The transformation continues

The transformation continues

Looking at the results released by Novo Nordisk this morning and listening to the earnings call the transformation initiated by the company continues to move ahead. Like their main competitor Lilly, Novo is also adjusting to the impact of COVID. The good news is that things aren’t as bad as initially anticipated. The fact is until COVID is gone everyone is adjusting to this new normal and the new normal basically seems to be slower growth.

The results also show how important obesity products, GLP-1’s repositioned from diabetes to obesity treatments, have become to the company. With each passing quarter as obesity product sales grow it reinforces how brilliant this strategy is. As we have said many times Novo is really a GLP-1 company first and an insulin company second.

Looking at this category it also seems that after a rocky beginning sales of Rybelsus® the company’s oral GLP-1 have found solid footing. It’s still way too early to dub Rybelsus a hit as the coming quarters will determine whether the drugs rather complex dosing regimen hurts script refills. Everyone knows that when taken as prescribed when patients follow this regimen the drug works just fine. The major unknown which will be answered moving forward is whether this regimen causes patients to switch to an injectable GLP-1. Either way Novo will come out just fine as their injectable GLP-1’s continue to perform very well.

As we have noted the company like Lilly is developing their version of a Tyler which should hit US shores sometime next year. The company has also noted they plan to be agnostic when it comes interoperability when it comes to CGM.

Yet with the obesity portfolio doing so well and with such a bright future one has to wonder if Novo has an advantage that others in the space do not. Obesity has always been a difficult area as far too often patients regain the weight they have lost. Traditionally battling obesity came down to behavior modification something that works over the short term but rarely works over the long term. The fact is most patients battling obesity simply get tired of doing all the hard work not just to lose the weight but to keep the weight off.

GLP-1 while injectable is the ideal solution as it has proven benefits, does not require any behavior modification and has a simple dosing regimen. As the company highlighted today semaglutide, their once weekly GLP-1 marketed as Ozempic for diabetes and now being repositioned as treatment for obesity is showing solid results in the STEP trials. And just as GLP-1 usage increased for diabetes as the number of injections decreased we anticipate the obesity segment to follow the same path.

A few years ago many including us would have laughed at the thought of Novo becoming a major player in the obesity market. Yet that is exactly where this company is headed. Lilly has yet to aggressively move into obesity with their GLP-1 portfolio which makes this move by Novo even better. Novo can establish a firm hold on obesity which will help fend off the coming competition.

Having followed Novo for 20 plus years it’s been interesting to watch this once methodical company, often moving at glacial speed undergo this current transformation. Frankly it’s refreshing that they realized insulin, once their bread and butter franchise, is no longer the goose that lays the golden eggs. They have grabbed the bull by the horns when it comes to GLP-1 and they aren’t letting go.