Novo Nordisk basks in diabetes top spot

As rival drugs fall by the wayside, Novo Nordisk (NOVOb.CO) is confident Victoza, its new diabetes drug, will be a megaproduct, with possible sales of some $2.5 billion a year, its chief executive said on Tuesday.

CEO Lars Sorensen said Victoza was set to become the top seller in the GLP-1 drug class by mid-2011 in the United States, overtaking Amylin Pharmaceuticals Inc’s (AMLN.O) and Eli Lilly and Co’s (LLY.N) Byetta.

Novo said last month it expected annual Victoza sales to reach $1 billion by 2012—some two years earlier than initially expected—but it has until now been cautious about giving longer-term forecasts.

But asked about analysts’ expectations that sales might hit $2.5 billion later this decade, Sorensen told the Reuters Health Summit: “I think that’s within reach.”

The final market potential will hinge on new uses for once-daily Victoza, which could be co-administered with insulin and possibly prescribed for people with pre-diabetes.

“We don’t want to restrict ourselves to any peak number,” Sorensen said. “If these come to fruition, it will be significantly larger than we have predicted.”

New once-weekly GLP-1 drugs are in development, but Sorensen said he no longer saw Amylin and Lilly’s Bydureon as the key competitor, following a rebuff for Bydureon from U.S. regulators.

Roche Holding AG (ROG.VX) also suffered a setback for another rival to Victoza earlier this year.

GlaxoSmithKline Plc’s (GSK.L) Syncria and Lilly’s in-house product, GLP-Fc, are now viewed as the main competition, although those new drugs will not reach the market before 2013 or 2014, he noted.

PRIME SPOT

Thanks to its dominance in diabetes—a disease that is reaching epidemic proportions worldwide—Novo finds itself in a prime spot in the global healthcare market at a time when many rivals are struggling with falling sales of key products.

Its market capitalization, at more than $51 billion, has overtaken that of better-known drug companies like Lilly and Bristol-Myers Squibb Co (BMY.N) and is now approaching that of the world’s largest biotechnology company, Amgen Inc (AMGN.O).

Whether it can sustain its premium, with the shares trading on 20 times forecast earnings against 10 or less for some drug companies, depends on keeping its pole position in diabetes in the face of competition from existing and new players.

Investors took temporary fright last month when Pfizer Inc (PFE.N), the world’s largest drugs group, joined forces with India’s Biocon Ltd (BION.BO) in a deal to make cheap so-called biosimilar copies of insulin, Novo’s mainstay business.

The deal crystallized the threat of biosimilars, but Sorensen said scale was key to making insulin and it would take years—and billions of dollars in investment—for rivals to match Novo, which controls 52 percent of the global insulin market.

“When you talk about insulin, this is industrial-scale manufacturing—the size of big breweries, not lab scale,” he said. “For companies to be successful here they need to be very large and they need to make very large investments, which it is going to take them a very long time to recover.”

Novo’s recent success in the world’s largest tender for human insulin, held by Brazil, showed its low-cost base, he added.

“I would predict that we would be able to hang on to a market share of the size we are talking about at the moment, in spite of the wishes of generic manufacturers to get into the market,” he said.

Novo is also pushing up the value chain by developing improved modern insulins, such as the new ultra long-acting product degludec, which it hopes to launch in 2013.

Sorensen said he was confident degludec would show a clear edge over Sanofi-Aventis SA’s (SASY.PA) Lantus in clinical trials, with data expected early next year.

Novo is feeling no need to diversify from its focus on diabetes and sees no obvious acquisition targets. Its CEO said it would continue to return surplus cash to investors through dividends and share buybacks.

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By Ben Hirschler