Q&A with Lars Rebien Sorensen 2013

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Med Ad News: What do you feel are the major strategic and marketplace challenges today for a company such as Novo Nordisk, and how is the company meeting those challenges?

LS: One of the challenges is one we share with all of the pharmaceutical companies, and that is generating innovation, which is useful for the people we serve, in our case, people with diabetes and professionals who are trying to help these individuals. That’s not a specific one to this time and age and a general one for this time and age.

Another one that is more difficult these days is enabling us to get reimbursement for innovation, or market access. It’s increasingly difficult to get payors to pay for medical innovation, it puts high demand on all these companies to generate evidence of what value our products are providing patients and the healthcare providers. It is only natural that we demonstrate value, the only problem is that the regulatory process, whereby our products are being approved, are not necessarily defined in a way that also enables us to show and demonstrate commercial and clinical value. It’s more focused on safety and comparison between other products, especially in our area of chronic disease, it really truly doesn’t represent the long-term clinical benefit patients and society can get out of our therapies.

So that it what I would say is one of the major ones and in a way, linked to that, is also increasing regulatory focus on safety, which does mean, especially in the diabetes area, we’re required to do additional clinical studies to ensure the safety of our drugs.

Med Ad News: Right, you have that going on right now with Tresiba. With the U.S. launch of Tresiba delayed, what are the steps you are taking to ensure the growth of the diabetes sector of the company?

LS: We have a quite strong demand for our current products on the market, which we call our modern insulins, such as NovoLog and NovoLog Mix, and Levemir. There’s quite a strong demand for all these products in the United States, but also elsewhere. So it’s likely these products will continue to grow in demand, the demand will grow for insulin therapy in general. And then there’s also quite strong growth in the area of our GLP-1 product, Victoza. In addition to that, outside the diabetes area, our biopharmaceutical drugs are doing quite well, such as NovoSeven.

So there is going to be demand for our current products until such time we can demonstrate to the FDA that there’s adequate safety and getting Tresiba approved in the U.S. It’s sad though in a way that we have to do these additional trials. We think that they are largely unnecessary, but at the end of the day it’s the FDA that decides what type of data they want, and in this case, they required us to provide additional cardiovascular data on the product, and that’s what we are starting up and trying to generate right now.

Med Ad News: North America is viewed as one of the major areas of growth for Novo Nordisk, and with everyone here being concerned about the implementation of the Affordable Care Act, what are the challenges and opportunities for Novo Nordisk that are being presented by the legislation, and how will the company meet them?

LS: The Affordable Care Act, you have the objective to provide basic healthcare services to some 30 million people in the United States, and they happen to be mainly in the regions that have a very high prevalence of chronic disease. So whereas on one hand the Affordable Care Act did mean additional costs to us and the industry in general, it did require additional rebates in our pricing, it will require us to pay for part of the donut hole, the longer term benefit that we have foreseen is one of more people getting access to better care and that will lead to growth in the volume of our business. We still think that is warranted because diabetes care can be improved and should be improved, especially in those less fortunate groups, from a social perspective, who are likely to benefit from the Affordable Care Act. That’s what we are expecting.

Med Ad News: Now, China is also seen as an area of growth for the company, and there were recent reports that regulators visited the company’s production facility in Northern China. What steps has Novo Nordisk taken to proactively look at its business practices, to avoid the problems other companies are now facing in that country?

LS: Well, none in fact. This was a kind of routine inspection, probably prompted by some of the other cases, the most notable one being the GlaxoSmithKline investigations in China. But as far as we know, we are not part of an investigation in that regard, and in fact we operate strongly with our compliance program not only in the United States but elsewhere, as a result of previous demands from the Department of Justice in the United States, we’ve worked a number of years on strengthening our compliance programs. And therefore, we have not felt the need to amend any of our practices in China, because we believe we are in good shape.

Med Ad News: Novo Nordisk is regarded as a leading company in the world in diabetes treatment, with the broadest pipeline. What will the company continue to do to maintain its pre-eminence in that field?

LS: I think our focus in that strength is one of the key opportunities. We’re in a very unusual spot in that the only thing we really know something about is diabetes, and since that area is growing tremendously, we have the opportunity of focusing on that going forward, and not diversifying our interest in a large number of other areas. Out of that comes a higher probability of us having success, also going forward, we’ve been working on something that we’ve been working on for 90 years. It’s much more challenging for broader-based pharmaceutical companies that are competing in a number of therapeutic areas to find growth, whereas we are competing in one area where we are having epidemic proportions right now, with a growing number of individuals with diabetes and pre-diabetes. We are on the threshold right now of treating pre-diabetes. We are likely to file later this year a pharmaceutical drug for obesity treatment, for severe obesity, which is in a way preventing diabetes. So we are in a way in a very unusual situation compared with other of our peers, in that the only thing we actually know anything about is growing in demand.

Med Ad News: What are your view on acquisitions to grow the company? Is this a strategy you would contemplate?

LS: Years ago, when we were a smaller predominantly European and Japanese-based pharmaceutical company, there were considerations of acquisitions and expansions and joint ventures. But since we have made a significant breakthrough in the U.S. market, and now can compete with even the biggest pharmaceutical companies in the United States, in our niche, which we have discussed is growing in demand, and we are the leading player in that niche, the acquisitions we are contemplating are bolt-on acquisitions in terms of individual technologies, and products that can strengthen our portfolio. If you’re thinking about general acquisitions of other companies or major mergers, that is not on our plate and hasn’t been for the last 15 years, and it won’t likely be so going forward.

Med Ad News: Your company seeks to partner for research and has undertaken partnered research, outlicensed R&D, and product marketing partnerships. What is the overall preferred partnering strategy, one where both companies equally assume risks and profits, or deals with small companies that allow you to take possession of a greater part of the profits or outright acquire a product?

LS: Our strategy is one of in-licensing new and very early technologies in the area of diabetes, if we can find these within the areas we’re approaching. We’re only interested in making biopharmaceutical drugs for diabetes, not small molecules like many of our competitors are doing. In terms of marketing and sales, we prefer to do it on our own because we have a global footprint and want to be in control of the positioning and the pricing and taking care of the reputation of the company. So in that respect, we’re not a very good partner from a sales/marketing perspective, but I think we are a good partner from the perspective of early research and development. And we always try to gain control through the regulatory development and into marketing, because we’ve found not many are willing to be partnering on sales and marketing.

Med Ad News: Now you have very clearly delineated areas of R&D, are there any thoughts of expanding beyond those areas of expertise into related areas such as heart disease?

LS: Your question is quite relevant in the sense of that the clinical trials required for diabetes drugs are now significantly including investigation of cardiovascular risk because many people with diabetes die from cardiovascular disease, and if they survive, later on become victims of the microvascular complications of diabetes, such as nephropathy and neuropathy and things of that sort. So therefore it’s only natural to think about cardiovascular disease when you think about diabetes. However, so far the general treatment of cardiovascular disease is dominated by some different technologies than what our company possesses – it’s been lipid-lowering drugs, it’s been angiotensin inhibitors, major cardiovascular drugs – which is not our particular area.

Right now we are investigating one of our new drugs [Victoza], it seems to have some potential positive effect on the cardiovascular system, but that is to be proven in a few years when we disclose the results from a major study that we have committed ourselves to undertake and that should be finalized around 2016. So we’re not going to go into cardiovascular disease on a broad scale, but we have to acknowledge that the patients we’re treating have significant risk of cardiovascular disease, and therefore cardiovascular complications are something that we need to evaluate in our clinical programs.