
Novo Nordisk: survival of the fittest applies in diabetes and obesity market
Novo Nordisk: survival of the fittest applies in diabetes and obesity market
Diabetes specialist Novo Nordisk is feeling the heat from increasingly price conscious US payers. It needs next generation innovation and growth in emerging markets to keep ahead of competitors and meet demands of outcomes-focused payers.
For many years, Denmarks Novo Nordisk was the pharmaceutical company that could do no wrong by shareholders under the 16-year tenure of chief executive Lars Srensen, it achieved an unbroken run of nearly 50 quarters of double digit sales growth.
This great success was founded on successive innovation in insulin products and user-friendly insulin pen devices. The company also expanded into haemophilia and growth disorder treatments, all of which saw revenues rise year on year, its share price growing twelvefold between 2000 and 2016.
But this golden period came to an abrupt halt last year when newly-empowered pharmacy benefit managers (PBMs) began to demand major price cuts in the US market, which accounts for around 40% of global diabetes sales, and 51% of Novos revenues. Novo and competitors such as Sanofi and Eli Lilly were forced to give steep discounts or otherwise see their products delisted from reimbursed lists entirely.
This led to Novo cutting its longer-term forecast for sales growth twice: slashed from 15% to 5%, the move sparked an investor crisis of confidence which led to Lars Srensen stepping down from the CEO role two years early.
Novo isnt out of the woods yet in the US: there are continuing battles with PBMs, threats of new price transpa
Continue
reading