Novo CEO: Expect U.S. diabetes drug prices to continue their downward spiral next year

Price-pressured Novo Nordisk expects basal insulin prices to sink even further next year—but that shouldn’t surprise investors too much, the company’s CEO says.

It’s a "continuation of the dynamics we’ve seen for some years," skipper Lars Fruergaard Jørgensen said in an interview, pointing to an expansion in the number of competitors in the insulin market. The category has gone from having two products to five, and that increased competition has forced prices down.

But the way he sees it, there’s some good news on Novo’s end. The company should be able to leverage its "broad access"—read insurance reimbursement, which it expects to be unchanged from last year when payer discussions are complete—to "mitigate pricing impact," he said.

Analysts, on the other hand? They’re not so sure. "2019 risks being a complicated year," Oddo BHF analyst Pierre Corby wrote in a Wednesday note to clients.

As a diabetes leader, Novo has been suffering alongside its rivals at the hands of payers for the last few years. Back in 2016, increased competition forced it to let 1,000 workers go, and earlier this summer, rumors swirled that the company could be plotting another similar scale-down.

For the second quarter, "growth was much slower than in Q1," Corby pointed out, noting that sales of GLP-1 blockbuster Victoza came in 7% below consensus estimates.

Novo, though, is looking ahead to a GLP-1 future starring semaglutide, a drug that’s newly on the market as once-weekly injectable Ozempic and making its way down the regulatory pathway in the form of a highly anticipated daily pill. The majority of Novo’s U.S. reps "are now going from focusing on Victoza to focusing on Ozempic," whose initial launch has so far proved "very successful," Jørgensen said.

That rollout should help sales expand by between 3% and 5% for 2018, the Danish drugmaker predicts, and other newer products will be chipping in, too. In the second quarter, GLP-1 combo product Xultophy saw sales leap 154% to DKK 720 million ($112.1 million), while Saxenda—a therapy Novo intends to back in the largely untapped, yet troublesome, obesity market—raked in DKK 1.7 billion ($264.6 million), a 35% year-over-year increase.

Overall, Novo’s second-quarter sales came to DKK 54.3 billion, while profit reached DKK 21.1 billion.

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