug Administration and Novo Nordisk launched the product in the first half of 2017, during which it generated DKK 284 million ($42 million).

Ryzodeg, a soluble formulation of insulin degludec and insulin aspart, is marketed in 10 countries, and feedback from patients and prescribers is encouraging, executives say. Ryzodeg sales in first-half 2017 were DKK 196 million ($29 million), 172 percent more than in the first half of 2016.

Sales of modern insulin decreased by 5 percent in Danish kroner to DKK 47.51 billion ($3.2 billion) during 2016. Sales declined in the United States, Europe and Pacific partly offset by a positive contribution from International Operations and China. Sales of modern insulin and new-generation insulin in total constitute 82 percent of Novo Nordisk’s sales of insulin measured in value.

Sales in 2016 of other diabetes and obesity care products, which predominantly consists of needles, oral antidiabetic products and Saxenda, increased by 24 percent to DKK 5.84 billion ($869 million). Saxenda (liraglutide 3 mg for weight management) was launched in May 2015 and sales were DKK 1.58 billion ($234 million) in 2016 compared with DKK 460 million ($68 million) in 2015.

In the United States, executives say promotional activities are progressing as planned, and Saxenda is now the market-leading anti-obesity medication measured in value. Saxenda has been launched in 15 countries.

In the first half of 2017, Saxenda generated DKK 1.23 billion ($182 million), 98 percent more than in the first half of 2016.

Sales of hemophilia products decreased by 2 percent in Danish kroner to DKK 10.47 billion ($1.56 billion) for 2016. The sales development was negatively impacted by lower NovoSeven sales in the United States due to increased competition and patients participating in clinical trials with competing drugs, partly offset by the roll-out of NovoEight in Europe and the United States and by sales growth for NovoSeven in Pacific. In the first half of 2017, sales were DKK 5.32 billion ($790 million), slightly less than in first-half 2016.

Sales of other products within biopharmaceuticals, which predominantly consist of hormone replacement therapy-related (HRT) products, declined by 7 percent to DKK 3.59 billion ($533 million). The sales decline reflected a negative impact from the launch of a generic version of Vagifem in the United States in the fourth quarter. First-half 2017 sales in this segment were DKK 919 million ($137 million), 52 percent less than in the same period last year.

According to executives, 2016 was a year in which Novo Nordisk made significant progress in the company’s research and development pipeline and reached several milestones.

In October 2016, Novo Nordisk updated its R&D strategy and priorities to reflect the increasingly challenging payer environment, particularly in the U.S. market, by applying an even higher innovation threshold for progressing R&D projects.

Executives say Novo Nordisk will further intensify exploration of current assets in adjacent disease areas of high unmet need as well as identify new assets using its existing technology platform. In addition to the other areas, new areas to pursue in R&D are NASH (non-alcoholic steatohepatitis), diabetic kidney disease, and cardiovascular disease.

In 2016, Novo Nordisk spent DKK 14.56 billion ($2.17 billion) on R&D, 7 percent more than in 2015. First-half 2017 R&D costs amounted to DKK 6.7 billion ($996 million), about the same as in first-half 2016.

According to executives, as a result of the updated R&D strategy and priorities, Novo Nordisk in 2016 decided not to progress its current development projects within oral insulin and combinations involving oral insulin. In addition, a number of changes to the portfolio of early-stage projects were also implemented.

“Furthermore, Novo Nordisk intends to strengthen its activities for in-licensing of early- and mid-stage projects as well as external academic collaborations,” executives say. “Novo Nordisk’s current late-stage development portfolio was not affected by the changes.”

In January and February 2016, the results from the two double-blinded Phase IIIb trials SWITCH 1 and 2 were announced. The primary endpoint of the SWITCH 1 trial was met by showing a statistically significantly lower rate of severe or blood glucose confirmed symptomatic hypoglycemia during the maintenance period of 11 percent for people with type 1 diabetes treated with Tresiba compared to insulin glargine U100. The primary endpoint of the SWITCH 2 trial was also met by showing a statistically significantly lower rate of severe or blood glucose confirmed symptomatic hypoglycemia during the maintenance period of 30 percent for people with type 2 diabetes treated with Tresiba compared to insulin glargine U100.

In November 2016, Novo Nordisk announced the headline results from the DEVOTE trial, a long-term, randomized, double-blinded and event-driven trial conducted to confirm the cardiovascular safety of Tresiba (insulin degludec) compared to insulin glargine U100 when added to standard of care. In the trial, more than 7,500 people with type 2 diabetes at high risk of major adverse cardiovascular events were treated for a period of approximately two years.

The primary endpoint of the DEVOTE study was defined as the MACE composite outcome of the first occurrence of cardiovascular death, nonfatal myocardial infarction or non-fatal stroke and showed a hazard ratio of 0.91 in favor of Tresiba relative to insulin glargine U100, with no statistically significant difference between the two treatments. In the trial, Tresiba demonstrated superiority on the secondary confirmatory endpoint of severe hypoglycemia: 27 percent fewer patients in the Tresiba treated group experienced an episode of severe hypoglycemia, resulting in a 40 percent overall reduction in total episodes of adjudicated severe hypoglycemia with Tresiba compared to insulin glargine U100.

In February 2016, Novo Nordisk initiated the first Phase IIIa trial with oral semaglutide, an oral formulation of Novo Nordisk’s long-acting GLP-1 analog semaglutide using Emisphere Eligen technology. The global PIONEER program comprises 10 clinical trials in total.

In April 2016, Novo Nordisk announced results from the SUSTAIN 6 trial, where once-weekly semaglutide when added to standard of care statistically significantly reduced the risk of the composite primary endpoint of cardiovascular death, non-fatal myocardial infarction and non-fatal stroke by 26 percent compared to placebo in a study with 3,297 adults with type 2 diabetes with elevated cardiovascular risk. In December 2016, Novo Nordisk filed semaglutide for regulatory approval in the United States and the European Union, based on the results from the six SUSTAIN trials.

In November 2016, Novo Nordisk initiated a Phase II dose-finding trial in patients with NASH (non-alcoholic steatohepatitis) to investigate the effect of subcutaneous semaglutide once daily for 72 weeks on the histological resolution of NASH. The trial will include 372 patients globally randomized to one of three doses of semaglutide or placebo and is planned to conclude in 2019.

In August 2017, Novo Nordisk announced the SUSTAIN 7 trial results, which demonstrated that people with type 2 diabetes treated with once-weekly semaglutide experienced superior reduction in HbA1c and body weight compared to treatment with dulaglutide. The 40-week trial investigated the efficacy and safety of 0.5 mg semaglutide compared with 0.75 dulaglutide and 1.0 mg semaglutide compared with 1.5 mg dulaglutide, when added to metformin.

From a mean baseline HbA1c of 8.2 percent, 0.5 mg semaglutide achieved a statistically significant and superior reduction of 1.5 percent compared with a reduction of 1.1 percent with 0.75 mg dulaglutide. People treated with 1.0 mg semaglutide experienced a statistically significant and superior reduction of 1.8 percent compared with a reduction of 1.4 percent with 1.5 mg dulaglutide.

Results of a post-hoc analysis – that of the SUSTAIN 1-5 trials – were presented in September 2017 demonstrating that a greater proportion of adults with type 2 diabetes achieved a clinically meaningful reduction in both HbA1c and body weight with once-weekly semaglutide vs. comparator treatments. Comparators included placebo, sitagliptin, insulin glargine U100, or exenatide extended release (ER).

In March 2016, Novo Nordisk announced that, in the LEADER study, Victoza significantly reduced the risk of the composite primary endpoint of cardiovascular (CV) death, non-fatal myocardial infarction and non-fatal stroke by 13 percent, and the secondary endpoint of CV mortality was also significantly reduced by 22 percent versus placebo, when added to standard of care in 9,340 adults with type 2 diabetes at high CV risk.

In August 2017, FDA approved a new indication for Victoza to reduce the risk of major adverse CV events in adults with type 2 diabetes and established CV disease. The approval was based on the results of the LEADER trial.

In October 2016, Novo Nordisk announced that it had received a complete response letter from FDA regarding the new drug application for fast-acting insulin aspart. In the letter, the FDA requested additional information related to the assay for the immunogenicity and the assay used to generate the clinical pharmacokinetics data before the review of the new drug application (NDA) could be completed.

Novo Nordisk resubmitted the fast-acting insulin aspart NDA as a class II resubmission in March 2017 and FDA approval is expected at the end of the third quarter of 2017.

In January 2017, Novo Nordisk announced that the European Commission granted marketing authorization for Fiasp for the treatment of diabetes in adults and that Novo Nordisk had also received marketing authorization for Fiasp from Health Canada. Swissmedic and the Australian Government Department of Health granted market authorization in June 2017.

In September 2017, Novo Nordisk presented findings at the 53rd European Association for the Study of Diabetes that Fiasp improved overall blood sugar (HbA1c) and post-meal sugar (postprandial glucose or PPG) control over 52 weeks, compared to conventional insulin aspart (NovoRapid),

The findings showed that Fiasp maintained the significant improvement in overall blood sugar control that was seen in a shorter-term (26 weeks) study period. The results also reconfirmed the safety profile of Fiasp, showing comparable overall numbers of severe or blood-sugar confirmed hypoglycemia (low blood sugar levels).

“Compared to conventional insulin aspart, Fiasp is a closer match to the natural physiological insulin response, leading to better long-term blood sugar control,” says Mads Krogsgaard Thomsen, executive VP and chief science officer of Novo Nordisk. “Fiasp delivers benefits for people with diabetes, helping them to achieve better post-meal and overall blood sugar control.”

In November 2016, Novo Nordisk announced that the FDA approved the new drug application for Xultophy 100/3.6. The product is indicated as an adjunct to diet and exercise to improve glycemic control in adults with type 2 diabetes inadequately controlled on basal insulin (less than 50 units daily) or liraglutide (less than or equal to 1.8 mg daily).

In September 2017, Novo Nordisk reported results from a post-hoc analysis that in people with type 2 diabetes, Xultophy significantly reduced a number of risk factors associated with an increased risk of cardiovascular disease (CVD), compared to basal insulin. People treated with Xultophy had significantly lower systolic blood pressure, lower total cholesterol as well as lower low-density lipoprotein cholesterol (so-called “bad cholesterol”), and significant weight changes in favor of Xultophy compared to people treated with basal insulin (insulin glargine U100 or insulin degludec). A small but statistically significant increase in heart rate was also observed with Xultophy.

In first half of 2016, Novo Nordisk submitted the marketing authorization application to the European Medicines Agency and the biologics license application to the FDA for the approval of long-acting factor IX, nonacog beta pegol. Nonacog beta pegol is a glycopegylated recombinant factor IX with a significantly improved pharmacokinetic (PK) profile, developed for patients with hemophilia B.

In March 2017, Novo Nordisk received the positive opinion from the Committee for Medicinal Products for Human Use (CHMP), under the European Medicines Agency, for nonacog beta pegol; N9-GP, indicated for prophylaxis and on-demand treatment of bleeding as well as for surgical procedures in adolescent (>12 years of age) and adult patients with hemophilia B. In May 2017, Novo Nordisk received FDA approval for the product as Rebinyn. The company expects to launch the product in the United States in the first half of 2018.

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