There's a Blood Battle Raging Between Europe's Drug Giants

  • Roche’s experimental hemophilia treatment is in final testing
  • NovoSeven, a $1.5 billion drug, has no direct competitor

Novo Nordisk A/S, already reeling from pricing pressure in its diabetes business, is now feeling the heat in the $8 billion market for treating hemophilia, a rare bleeding disorder.

The Danish company is bracing for competition for NovoSeven, a blockbuster that generated $1.5 billion in sales last year, from Roche Holding AG. The Swiss drugmaker is in final stages of testing a new drug that promises to chip away at a part of the market long dominated by the 20-year-old medicine.

Roche expects to demonstrate the efficacy of its treatment -- currently known by the clunky moniker ACE910 -- by the end of the year.

“That is the key threat,” Chief Executive Officer Lars Rebien Sorensen said last week in an interview, responding to a question about the outlook for his company’s hemophilia business.

Early in 2017, Novo expects to have a better assessment of the threat posed by the experimental drug. Roche said Thursday four patients had suffered serious adverse events in a test of the medicine, though that shouldn’t derail its development schedule. The news caused shares of Shire Plc, which is buying Baxalta Inc. this year for its stable of hemophilia drugs, to surge as much as 5.8 percent in London trading. Roche dropped 0.5 percent in Zurich.

Bad Timing

The timing of the hemophilia challenge couldn’t be worse for Novo. The world’s biggest maker of insulin is trying to navigate mounting resistance from U.S. benefits managers to prices of diabetes drugs, which bring in about 80 percent of the company’s sales. Novo shares have plunged 40 percent so far in 2016, wiping out $63 billion in market value. They gained 1 percent in Copenhagen on Thursday.

While hemophilia affects only 20,000 people in the U.S., the medicines used to treat the incurable condition may grow to generate $9.6 billion annually in four years for companies tracked by Bloomberg Intelligence, up from $8 billion this year, following the development of new long-acting formulations, gene therapies and other drugs.

Shire, which became the largest player following its $36 billion acquisition of Baxalta, has 37 percent of the market, while Novo is second with 18 percent, according to Bloomberg Intelligence.

Niche Market

What has set NovoSeven apart is that it’s the only medicine that can be used by patients who need a protein known as factor VII after becoming resistant to other hemophilia treatments.

The drug is largely responsible for giving Novo its grasp of the hemophilia market, though the company has also more recently introduced NovoEight. It’s now gearing up for pricing negotiations with U.S. benefits managers for the newer treatment while also expanding manufacturing facilities in New Hampshire.

Roche’s experimental drug could undermine all that.

“We need to assume that ACE910 will capture a big chunk of the NovoSeven sales and that it will also intrude on the NovoEight business at some point,” Chief Science Officer Mads Krogsgaard Thomsen said in an interview on Friday. “We’re anticipating that Roche will do all it can to capture this market and make the existing products appear outdated.”

For its part, Novo is gearing up for the fight.

The drugmaker filed a lawsuit in federal court in Pittsburgh at the end of September, seeking to block a former sales manager from working for Roche. Novo claims recruiters for the Basel-based competitor have targeted its staff, and it’s seeking to enforce commitments including non-compete obligations that are “reasonable and necessary” to protect its business interests, the drugmaker wrote in an e-mail.

‘Intense Competition’

“There is an extremely small hemophilia community and network with a small patient pool, for which there is an intense competition” among drugmakers, according to Novo’s lawsuit. Roche has sought out employees with hemophilia experience “in light of the success” of NovoSeven and NovoEight, it said.

Roche said it doesn’t comment on pending litigation. But the former Novo employee, Laureen Temple, filed her own lawsuit the same day, accusing the Danish company of trying to slow the progress of Roche’s new medicine. She and her lawyers didn’t respond to phone calls and e-mails seeking comment on Novo’s claims.

Court records indicate that mediation efforts haven’t ended the dispute thus far.

Meanwhile, Roche’s ACE910, which received breakthrough status last year from the U.S. Food and Drug Administration, may generate almost $681 million in sales in 2021, according to estimates compiled by Bloomberg.

‘Cash Cow’

One potential benefit of ACE910 could be dosing every one or two weeks instead of every few days, the Swiss company’s pharma unit chief Daniel O’Day said Oct. 20. The therapy would also be administered as a shot instead of as an intravenous infusion into the bloodstream, making it easier for patients.

At the Danish company, Thomsen is betting that there will continue to be a market for NovoSeven, even as he acknowledges the need for treatments that are more convenient for patients.

The drugmaker faces an uphill battle, said Rudi Van den Eynde, who manages the pharmaceutical and biotech strategies at Candriam Investors Group in Belgium.

NovoSeven has been a “cash cow” for Novo, he said. “But there’s going to be heavy pressure on that cash cow, and there’s not an easy solution to that.”

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