Just what does Novo sell?

With the insulin markets commoditizing and becoming a volume business, GLP-1’s is one of the few bright spots in the diabetes drug sector. Never was this more apparent than by looking at the results Novo Nordisk released this morning and looking through the slides that accompanied the conference. Someone new to our wacky world seeing this for the first time just might get the impression that Novo is a GLP-1 company first and an insulin company second and you know what they’d be right.

Strategically Novo is well positioned in this expanding market. Victoza continues to lead the way with Ozempic® off to a good start. The issue here is that this market growing as it is will also commoditize. Should the company continue to drag their feet with the oral version of semaglutide they are in danger of missing a huge opportunity. For all the changes the company has made this let’s study the drug to death syndrome shows that the company still has a long way to go.

The question that we have is did the company wait too long before they began revamping the way they do business. Unlike their American counterparts our friends in Denmark seem to have missed the memo that the insulin markets were going from bad to worse. That they could no longer afford an army of expensive sales people or spend lavishly on R&D projects for drugs which were nothing more than copycats.

Novo is caught in a vacuum at the moment as until the oral version of semaglutide gets here they have nothing in the oral space at all. They are forced to play the discount/rebate game with payors just to maintain their formulary presence for insulin’s. Although Sanofi is still screwing up Ademlog® there will be more biosimilar short-acting insulins which will only drive prices lower in that important category.

Tresiba® is an example of the problem as it may be picking up share but it’s not generating profits. This premium product is not getting premium reimbursement and that in a nutshell is the problem Novo will face in the GLP-1 market in the not so distant future. This is why the oral version of semaglutide is critical to their future, it has blockbuster potential and no competition. So, it makes perfect sense the company would do what they always do and study the damn thing to death when they should have gotten this drug to the FDA last year.

Given the competitive dynamic and Novo’s ultra-conservative nature we don’t see them being bold making an acquisition. Unfortunately, we see them continuing their same slow methodical approach. They will, excuse the expression, take their sweet time getting the oral version of semaglutide to the FDA. The question is do they realize as good as things are in the GLP-1 category today the future is clear too as the same thing that happened to the insulin category will happen in the GLP-1 category.

With only injectable therapies Novo cannot fight Lilly who has a complete portfolio of meds. They cannot go to a payor with bundled pricing as they don’t have the entire bundle. This situation makes their slow methodical more like glacial approach to the oral version of semaglutide even more maddening. It’s as if the barn is on fire and the fireman are deciding which hose to use before they begin powering water on the flames.