Novo Nordisk: A Goal Achieved
Novo Allé, 2880
Bagsværd, Denmark
Telephone: +45 4444 8888
Website: novonordisk.com
Best-Selling Products
| Product | 2014 Sales | 2013 Sales |
|---|---|---|
| NovoLog/NovoRapid | $3,108 | $3,000 |
| Levemir | $2.532 | $2,056 |
| Victoza | $2,391 | $2,072 |
| NovoLog Mix/NovoMix | $1,758 | $1,738 |
| NovoSeven | $1,628 | $1,648 |
| Norditropin | $1,159 | $1,089 |
All sales are in millions of dollars and were translated using the Federal Reserve Board’s average rate of exchange in 2014: DKK5.6151.
Financial Performance
| 2014 | 2013 | |
|---|---|---|
| Revenue | $15,816 | $14,883 |
| Net income | $4,716 | $4,485 |
| Adjusted EPS | $1.79 | $1.67 |
| R&D | $2,451 | $2,090 |
| 1H15 | 1H14 | |
|---|---|---|
| Revenue | $9,307 | $7,475 |
| Net income | $3,245 | $2,396 |
| Adjusted EPS | $1.10 | $0.91 |
| R&D | $1,119 | $1,112 |
All sales are in millions of dollars except EPS and were translated using the Federal Reserve Board’s average rate of exchange in 2014: 5.6151.
According to President Lars Rebien Sorensen, 2014 ended much better than it started for Novo Nordisk. And 2015 is looking even better for the company, as three-quarters of the way through the year, Novo Nordisk received the long-awaited good news that the U.S. Food and Drug Administration approved the once-daily insulin Tresiba.
But 2014 was a rather grim ride, at least initially.
“I must admit that I felt a bit uneasy during the first couple of months when following the development of our sales in the United States,” Sorensen says.
Sorensen says the company knew sales would be negatively affected by the loss of reimbursement for two of its main diabetes products with a large pharmacy benefit manager, which took effect in January 2014. Novo Nordisk was also expecting that more Americans would seek medical coverage under Medicare Part D, to which the company gives very high rebates. This would put pressure on Novo Nordisk’s average net sales prices.
Executives also knew that sales of the oral diabetes medication Prandin would be much lower after the product was exposed to generic competition in August 2013, and some of the company’s wholesalers reduced their inventories in the first quarter of 2014.
“Together, this meant that 47 quarters of double-digit sales growth, measured in local currencies – both for our US business and the company as a whole – came to an end in the first quarter, and we had to lower our sales guidance for the full year a notch,” Sorensen says.
Ultimately, Novo Nordisk ended the year growing its North American sales by 11 percent and global sales by 8 percent in local currencies, within the range originally forecasted. Additionally, the company delivered 13 percent growth in operating profit in local currencies, which was better than forecasted.
Financial performance
In 2014, Novo Nordisk recorded sales of DKK 88.81 billion ($15.82 billion), 6.9 percent more than in 2013. Net profit was DKK 26.48 billion ($4.72 billion), 5.2 percent more than in 2014. Diluted earnings per share were DKK 10.07 ($1.79), 7.7 percent more than in the previous year.
During 2014, two of Novo Nordisk’s products — Levemir and Victoza — accounted for most of the company’s sales growth, executives say. But sales of the human growth hormone Norditropin as well as Tresiba, the company’s new long-acting insulin, also showed positive growth trends.
Tresiba was launched in Japan in March 2013, and by the end of 2014 it had claimed more than 26 percent of the segment for long-acting, or basal, insulin measured in monthly value market share. “Measured in local currencies, Tresiba accounted for 8 percent of sales growth and continues to do well in all the markets in which it is competing on an equal footing in terms of reimbursement status with other insulin products,” Sorensen says.
From a regional perspective in 2014, North America accounted for 61 percent of sales growth, followed by International Operations and Region China. These regions are expected to see most of the growth in the coming years, execs say.
“I consider this to be a solid financial performance in a year characterized by all forms of cost-containment measures by the payers of pharmaceuticals – whether these are governments, employers or their intermediaries,” Sorensen says, pointing out that pressure on prices and reimbursement is nothing new, especially in Europe. And in the United States – the world’s largest pharmaceutical market – pricing pressure has been growing significantly in the past two years, a trend that will continue. “That is the main reason why our sales are unlikely to return to previous double-digit growth levels in 2015,” Sorensen says.
But the company has been doing very well in 2015. In the first six months of the year, sales were DKK 52.26 billion ($9.31 billion), 24.5 percent more than in first-half 2014. Net profit was DKK 18.22 billion ($3.25 billion), 35.4 percent more than in the same period last year. Non-adjusted diluted earnings per share were DKK 7.02 ($1.25), 37.9 percent more than in first-half 2014. Adjusted diluted EPS amounted to DKK 6.20 ($1.10).
Some of the increase in net income and diluted earnings per share can be attributed to the partial divestment in May 2015 of NNIT, Novo Nordisk’s IT company. Adjusted for the partial divestment of NNIT, net profit and diluted earnings per share increased by 20 percent and 22 percent respectively.
In the first half, sales in North America increased by 35 percent, or 10 percent in local currencies; sales in International Operations increased by 26 percent, or 17 percent in local currencies; and sales in Region China increased by 25 percent, or 3 percent in local currencies.
Product performance
Novo Nordisk’s leading sales product during 2014 was the modern insulin NovoLog/NovoRapid, which generated DKK 17.45 billion ($3.11 billion), up 3.6 percent from 2013. During January-June 2015, NovoLog/NovoRapid sales were DKK 9.91 billion ($1.77 billion), rising 22 percent versus first-half 2014.
The modern insulin Levemir was the company’s second best-selling product in 2014 with sales of DKK 14.22 billion ($2.53 billion), 23 percent more than in 2013. Levemir sales in first-half 2015 were DKK 8.59 billion ($1.53 billion), 28 percent more than in first-half 2014.
The GLP-1 diabetes therapy Victoza was Novo Nordisk’s third best seller in 2014, achieving sales of DKK 13.42 billion ($2.39 billion), 15.4 percent more than in same-period 2015. During the first half of 2015, Victoza sales were DKK 8.44 billion ($1.5 billion), 41 percent more than in first-half 2014.
The modern insulin NovoLog Mix/ NovoMix was the fourth best-selling product in 2014, with sales of DKK 9.87 billion ($1.76 billion), 1 percent more than in 2013. First-half 2015 sales were DKK 5.6 billion ($997 million), 16 percent more than in first-half 2014.
The hemophilia product NovoSeven was the company’s fifth best seller last year at DKK 9.14 billion ($1.63 billion), a decline of 1.2 percent from 2013. In the first half of 2015, the product achieved sales of DKK 5.26 billion ($937 million), 16 percent more than in the same period last year.
The growth hormone therapy Norditropin was Novo Nordisk’s sixth best-selling product in 2014 with sales of DKK 6.51 billion ($1.16 billion). During the first half of 2015, Norditropin sales totaled DKK 3.91 billion ($697 million), an increase of 30 percent compared with the first half of 2014.
Executives say Novo Nordisk’s sales growth for 2015 is expected to be 7 percent to 9 percent measured in local currencies. This reflects expectations for continued robust performance for the portfolio of modern insulin, Victoza and Tresiba, as well as a modest sales contribution from the launches of Saxenda, Xultophy, and NovoEight. These sales drivers are expected to be partly countered by an impact from increased rebate levels in the United States, intensifying competition within diabetes and biopharmaceuticals, as well as macroeconomic conditions in China and various markets in International Operations.
Pipeline progress
Novo Nordisk prides itself on its diabetes research. “Looking further ahead, more than anything else it is our ability to discover, develop and launch new and better products that can change the lives of people with chronic diseases such as diabetes that will determine our success as a company,” Sorensen says. In 2014, the company spent DKK 9.32 billion ($2.45 billion) on R&D, 19.7 percent more than in 2013, and Sorensen says “we have no intention of cutting back in the coming years” on funding.
In the first half of 2015, Novo Nordisk spent DKK 6.29 billion ($1.12 billion) on research and development, about 1 percent more than during first-half 2014.
Novo Nordisk reached several important R&D milestones in 2014, Sorensen says. In September 2014, the European Commission granted marketing authorization for Xultophy for the treatment of type 2 diabetes in adults. Xultophy is a fixed combination of insulin degludec , the active chemical in Tresiba, and liraglutide, the active chemical in Victoza.
Novo Nordisk believes that the compound offers a new way to intensify treatment and improve blood glucose control. In January 2015, Switzerland was the first country to launch Xultophy, and more countries are following during the year.
By the end of 2014, all the patients needed for the Tresiba DEVOTE study had been recruited. Based on interim results from this study, Novo Nordisk resubmitted an application for approval to FDA in March 2015. The resubmission paid off, as on Sept. 25, 2015, Novo Nordisk announced that FDA had approved Tresiba and Ryzodeg 70/30.
Tresiba is a once-daily new-generation basal insulin analog with a half-life of 25 hours and a duration of action of at least 42 hours. In “treat-to-target” studies comparing Tresiba to insulin glargine, people using Tresiba achieved similar reduction in long-term blood glucose (HbA1c), numerically greater fasting plasma glucose reduction, while using numerically lower doses of insulin in a majority of the studies.Furthermore, the studies demonstrated that Tresiba is the first basal insulin to offer people with diabetes the possibility of injecting their basal insulin at any time of the day with the option to adjust the time of injection.
Ryzodeg 70/30, the approved brand name for insulin degludec/insulin aspart, contains insulin degludec, the active chemical in Tresiba, in a soluble co-formulation with insulin aspart. Ryzodeg 70/30 can be administered once or twice daily with any main meal. In a “treat-to-target” study supporting the new drug application where Ryzodeg 70/30 was compared to NovoLog Mix 70/30, Ryzodeg 70/30 showed equivalent reductions in HbA1c.
Novo Nordisk expects to launch Tresiba in the United States during the first quarter of 2016. Tresiba will be available in the FlexTouch device and be offered in two concentrations enabling maximum doses of 80 units and 160 units per injection, respectively.
According to company executives, 2015 brought very important study results for other key development projects within the diabetes area. These include the remaining Phase IIIa data for faster-acting insulin aspart; all Phase IIIa results for the use of Victoza in people with type 1 diabetes; the first Phase IIIa results for semaglutide, a once-weekly GLP-1 analog; and Phase II results for an oral tablet formulation of GLP-1.
The company’s new treatment for people with obesity, Saxenda (liraglutide 3 mg), was approved in the United States in December 2014 and approved in Europe during March 2015. The company launched Saxenda in the United States during April 2015. In May 2015, Novo Nordisk successfully completed the three-year extension of the SCALE Obesity and Prediabetes trial in adults with obesity or who were overweight with comorbidities, and had prediabetes at baseline. The trial met its primary endpoint, demonstrating that ongoing treatment with Saxenda in combination with a reduced-calorie diet and increased physical activity delayed the onset of type 2 diabetes, compared with placebo (diet and exercise alone).
Over the course of this 160-week, randomized, blinded Phase IIIa trial, the time to onset of type 2 diabetes was 2.6 times longer for people treated with Saxenda compared with placebo treatment. In addition, the risk of developing type 2 diabetes was reduced by approximately 80 percent and statistically significant for those being treated with Saxenda.
At 160 weeks, Saxenda provided an average body weight loss of 6.1 percent from baseline, compared with 1.8 percent for placebo treatment, both in combination with a reduced-calorie diet and increased physical activity. 49.6 percent of people treated with Saxenda achieved a weight loss of at least 5 percent of their baseline body weight, compared with 23.4 percent on placebo treatment; 24.3 percent lost more than 10 percent of their body weight when treated with Saxenda compared to 9.4 percent with placebo. Also in May 2015, Novo Nordisk presented results from the Phase IIIa SCALE trial at the European Congress on Obesity that demonstrated the weight-loss-dependent and independent effects of Saxenda. Endpoints that improved due to treatment, but were independent of weight loss, included glycemic endpoints (HbA1c and fasting plasma glucose), as well as a reduction in the use of oral anti-diabetic treatments. However, reduction in bodyweight still contributed to these treatment effects.
Within the hemophilia area, Novo Nordisk launched NovoEight (recombinant factor VIII) in Japan and some European countries for the treatment of people with hemophilia A. The product was launched in the United States during April 2015.
In June 2015, Novo Nordisk initiated the first Phase IIa proof-of-principle trial with the long-acting insulin analog OI338GT. The trial is an eight-week randomized, double-blinded, multiple dose trial investigating the glycemic effect and safety of once-daily OI338GT in combination with subcutaneous placebo compared to once-daily insulin glargine in combination with once-daily oral placebo in 50 people with type 2 diabetes. Contingent on the achievement of proof of principle, larger Phase IIb trials are expected to be initiated.
Additionally in June 2015, Novo Nordisk started the first Phase I trial with OI320GT, a new oral insulin analog. The trial will investigate the safety, tolerability, pharmacokinetics, and pharmacodynamics of OI320GT in approximately 80 healthy volunteers.
During July 2015, Novo Nordisk completed the first Phase IIIa trial with liraglutide as adjunct to insulin therapy in people with type 1 diabetes. ADJUNCT TWO is a randomized, double-blinded placebo-controlled trial investigating efficacy and safety of daily doses of 0.6 mg, 1.2 mg or 1.8 mg liraglutide compared with placebo as adjunct to insulin treatment in 835 people with type 1 diabetes for 26 weeks. In agreement with regulatory requirements, the maximum insulin dose in the trial was fixed in all treatment arms with an upper cap of the average daily total insulin dose when entering the trial, to investigate the additional impact of liraglutide on glucose control.
Also in July, Novo Nordisk successfully completed SUSTAIN 1, the first Phase IIIa trial for semaglutide, administered subcutaneously once weekly. The trial investigated the efficacy and safety of 0.5 mg and 1.0 mg semaglutide as monotherapy during 30 weeks of treatment compared with placebo in 388 people with type 2 diabetes previously on diet and exercise.
The trial achieved its primary endpoint by demonstrating that from a mean baseline HbA1c of 8.1 percent, people treated with doses of 0.5 mg and 1.0 mg semaglutide achieved superior improvements in HbA1c of 1.5 percent and 1.6 percent, respectively, compared to no change in HbA1c in the placebo group. 74 percent and 73 percent of the people treated with 0.5 mg and 1.0 mg semaglutide, respectively, achieved the American Diabetes Association (ADA) and European Association for the Study of Diabetes (EASD) treatment target of HbA1c below 7 percent compared with 25 percent of the people treated with placebo. Furthermore, from a mean baseline of 92 kg, people treated with semaglutide in both doses of 0.5 mg and 1.0 mg experienced a superior weight loss of 3.8 kg and 4.6 kg, respectively, compared with a weight loss of 1.0 kg for people treated with placebo, thus meeting the confirmatory secondary endpoint.
In September 2015, the company announced the headline results from the second Phase IIIa trial for semaglutide, SUSTAIN 3. The trial achieved its objective by demonstrating that from a mean baseline HbA1c of 8.4 percent, people treated with 1.0 mg semaglutide achieved a statistically significant and superior improvement in HbA1c of 1.5 percent compared to the improvement in HbA1c of 0.9 percent with 2.0 mg exenatide once-weekly.
66 percent of the people treated with 1.0 mg semaglutide achieved the American Diabetes Association (ADA) and the European Association for the Study of Diabetes (EASD) treatment target of HbA1c below 7 percent compared with 40 percent of the people treated with 2.0 mg exenatide once-weekly.
Furthermore, from a mean baseline body weight of 96 kg, people treated with 1.0 mg semaglutide experienced a statistically significant and superior weight loss of 5.6 kg compared with a weight loss of 1.8 kg for people treated with 2.0 mg exenatide once-weekly.
During September 2015, Novo Nordisk announced findings from a head-to-head trial, LIRA-LIXI, comparing Victoza and lixisenatide, both in combination with metformin. The trial demonstrated a significantly greater reduction in HbA1c of -1.83 percent for liraglutide vs -1.21 percent for lixisenatide in adults with type 2 diabetes. In addition, more people treated with Victoza achieved HbA1c targets of less than 7 percent compared with lixisenatide. Victoza demonstrated significantly greater reductions in fasting plasma glucose. Lixisenatide had a smaller postprandial increment for the meal following the injection compared to Victoza, but there was no difference at the other meals of the day, leading to similar overall postprandial glucose control across all meals for lixisenatide and Victoza.
Weight loss was observed in both treatment groups, and systolic and diastolic blood pressure decreased with Victoza and lixisenatide treatment.
