Europe Warms to New Novartis Heart Drug Amid Glacial U.S. Sales

  • Single-payer systems recognize hospital cost savings, CEO says
  • Novartis still expects $5 billion in peak Entresto sales

Novartis AG’s new heart medicine is getting a warmer reception in Europe than the U.S., defying conventional market wisdom and highlighting weaknesses in the world’s largest health-care market.

The drug, Entresto, is struggling to generate the sales investors expected after its introduction in July. Analysts have cut their 2020 estimates for Entresto by 35 percent in the last three months amid weak demand for the drug in the U.S., where physicians are reluctant to prescribe the drug as insurance companies resist broad coverage.

Entresto has had a faster uptake in Europe since it was approved by regulators there in November. That may be because many European governments are the main purchasers of both drug and hospital treatment. Entresto reduces hospitalization rates for heart-failure patients by 20 percent, saving governments money, Novartis Chief Executive Officer Joe Jimenez said.

“The savings that Entresto could provide across the system is being recognized,” Jimenez said Thursday on a conference call with journalists.

In the first week Entresto was on the German market, more than 1,000 patients were on the therapy, David Epstein, CEO of Novartis’s pharmaceutical unit, said on a conference call in January. That compared with about 11,000 patients in the U.S., after the drug had been available for six months. In Switzerland, the adoption of the new treatment was more than five times as strong as it was in the U.S., Epstein said.

Straightforward Switzerland

“The Swiss system is much more straightforward,” Epstein said. “Once the price is negotiated, the market opens.”

Entresto generated $17 million in the first quarter, compared with analysts’ average estimate of $20.2 million. Novartis forecast about $200 million in Entresto sales for this year, with the drug eventually reaching peak sales of $5 billion, albeit at a much slower rate than it previously expected.

“The drug is well-positioned to show benefit in a single-payer health-care environment,” Credit Suisse Group AG analyst Jo Walton wrote in a note to investors. “U.S. uptake remains under pressure from formulary prior authorization requirements.”

The company said it’s ramping up marketing to persuade physicians in the U.S. to prescribe it.

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