- Danish company says it lost key contract for NovoLog insulin
- Novo Nordisk trims sales and profit forecasts for 2016
Novo Nordisk A/S is headed for its biggest drop in 3 1/2 years after the world’s biggest maker of insulin trimmed its sales and profit forecasts for the year, signaling intensifying pricing pressure from customers in its largest market.
Profit this year is likely to climb as much as 8 percent, down from an earlier projection of as much as 9 percent, the Bagsvaerd, Denmark-based company said in a statement on Friday.
Growth in 2016 will be weighed down by the loss of a “sizable” contract for its top-selling insulin NovoLog, Chief Executive Officer Lars Rebien Soerensen said in an interview. Lower prices and escalating competition from biosimilars -- or cheaper copies of complex biologic drugs -- within hormone replacement therapy and diabetes have dimmed prospects for the Danish company, which controls almost half the global market for insulins.
“Because of competition and biosimilar entries, we’ve had to increase our rebates to retain that level of access in the marketplace,” Soerensen said by phone on Friday. “In reality, the only way you can insulate yourself from pricing pressures are by, long-term, introducing new and better products.”
Shares of Novo fell 8.7 percent to 336.40 kroner as of 1:01 p.m. local time, heading for their biggest one-day plunge since February 2013. The stock has declined about 16 percent this year.
After completing the majority of 2017 negotiations with pharmacy benefits managers for insurance coverage in the U.S., average prices will be “low- to mid-single digit” percentage less than 2016 levels with rebates, according to Soerensen.
“We have been trying to establish strategic partnerships with some of the major PBMs,” the CEO said. “For 2017 we’re secure, we have very, very good access. It came at a slight cost on price but we can compete next year.”
Sales this year will climb as much as 7 percent, instead of an earlier projection of as much as 9 percent, Novo said.
Novo is betting that diabetes treatments, which account for almost 80 percent of its sales, will become an even bigger part of its business as the number of people suffering from the condition surges. The Danish company is counting on the insulin Tresiba and diabetes medicine Victoza to boost sales even as U.S. insurers and payers demand lower prices.
Climbing revenue from Victoza, a blockbuster medicine that stimulates insulin production, and Tresiba are likely to be partly offset by the lost contract for NovoLog this year.
“We are losing more business due to that contract loss than we had anticipated,” Novo’s CEO said in the phone interview. “It’s a sizable contract.”
Sales of Victoza, rebuffed earlier this week by U.S. pharmacy benefits manager Express Scripts Holding Co., advanced to 4.95 billion kroner ($742 million) in the second quarter, compared with the 5.02 billion kroner analysts had anticipated.
Net income in the quarter rose 19 percent to 9.97 billion kroner, compared with the 9.91 billion kroner average of estimates compiled by Bloomberg.
On Tresiba, Novo expects to file data within the next three months to the U.S. Food and Drug Administration for a label change and aims to have that updated in mid-2017, helping the company negotiate contracts for 2018, he said.
(An earlier version of this story was corrected to show the high end of the sales forecast was 7 percent.)