Novo Nordisk 2Q16 – Diabetes and obesity portfolio up 7% YOY operationally to DKK 21.8 billion (~$3.3 billion); Victoza up 14% YOY operationally to DKK 5 billion ($752 million); GLP-1 agonist class up 29% YOY to $1.2 billion – August 5, 2016

Executive Highlights

  • Novo Nordisk’s diabetes and obesity portfolio revenues totaled DKK 21.8 billion (~$3.3 billion) in 2Q16, up 7% year-over-year (YOY) in constant currencies and 2% as reported. Growth was driven by new generation insulins, GLP-1 Victoza, and obesity drug Saxenda, (lira for obesity).
  • Following positive results from the LEADER trial (there were three weeks left in the quarter when LEADER was announced), sales of Victoza (liraglutide) grew 10% YOY as reported (14% in constant currencies) to DKK 5 billion ($752 million) while sales of the overall GLP-1 agonist class rose 29% YOY to $1.2 billion. Victoza continues to lead the class with 61% of market share by value and 52% by total volume of prescriptions.
  • Sales of the company’s new-generation insulins nearly tripled YOY as reported to DKK 983 million ($149 million), accounting for 46% of the growth of Novo Nordisk’s diabetes and obesity portfolio and growing 57% sequentially. Standalone Tresiba reported DKK 903 million ($137 million) in revenue, up 66% sequentially.
  • Notably, the next-generation basal insulin market – combined sales of Tresiba and Sanofi’s Toujeo (insulin glargine U300) – grew 52% sequentially to $296 million in 2Q16.

Novo Nordisk provided its 2Q16 update this morning in a call led by CEO Mr. Lars Sørensen. The company’s overall diabetes and obesity portfolio revenues totaled DKK 21.8 billion (~$3.3 billion) in 2Q16, up 2% as reported and up 7% year-over-year (YOY) in constant currencies. Sequentially, sales rose 4% as reported.

Before getting to the financials, big picture, we have three takeaways from the call, after thinking about Novo Nordisk. First, GLP-1 is a big deal and getting bigger, similar to our projections over the last several years (for examples, see our 2012 end of year reflections report: “…the improvements in the GLP-1 class have just begun…”, our 2015 ADA report “… we expect [the GLP-1 market] to grow at a faster rate from a higher base…,” and elsewhere …)  For the first quarter ever, Victoza is now Novo Nordisk’s top selling product! That’s not even including sales for Saxenda, which did extremely well in 2Q16 for an obesity drug (yes, you read that correctly). GLP-1 is becoming easier to take and the benefits are finally starting to sink in. Although Victoza will actually see more competition near term, particularly with Lilly’s popular IDEO-designed Trulicity, the GLP-1 pie is growing and will do so even more so with a label change reflecting cardioprotection Novo Nordisk’s next-gen semaglutide. Look out! We’re very happy for patients and doctors who will finally begin to benefit as they deserve to from GLP-1, which has now been out a decade. Our second big takeaway is that Novo Nordisk’s recently approved products are very strong products, particularly from the Tresiba franchise, and starting to fire on many cylinders despite commercial pressures. Our last takeaway may sound obvious – it’s that commercial pressures are acute, particularly the pricing pressure in the US, and look to be worse than may have been expected by industry across the board. Indeed, Novo Nordisk narrowed growth projections on the call, a rare move, presumably in response to payer moves to “sole source” and/or to reduce prices.

Table 1: 2Q16 Financial Results for Novo Nordisk’s Major Diabetes and Obesity Products


1Q16 Revenue (billions)

Year-Over-Year Reported (Operational) Growth

Sequential Reported Growth

Modern Insulins

DKK 11.8 (~$1.8)

-6% (-2%)


- NovoLog

DKK 4.9 (~$0.7)

-7% (-3%)


- NovoMix

DKK 2.7 (~$0.4)

-7% (-1%)


- Levemir

DKK 4.3 (~$0.6)

-6% (-1%)


New Generation Insulins

DKK 1.0 (~$0.1)

198% (205%)


- Tresiba

DKK 0.9(~$0.1)




DKK 5.0 (~$0.8)

10% (13%)


Human Insulin

DKK 2.7 (~$0.4)

-4% (2%)



DKK 0.4 (~$0.06)



Total Diabetes/Obesity

DKK 21.8 (~$3.3)

2% (7%)



Financial Highlights

  • Novo Nordisk’s diabetes and obesity portfolio revenues totaled DKK 21.8 billion (~$3.3 billion) in 2Q16, up 7% year-over-year (YOY) in constant currencies and 2% as reported. Sequentially, sales rose 4% as reported from DKK 21.0 billion (~$3.1 billion) in 1Q16. Though 2Q16 was profitable overall, these numbers represent a significant decline from the portfolio’s ~20%-25% YOY reported growth throughout 2015. Management attributed this to two overarching factors: increased competition and lower pricing for certain portfolio items. These effects were particularly prevalent in the US, which is by far Novo Nordisk’s largest market. Relatively somber commentary regarding these issues permeated both the prepared remarks and Q&A.
    • Management suggested that near term pricing assumptions will be “slightly more adverse” than the company’s original guidance predicted. Management shared during Q&A that Novo Nordisk had assumed prices would be broadly flat on a global basis, but developments in the US have made it clear that this will not be the case. With the majority of US formulary negotiations for 2017 completed (including those with two of the the three largest pharmacy benefits managers [PBMs]: Express Scripts, and CVS Health), management forecast that the net price of Novo Nordisk’s diabetes portfolio will be “moderately lower” in 2017 compared to 2016, predicting decreases on the order of 2%-3% to 5%-6%.
    • Novo Nordisk emphasized that it is well-equipped to handle the challenges of the increasingly competitive diabetes arena in future quarters. As a “very focused diabetes care company” compared to other large pharmaceutical companies, Novo Nordisk believes its diabetes care business will continue to thrive despite these headwinds. The company emphasized in Q&A that it has not scaled down its long-term goals in the face of the challenging pricing environment as of late, and still finds it “reasonable” to have the ambition of growing its diabetes and obesity portfolio by 10% after the next few years. Novo Nordisk’s optimism comes from: (i) a “leading insulin portfolio in a world with phenomenal need for intensified insulin therapy”; (ii) opportunities for combination therapy (e.g. Xultophy [insulin degludec/liraglutide]); and (iii) a growing GLP-1 agonist market, within which Novo Nordisk has several promising projects. As management concluded, “the need is there and we have the drugs.”
    • Management anticipates that Novo Nordisk’s broad market access  will help offset the challenging pricing environment. Novo Nordisk shared that four of the company’s flagship products – GLP-1 agonist Victoza (liraglutide), basal insulin analog Levemir (insulin detemir), next-generation basal insulin Tresiba (insulin degludec), and rapid-acting insulin analog NovoLog (insulin aspart) – have 60-90% unrestricted coverage access in the US, between commercial insurance and Medicare Part D.

Figure 1: Total Diabetes/Obesity Sales (1Q12-2Q16)

  • US sales were the primary driver of growth by geography, but they accounted for a smaller share of the company’s total operational growth in 2Q16 – only 31%, including diabetes and non-diabetes products, considerably less than in previous quarters. For context, US sales accounted for 64% of total operational growth in 1Q16, and North American sales (of which US sales comprised the lion’s share) accounted for 62%, 56%, and 57% of total operational growth in 4Q15, 3Q15, and 2Q15 respectively. The more modest contribution of US sales growth in 2Q16 reflects the increasing competition in the diabetes arena, particularly within the insulin market. The decrease in US share of growth was largely attributable to falling US insulin revenues: US sales declined YOY for both modern insulins (Novolog, NovoMix, and Levemir; -8% collectively) and human insulin (-16%). For a product like Novolog that has driven sales in the past, this was an especially weak performance. Management outlined a confluence of factors that could explain this decline, including: (i) wholesaler inventory management; (ii) United Healthcare’s formulary exclusion of Novolog; (iii) lower impact from list price increases; and (iv) phasing of rebates. Despite these pressures, US sales of Novo Nordisk’s diabetes and obesity portfolio increased 5% YOY in constant currencies to DKK 11.1 billion (~$1.7 billion). As with worldwide growth, US growth was driven by Tresiba, Victoza, and Saxenda. Victoza experienced strong growth compared to Novo Nordisk’s other products in 2Q16, rising 15% operationally in the US; this was largely driven by the underlying trend of 30% prescription volume growth in the GLP-1 agonist class.

Table 2: Whole-Company Sales and Growth by Geography


Share of Sales

Reported (Operational) Growth

Share of Operational Growth



1% (3%)




1% (3%)


International Operations


-7% (8%)




10% (19%)




11% (8%)


  • Growth remained relatively stable in Novo Nordisk’s European and Pacific markets, with growth of recently-launched products offset by declining insulin sales. In Europe, as in the US, growth was driven primarily by new generation insulins including Tresiba and Xultophy, with additional contributions from GLP-1 Victoza and human insulin. European growth was offset by a 1% decrease in modern insulin revenues (driven largely by an 8% decrease in Levemir sales), owing to increased competition in the basal insulin sector as well as payers refusal to pay a premium for Tresiba in multiple markets. The Pacific region (including Japan, Korea, Canada, and Oceania) growth was relatively stronger than Europe, from a lower base. Sales growth was driven by strong uptake of Tresiba, particularly in Japan, where, notably, it holds 39% of the basal insulin market in terms of value.
  • A substantial share of Novo Nordisk’s total company growth came from China and International Operations, where, in contrast to other markets, insulins drove sales. China now accounts for 28% of the growth of Novo Nordisk’s entire portfolio (including diabetes and non-diabetes; up from 4% in 1Q16) and 2Q16 marks the first quarter in which China’s share of growth reached double-digits. This was driven primarily by an 18% increase in sales of modern insulin – it will be interesting to see whether this can be repeated. Management noted during Q&A that the strong growth of Novo Nordisk’s International Operations division (now comprising 18% of the company’s overall portfolio growth) is often overlooked. Like in China, insulin was the largest growth driver within International Operations; management shared that modern and new generation insulins accounted for 39% of the market’s operational growth. However, Novo Nordisk explained that International Operations is beginning to see “meaningful adoption” of next-generation insulins and GLP-1 agonists and forecast that patients upgrading to more modern treatment options in these emerging markets could be an important source of revenue growth in future quarters. Management also noted that reported sales in this region were negatively impacted in 2Q16 by the depreciation of the Argentinean peso and the Venezuelan bolivar.
  • By product, growth of Novo Nordisk’s diabetes and obesity portfolio was driven by new-generation insulins (Tresiba [insulin degludec], Xultophy [insulin degludec/liraglutide], and Ryzodeg [insulin degludec/insulin aspart]), Victoza (liraglutide), and Saxenda (liraglutide 3.0 mg for obesity). As reported, combined sales of Tresiba, Xultophy, and Ryzodeg accounted for 46% of the total growth of Novo Nordisk’s diabetes and obesity portfolio in 2Q16. Victoza accounted for 33% of the growth, while “other diabetes and obesity care” (including Saxenda) accounted for 22%. Notably, this represents a decline in Victoza’s share of growth (46% in 1Q16) as revenue from Tresiba and Saxenda ramps up, but the numbers generally reflect strong performances by all three products in 2Q16. The larger share of growth attributable to new-generation insulins and to Saxenda was partly driven by Levemir’s (insulin detemir) weaker performance in 2Q16. In 1Q16, Levemir drove 21% of the overall growth of Novo Nordisk’s diabetes and obesity portfolio, whereas the product had a negative impact on growth for 2Q16 as sales declined YOY. Management cited Tresiba, Victoza, and Saxenda as especially influential growth drivers in the US, where they offset the negative financial effects of a NovoLog contract loss, the impact of list price increases, and phasing of rebates.
    • Although there have been doubts where “there is a difference” between next-generation basal insulins and traditional Lantus and Levemir by skeptics, the market would certainly imply that there is. Indeed, while some products in some markets (like GLP-1) perform better in RCT’s than they do “in real life,” the opposite seems to be the case for both Tresiba and Toujeo. Although A1c alone is not that different between the two drugs, we hear a great deal of positivity anecdotally from patients and providers about the relatively much greater stability of both new insulins compared to older “modern” insulins Levemir and Lantus.


  • Novo Nordisk’s modern insulin portfolio (Levemir [insulin detemir], NovoLog/NovoRapid [insulin aspart], and NovoMix) grew 2% YOY as reported (down 2% operationally) to DKK 11.8 billion (~$1.8 billion). Sequentially, sales grew 1% against an easy comparison of 14% revenue losses in 1Q16. Management shared during Q&A that rapid-acting insulins such as NovoLog are at “rock-bottom net pricing” in the US. This will likely continue to pose a challenge in future quarters, given Novo Nordisk’s traditionally high sales base in the US – of 2Q16’s revenues, US sales comprised 53% (~$951 million) and ex-US sales comprised 47% (~$841 million).

Figure 2: Modern Insulin Sales (1Q12-2Q16)

Table 3: Novo Nordisk Insulin Market Share


Novo Nordisk share of total insulin market

Novo Nordisk share of modern and new-generation insulin market


May 2016

May 2015

May 2016

May 2015











International Operations















Global Total





  • Pooled worldwide basal insulin sales totaled ~$2.6 billion in 2Q16, flat YOY and up 9% sequentially. This sequential increase comes against a relatively easy comparison of an 8% sequential decrease in 1Q16. By value, Novo Nordisk’s Levemir (insulin detemir) holds 25% market share. Sanofi’s Lantus (insulin glargine) leads the basal insulin market with 63% of sales, while Sanofi’s Toujeo (U300 insulin glargine) and Novo Nordisk’s Tresiba (insulin degludec) each hold 6% of the market, and Lilly/BI’s Basaglar (biosimilar insulin glargine) holds <0.1%.
  • “We’ve all anticipated that the basal segment would be impacted because of the entry of biosimilars and it’s now going to be a three-player market.” Management discussed at length the challenges facing the basal insulin market from increased competition and pricing pressures – the press release acknowledged pricing pressures quite openly and it was the major topic of the conference call. It appears that PBMs are beginning to wield formulary exclusions within the basal insulin field, as evidenced by CVS Health’s recent decision to exclude Sanofi’s Lantus (insulin glargine) and Toujeo (U300 insulin glargine) from its 2017 Standard Formulary list in favor of Lilly/BI’s biosimilar insulin glargine Basaglar, which is slated to launch in the US on December 15, 2016. Previously, formulary exclusions have significantly shifted the rapid-acting insulin landscape (with Express Scripts’ favoring Lilly’s Humalog [insulin lispro] and CVS Health favoring Novo Nordisk’s NovoLog [insulin aspart], to name a few examples), but formularies have typically not excluded any of the basal insulins. While Express Scripts’ formulary exclusion list remains unchanged since 2016, the organization has hinted that basal insulin formulary positioning may be reassessed later this year. Novo Nordisk’s recently-launched next-generation basal insulin Tresiba will likely be the preferred alternative in the aftermath of Toujeo’s exclusion. Tresiba has received positive feedback from patients and providers alike, particularly with regard to its flexible-dosing option – so has Toujeo, but the larger question for many patients has been the accessibility of  next-generation basal insulins in the first place.
    • “It is our anticipation and our expectation that if we roll forward 12 to 18 months we will see a bifurcation of the basal insulin market.” In Q&A, Novo Nordisk explained that it sees Lantus, Basaglar, and Levemir (and to a certain extent Toujeo, though it has a slightly different action profile) in one category of basal insulins, whereas it envisions Tresiba in a category of its own. Management expects that the SWITCH data will improve Tresiba’s label in coming quarters, differentiating it from the rest of the market. In fact, the company predicts that Tresiba will become the “clear leading product in the basal insulin segment” in two to three years. Time will tell whether this prediction is correct, though we are somewhat skeptical that Tresiba will be able to distinguish itself that significantly from Toujeo given the products’ fairly similar action profiles.
    • News of an FDA submission for Merck’s biosimilar insulin glargine broke just after the call ended. An approval decision for the product, MK-1293, is expected in 2Q17, assuming a standard 12-month review. We look forward to hearing Novo Nordisk’s take on how the basal insulin market will be impacted by the emergence of this new competitor.

Figure 3: Total Basal Insulin Market Sales (1Q06-2Q16)

*Note that the Tresiba revenues here represent the entire Tresiba/Xultophy/Ryzodeg portfolio. Tresiba-only sales for 2Q16 were DKK 903 million (~$137 million).

  • The overall rapid-acting insulin analog market remained flat YOY and rose 12% sequentially to ~$1.5 billion in 2Q16. All three of the major rapid-acting insulins (Lilly’s Humalog [insulin lispro], Novo Nordisk’s NovoLog/NovoRapid [insulin aspart], and Sanofi’s Apidra [insulin glulisine]), experienced sequential increases (16%, 6%, and 9% respectively, as reported) in 2Q16, a refreshing uptick after universal YOY declines in 1Q16. By value, NovoLog remains in the lead with 48% of sales in the rapid-acting insulin market. Humalog revenue was close behind with 45% of the market, and Apidra sales accounted for 7%. MannKind’s inhaled insulin Afrezza (formerly partnered with Sanofi) has not reported sales for 1Q16 or 2Q16, so it is not included in these calculations. Given its flat $2 million sales throughout 2015, it likely had a negligible impact on whole-market trends. The rapid-acting insulin market has been slowing in recent quarters due to competition from the increasing popularity of the GLP-1 agonist class as an option for basal insulin therapy intensification. Time will tell whether this trend continues; we look forward to learning whether the launch of new products like Novo Nordisk’s Faster aspart, Lilly/Adocia’s BioChaperone Lispro, and Sanofi’s biosimilar insulin lispro can revitalize the rapid-acting insulin market in future quarters, though based on data at ADA 2016 it appears that these upcoming products offer only modest improvements over current rapid-acting insulin analogs.  

Figure 4: Total Rapid-Acting Insulin Market Sales (1Q06-2Q16)

Levemir (insulin detemir)

  • Revenue for Novo Nordisk’s Levemir (insulin detemir) totaled DKK 4.3 billion (~$647 million), falling 6% YOY as reported (-1% operationally) and falling 3% sequentially. Levemir’s disappointing revenues come as a slight surprise, given that this product has been a major driver of growth in previous quarters, although presumably marketing resources have been shifted to Tresiba so some decline, particularly in a new era of extreme pricing pressures, may well have been expected. The drug has experienced double-digit sales growth (~20%-30%) each quarter for the past two years, with growth slowing down in 1Q16 (8%) and becoming negative in 2Q16. To be fair, these reported growth numbers are subject to currency developments and thus may not be a perfect indicator of performance. Furthermore, Levemir’s falling performance is partially attributable to a particularly tough comparison - the product saw 25% YOY reported growth in 2Q15.
  • In addition, management shared in 1Q16 that Tresiba’s launch has cannibalized Levemir’s sales to a greater extent than the company anticipated, a trend that appears to have continued through 2Q16. In this update, management shared that Levemir’s new-to-brand prescription (NBRx) share (20% as of June 2016) has been on a steady decline, whereas Tresiba’s share (11% as of June 2016) has been on a steady uptick. Overall, Novo Nordisk’s basal insulin portfolio holds 31% of the market by NBRx. For comparison, Lantus held 45% NBRx share as of June 2016, while Toujeo held 15%.

Figure 5: Levemir Sales (1Q12-2Q16)


  • Sales of the company’s new-generation insulins (Tresiba, Xultophy, and Ryzodeg) nearly tripled YOY as reported to DKK 983 million ($149 million). In constant currencies, YOY growth was 168% from a base of DKK 601 million ($49 million) in 2Q15. Sequentially, the new-generation insulin portfolio saw a 57% increase against a fairly tough comparison, as sales have experienced double-digit sequential growth for at least four consecutive quarters. By geography, US sales totaled DKK 461 million ($70 million), sales in Europe totaled DKK 204 million ($31 million), sales in the Pacific totaled DKK 191 million ($29 million), and sales in international operations totaled DKK 127 million ($19 million). Notably, new-generation insulins were responsible for 46% of growth in the company’s diabetes portfolio in 2Q16, up from 26% in 1Q16.

Figure 6: New-Generation Insulin Sales (1Q14-2Q16)

  • Novo Nordisk broke out sales of standalone Tresiba for the second time in 2Q16, reporting DKK 903 million ($137 million) in revenue. This marks a 66% sequential rise, up from DKK 545 million ($81 million) in 1Q16. Tresiba’s share of the basal insulin market varies widely by country depending on how it is reimbursed in comparison to Lantus, ranging from 4% in the UK to an impressive 39% in Japan. Management explained that it is “highly encouraging” for the company to see substantial basal insulin market share in Japan, where there has been significant uptake of biosimilar insulins as well (Basaglar holds 13% of the basal insulin market in Japan, according to Lilly’s 2Q16 update). Moreover, management highlighted Tresiba as a key driver of growth, both in the US and internationally. Tresiba alone accounted for an impressive 25% of the company’s overall growth in 1H16 (including non-diabetes products), and in fact contributed a larger share of growth than any other product. The company will be using lessons learned from the success of Tresiba’s launch to inform the launch of Xultophy in the US.
  • The next-generation basal insulin market – combined sales of Tresiba and Sanofi’s Toujeo (insulin glargine U300) – grew 52% sequentially to $296 million in 2Q16. By value, Tresiba held 46% of the market while Toujeo held 54%. Although standalone Tresiba sales have only been available since 1Q16, it appears that Tresiba’s market share is growing. In 1Q16, Tresiba held 42% of the next-gen insulin market while Toujeo held 58%. This growth is almost certainly due to the long-awaited launch of Tresiba in the US – ­the largest geographical diabetes market by value – at the beginning of 1Q16 and the product’s fairly rapid ramp-up since then. Management drew attention to the impressive growth of Tresiba’s US new-to-brand (NBRx) prescription share, which reached 11% in June 2016, up from 8% in April of this year. For comparison, Toujeo’s NBRx share was only slightly higher at 15%, despite launching in the US in 1Q15, a full year ahead of Tresiba. Notably, 80% of total Tresiba prescriptions in 2Q16 were for the U200 formulation, which management interpreted to mean that patients and providers appreciate the benefits of a more concentrated insulin. During Q&A, management further emphasized that progress for Tresiba within the total basal insulin market is “on track” – the company aimed to acquire 5% of the total basal insulin market within 12 months and currently holds just under 3% six months in. Toujeo benefits from being first to market. While some feel that Tresiba’s PK/PD profile, which features a long duration of stable insulin levels and allows for more flexibility in dosing, will draw patients and providers to Tresiba in the quarters to come, we believe that formulary access may be the main driver of differentiation. Overall, we believe Tresiba and Toujeo are far more similar than Tresiba vs. Levemir or Toujeo vs. Lantus, but we’ve heard several influential clinicians praise the flexible dosing offered by Tresiba. In fact, decisions like the recent one by CVS Health to exclude Toujeo from its formulary in 2017 may tilt next-generation insulin market share by value and by volume to Tresiba in the year ahead.
    • Tresiba is currently covered by >70% of commercial and Medicare Part D plans, according to management. The new-generation insulin has now been launched in 45 countries with comparable reimbursement to insulin glargine. While there was no extensive comment on CVS Health’s exclusion of Toujeo, management stated that most formulary decisions for 2017 are now finalized and expressed confidence that wide coverage of Tresiba will be maintained.
  • The company expects to submit the SWITCH 1 and 2 results for Tresiba to the FDA in 3Q16, in the hopes of a label update reflecting the hypoglycemia benefit. The SWITCH 1 and SWITCH 2 trials demonstrated a lower rate of hypoglycemia with Tresiba compared to Lantus. Neither Tresiba nor Toujeo currently has a hypoglycemia claim on its label, despite lower rates of hypoglycemia being one of the biggest selling points for next-generation basal insulins according to some patients and providers. During Q&A, management explained that a revised label would position Tresiba in a separate category of the basal insulin market and would convey to consumers that it is a premium product. Given the fairly unprecedented nature of a hypoglycemia claim, we would expect the FDA to require an Advisory Committee meeting for this indication. Novo Nordisk additionally reiterated that the DEVOTE CVOT for Tresiba is expected to complete in 4Q16 (September 2016, according to
  • Notably, management shared results from a phase 1 crossover study demonstrating that day-to-day glycemic variability was four times lower with Tresiba compared to Toujeo in patients with type 1 diabetes (n=60). Variability was measured in terms of variability in 2-hour AUC over 12 days. The company noted that glycemic variability was consistently lower with Tresiba compared to Toujeo throughout the 24-hour period but was particularly pronounced six to 18 hours after dosing. In addition, Novo Nordisk shared that Toujeo was associated with a statistically significant 30% lower potency compared to Tresiba (p<0.001) – we assume this refers to the well-characterized need for slightly higher insulin doses with Toujeo.

  • Based on these encouraging results, management announced that the company will initiate a large phase 3b head-to-head study of Tresiba compared to Toujeo in type 1 diabetes in 2017. The 26-week study will examine a variety of endpoints, including insulin dosage and hypoglycemia. Clearly, Novo Nordisk is very confident in the clinical profile of Tresiba and is willing to invest significantly in gathering clinical evidence to demonstrate its superiority over Toujeo. If positive, we imagine the results will further strengthen Tresiba’s pull among patients and providers and increase Novo Nordisk’s payer negotiation leverage. Already, Tresiba appears to have won one of the early battles in terms of next-generation basal insulin formulary positioning, given the CVS Health decision to exclude Toujeo from its formulary in 2017 while Tresiba remains included.


  • Management shared that an FDA decision for Xultophy (insulin degludec/liraglutide) is expected by September 2016. This is the most specific timeline we’ve heard for approval of the combination drug so far. Management particularly highlighted the unanimous 16-0 FDA Advisory Committee vote in favor of approval of Xultophy. Sanofi’s iGlarLixi/LixiLan (lixisenatide/insulin glargine) also won a favorable 12-2 FDA Advisory Committee vote in favor of approval; a decision on that candidate is expected by the end of August. iGlarLixi was submitted in December 2015, compared to Xultophy’s September 2015 submission, but Sanofi’s use of a Priority Review Voucher granted an expedited six-month review process for the candidate, putting it neck-and-neck with Xultophy to be the first GLP-1 agonist/basal insulin fixed-ratio combination to reach the US market.
  • The company launched Xultophy in Greece in 2Q16 but withdrew the drug from the German market. Management emphasized that launch activities for Xultophy are progressing on schedule. Management pointed out that the product has already made significant positive contributions to growth in Europe, and that it’s expected to contribute to worldwide sales growth in the second half of 2016. Together, Xultophy, Tresiba, and Ryzodeg were responsible for a 46% share of growth for Novo Nordisk Diabetes in 2Q16, though a majority of this share can likely be attributed to Tresiba since Xultophy has yet to launch officially in the US (the largest geographical diabetes market by value). Additionally, management shared that the company will rely on lessons learned through the US launch of Tresiba to inform the upcoming US launch of Xultophy.
    • Withdrawing Xultophy from the German market resulted in seemingly flat combined sales of Xultophy and Ryzodeg from 1Q16 to 2Q16. This discussion arose during Q&A, when management acknowledged that if you eliminated Tresiba sales from consideration, the new-generation insulin portfolio showed no sequential growth and pointed to the withdrawal of Xultophy in Germany as the culprit (the withdrawal was associated with a DKK 20 million [~$3 million] loss in revenue for the quarter). This withdrawal of Xultophy from the German market after an IQWiG “no additional benefit” ruling is yet another unfortunate example of restricted patient access to new therapies due to the country’s stringent and specific requirements for demonstrating benefit over existing therapies. We hope Novo Nordisk begins to break out sales for Xultophy (as it now does for Tresiba) as launches progress, which would make apparent how each product in Novo Nordisk’s reported new-generation insulin portfolio is performing individually.


  • Sales for NovoLog (insulin aspart), branded as NovoRapid in ex-US markets, totaled DKK 4.9 billion (~$742 million), down 7% YOY as reported (-3% operationally) and up 6% sequentially. This comes against a tough comparison; NovoLog saw consistent double-digit growth (15%-20%) throughout 2015 and experienced 19% YOY growth in 2Q15 (although, again, these reported growth numbers may be slightly skewed by currency developments). Management commented that another factor contributing to NovoLog’s falling revenues was NovoLog’s ongoing exclusion from United Health’s Part D coverage, which went into effect on January 1, 2016.
  • By region, NovoLog performed best in China, growing 41% in constant currencies to DKK 262 million (~$40 million). The product also performed well in International Operations, rising 4% in constant currencies to DKK 457 million (~$69 million). Sales rose 3% in constant currencies in Europe to DKK 1.1 billion (~$167 million) and rose 1% in the Pacific region to DDK 416 million (~$63 million). As was also the case in 1Q16, the US, which accounts for the majority of revenue, was the only region with negative growth: NovoLog fell 10% in constant currencies to DKK 2.7 billion (~$410 million). Management commented in Q&A that a contract loss in the US has resulted in “far fewer” patients continuing on NovoLog than anticipated. Novo Nordisk forecasts continued “modest negative” price development for this product in coming quarters.  

Figure 7: NovoLog/NovoRapid Sales (1Q12-2Q16)

Other Insulins

  • NovoMix sales fell 1% YOY in constant currencies (-7% as reported) and fell 2% sequentially to DKK 2.7 billion (~$402 million). By region, NovoMix performed best in China, were it grew 10% YOY as reported to DKK 812 million (~$123 million). Sales declined as reported in the US (-30%), Europe (-4%), the Pacific region (-4%), and in International Operations (-3%) where the demand for premix insulin is lower.

Figure 8: NovoMix Sales (1Q12-2Q16)

  • Human insulin sales rose 2% YOY in constant currencies (declined 4% as reported) to DKK 2.7 billion (~$405 million). Positive growth was driven exclusively by China, where sales increased 3% YOY to DKK 810 million (~$123 million) as reported. The portfolio saw flat or negative growth in nearly all geographic regions: notably human insulin revenues fell 18% YOY in the US and 13% YOY in the Pacific (both as reported).

Figure 9: Human Insulin Sales (1Q12-2Q16)


  • Victoza (liraglutide) sales totaled DKK 5 billion ($752 million), up 10% YOY as reported (14% in constant currencies) against a tough comparison. The drug has experienced consistent double-digit sales growth over the last year – up 16% YOY as reported in 1Q16, 22% in 4Q15, 36% in 3Q15, and 47% in 2Q15. As in past quarters, higher revenue can be partly attributed to growth for the GLP-1 agonist class overall. Sequentially, Victoza sales rose 8% against an easy comparison, as sales fell 6% in 1Q16. By geography, sales rose (i) 13% YOY as reported (15% operationally) in the US to DKK 3.5 billion ($524 million); (ii) 1% YOY as reported (3% operationally) in Europe to DKK 892 million ($135 million); (iii) 21% YOY as reported (20% operationally) in the Pacific to DKK 284 million ($43 million), (iv) 20% YOY as reported (32% operationally) in China to DKK 60 million ($9 million), and (v) 5% YOY as reported (16% operationally) for international operations to DKK 266 million ($40 million). The positive growth in all regions is an encouraging sign of increasing global penetration of GLP-1 agonists although the existing base level varies widely. See below for the trend in Victoza sales since 1Q12.

Figure 10: Victoza Sales (1Q12-2Q16)

  • The GLP-1 agonist class grew 29% YOY and 16% sequentially to $1.2 billion in 2Q16, with Victoza retaining the large majority (61%) of market share by value. As we have been forecasting, this market is growing substantially, and should surpass $5 billion in 2016. In 2Q16, Lilly’s Trulicity (dulaglutide) held 16% market share by value within the class, AZ’s Bydureon (exenatide once-weekly) held 13%, AZ’s Byetta (exenatide twice-daily) held 6%, GSK’s Tanzeum (albiglutide) held 3%, and Sanofi’s Lyxumia (lixisenatide) held 1%. We’ve seen remarkable revenue increases for this class since 4Q10, with 2Q16 showing the highest YOY growth since 3Q13 and the highest sequential growth since 4Q12. We think cardioprotection has been driving at least some of this upswing, along with better design and easier-to-use formulations. According to Novo Nordisk management, GLP-1 agonists comprised 8.7% of the total diabetes care market by value as of May 2016, up from 7.4% in May 2015. The positive LEADER results may have slightly boosted sales for both Victoza and the entire GLP-1 agonist class in 2Q16, though most of the financial quarter was over by the time LEADER data were announced. We expect that a label update for Victoza reflecting cardioprotective benefit would result in further upswing. We see additional market potential for GLP-1 agonists in the upcoming once-weekly injectable and oral formulations of Novo Nordisk’s next-generation GLP-1 agonist semaglutide, which offer greater potency and convenience. We also believe that Intarcia could meaningfully expand the GLP-1 agonist market with its ITCA 650 implantable exenatide mini-pump. Future quarters will reveal how ITCA 650 and Novo Nordisk’s injectable and oral semaglutide affect the competitive landscape for GLP-1 agonists. Intarcia has suggested that ITCA 650 will be competitively priced, at a per-day discount to current GLP-1 agonist options, while the injectable formulation of semaglutide has strong support in data from the SUSTAIN 6 trial.

Figure 11: GLP-1 Agonist Sales (1Q06-2Q16)

Table 4: GLP-1 Agonist Market Share


GLP-1 Agonist Share of Total Diabetes Market
(by value)

Victoza Share of GLP-1 Agonist Market
(by value)


May 2016

May 2015

May 2016

May 2015











International Operations















Global Totals





  • While total prescription (TRx) volume growth of the underlying GLP-1 agonist class has reached ~32% in the US, Victoza continues to lose TRx share, primarily to Trulicity. According to Novo Nordisk’s presentation slides, Victoza’s US TRx share declined to 52% in June 2016 (down from 54% in March of this year), while Trulicity’s TRx share increased to 20% as of June (up from 16% in March). The slides also report AZ’s exenatide franchise (Bydureon and Byetta) at 20% TRx share and GSK’s Tanzeum at 9%. In the US, Victoza held 59% market share by value in May 2016, down from 62% as reported by the company for February 2016 and 68% as reported by the company for May 2015. This trend holds true in almost all regions except Japan, where Victoza’s market share by value increased between May 2015 and May 2016. We see this as another indication that data from LEADER and other evidence in favor of GLP-1 agonists is enhancing sales for the class as a whole, with Victoza experiencing fairly strong YOY growth despite losing proportional market share. While some appear surprised that Victoza isn’t deriving any disproportionate benefit from the data, we believe it’s very early – for heaven’s sake, most of the quarter was already over when LEADER results were announced! We expect the franchise to do well in future quarters as the market expands. Management forecasted that in the future the GLP-1 market will be split between Novo Nordisk and Lilly – while it’s too early to count out the other existing players, indeed, relative newcomer Trulicity has experienced very strong sales growth since its arrival on the market in 4Q14, garnering praise for the convenience of its IDEO-designed once-weekly dosing and extremely patient-friendly delivery pen. We expect Novo Nordisk’s share of the GLP-1 agonist market will return to faster growth with the launch of its once-weekly injectable semaglutide and its oral formulation of semaglutide – both promise to be quite potent. That said, formidable contenders for GLP-1 market share from other companies are on the horizon as well – we expect the built-in adherence of Intarcia’s implantable exenatide mini-pump ITCA 650 will be attractive to many, especially if it is offered at a competitive price point.

Figure 12: GLP-1 Agonist TRx Shares (June 2013-June 2016)

  • Novo Nordisk will file with the FDA for an inclusion of cardiovascular (CV) data on the Victoza label in 3Q16. During Q&A, Chief Scientific Officer Dr. Mads Thomsen mentioned that the company anticipates the revised label by mid-2017. Management shared that Novo Nordisk is looking for both cardiovascular safety and efficacy claims on the Victoza label. We’re curious if the FDA will require an Advisory Committee meeting to discuss the inclusion of LEADER on Victoza’s label as it did for Lilly/BI’s submission of the EMPA-REG OUTCOME results for Jardiance (empagliflozin) and Synjardy (empagliflozin/metformin).
  • Management also shared that Victoza has met its post-approval safety requirements with the completion of a five-year prospective epidemiological cohort study comparing the safety of Victoza with five different classes of diabetes drugs. The study found no increased safety risk with Victoza, including, notably, no increased risk of pancreatitis or pancreatic cancer. Victoza treatment was also associated with a lower risk of macrovascular and microvascular complications. A recent retrospective observational study published in JAMA similarly found no increased risk of pancreatitis with incretin usage, leading UCLA’s Dr. Peter Butler to advocate for the use of GLP-1 agonists as a potential second-line therapy for some patients, in a major turnaround from the many years in which he defended the hypothesis of a potential link between incretins and pancreatitis. Given that even Dr. Butler finds the current evidence on pancreatitis and incretins sufficiently reassuring, we assume the controversy can finally largely be put to rest. Clinical evidence increasingly suggests a very positive benefit/risk profile for Victoza in particular, with strong A1c-lowering efficacy, low risk of hypoglycemia, weight loss, and now cardioprotective potential. We expect the GLP-1 agonist class will become increasingly popular as next-generation GLP-1 agonists with innovative dosing arrive on the market (such as Novo Nordisk’s injectable and oral semaglutide formulations and Intarcia’s implantable exenatide mini-pump ITCA 650) and they become easier to prescribe and take. Although we would be disappointed if any lingering controversy over an increased risk of pancreatitis created a significant hurdle toward adoption of this class among patients, providers, and payers, we wouldn’t be surprised if this “baggage” carries on a long time – Dr. Butler made headlines in the New York Times when casting doubt on GLP-1 safety, but we doubt his new views that he was incorrect will prompt many headlines.


  • Saxenda (liraglutide 3.0 mg for obesity) was uniquely successful in the obesity drug landscape in 2Q16, reaching DKK 376 million ($57 million) in revenue, up from DKK 243 million ($36 million) in 1Q16. This is only the second quarter for which the company has broken out Saxenda sales, but YOY growth for Novo Nordisk’s “other diabetes and obesity care” reached 29% as reported (22% operationally), in large part due to Saxenda. Sequentially, sales of Saxenda alone grew 55%, a strong performance for a recently launched obesity product by any definition, particularly given the substantial challenges that obesity drugs face, including low reimbursement and reluctance from healthcare providers.
  • The overall obesity market more than doubled YOY to $91 million in 2Q16, driven entirely by the growth of Saxenda, which held a very impressive 63% market share by value. For comparison, Vivus’ Qsymia (phentermine/topiramate extended-release) declined 9% YOY to $13 million in 2Q16, Orexigen’s Contrave (naltrexone/bupropion extended-release) declined 19% YOY to $13 million (as announced in Takeda’s 2Q16 update), and Arena/Esai’s Belviq (lorcaserin) declined 25% YOY to $9 million. Zafgen had to terminate its most advanced therapeutic candidate, obesity drug beloranib, in 2Q16 due to safety concerns. Excluding Saxenda, the obesity market fell 20% YOY. In terms of market share, Qsymia held 14% of the market in 2Q16 while Contrave held 13% and Belviq held 10%. Management was optimistic about obesity pharmacotherapies as a whole during the update, pointing out that Novo Nordisk sees potential for Saxenda in the obesity arena.
  • Saxenda experienced the greatest YOY growth of any obesity drug in total volume of prescriptions (TRx), according to Novo Nordisk’s presentation slides. TRx for Saxenda reached 16,000 in June 2016. While the drug still lags behind competitors in number of prescriptions, with 10% obesity market share by volume, it’s playing rapid catch up. TRx for Contrave was 62,000 in June 2016, accounting for 40% of the market by volume. TRx for Belviq declined YOY to 40,000, holding 26% of the market by volume, and TRx for Qsymia declined YOY to 37,000, holding 24% of the market by volume. Given the high list price of Saxenda (priced by concentration of liraglutide at $1,068/month, compared to ~$200-$300/month for the other agents) we’re not surprised to see record-high revenue despite a lower volume of prescriptions. We expect the efficacy and potentially the familiarity of liraglutide among those within the diabetes field is also driving increased prescription volume and the drug will continue to capture a growing share of the obesity market by volume in future quarters.

Figure 13: Total Obesity Market Sales (1Q13-2Q16)

Figure 14: Obesity Drug TRx Volume (June 2015-June 2016)

  • In local currencies, Saxenda was responsible for 15% of overall company growth in 1H16. Management cited Saxenda sales as a key driver of US growth in particular, and noted that the drug has now launched in seven countries (adding Germany, Belgium, Brazil, and Israel to the list). The company’s overall US sales and distribution costs increased 5% YOY in local currencies because of the continued roll out of Saxenda, among other factors. Ongoing promotional efforts in the US will hopefully lead to strong performance by Saxenda in future quarters as well, especially as these initiatives work to decrease patient/provider reluctance to try a pharmacotherapy for obesity alongside diet and exercise.

Pipeline Highlights


  • Management shared that the full results of SUSTAIN 6 will be presented at EASD 2016 in Munich, Germany in September. The results presentation is slated for the last day of the conference, Friday, September 16, at 8:30 am in Meyerhof Hall. In the 2Q16 update, management reiterated the topline SUSTAIN 6 results, highlighting the finding of a statistically significant reduction in MACE events for semaglutide despite the relatively small size and short duration of treatment of the trial in comparison to LEADER or other CVOTs. Notably, however, management acknowledged that, due to the small size of SUSTAIN 6, the results are not as rigorous as those of the LEADER trial and that the company will conduct a larger post-approval cardiovascular outcomes trial for semaglutide. Indeed, the great Dr. Jay Skyler (University of Miami, FL) has expressed surprise that SUSTAIN 6 was able to claim a statistically significant reduction in cardiovascular risk with just 250 events. The company continued to characterize semaglutide as a more efficacious drug than Victoza and expressed confidence that semaglutide will demonstrate an even greater anti-atherosclerotic effect than Victoza did in the LEADER trial. Novo Nordisk also reaffirmed that it expects to submit once-weekly injectable semaglutide in the US and EU in 4Q16 – assuming a standard 12-month review process from submission, we expect semaglutide will be available toward the end of 2017.
  • Novo Nordisk continued to express strong confidence in the clinical profile of semaglutide. In Q&A, management suggested multiple times that semaglutide will be a best-in-class product and suggested that patients seeking greater efficacy would choose semaglutide while other patients preferring convenience might choose Victoza (though some could argue that semaglutide is more convenient as a once-weekly injection, we expect management meant that Victoza will be more familiar and perhaps more affordable). The company also shared that semaglutide’s patent is expected to expire in 2031, compared to Victoza’s expiration of 2023, which allows plenty of time for semaglutide sales to ramp up before biosimilar versions of Victoza potentially arrive on the market – we do hope that this does not dissuade companies from developing cheaper biosimilars that could expand access to the currently very expensive GLP-1 agonist class. Management also doubled down on the value it sees in R&D spending on trials such as a longer CVOT for semaglutide and suggested that even if data demonstrating cardioprotection doesn’t translate into higher net prices, it should greatly aid in access negotiations.

Oral GLP-1 Agonists and Insulins

  • The company very notably shared that a phase 2a trial of oral insulin OI338GT (NN1953) has completed with “generally encouraging results.” We learned updates on the progress of this trial in Novo Nordisk’s 4Q15 update and the trial was completed during the first half of 2016. In its 2Q16 update, management shared that the trial (n=50) demonstrated a 2.5 mmol/l (45 mg/dl) fasting plasma glucose reduction with both the oral insulin OI338GT and the Lantus comparator after eight weeks of treatment. In Q&A, management noted that the decision to advance this oral insulin into phase 3 is even more complicated than the decision to advance oral semaglutide into phase 3 last year. The company suggested that the potency of this insulin molecule is lower than that of semaglutide, noting that the oral formulation of the insulin requires much more peptide to achieve sufficient bioavailability than the oral semaglutide formulation. Even so, it took a ~280x dose of oral semaglutide to match the efficacy of injectable semaglutide in phase 2 trials, which led some to cast doubt on whether Novo Nordisk would advance the candidate into phase 3.
    • Management also pointed out that Novo Nordisk will have to carefully consider the target patient profile for oral insulin in its decision to advance into phase 3, particularly in terms of how the oral insulin would be positioned relative to oral semaglutide and Tresiba. The company briefly suggested that perhaps oral insulin could provide an opportunity for earlier use of insulin in the diabetes treatment algorithm. This may be a promising approach as there is some clinical evidence of the benefits of early insulin therapy in producing sustained glucose-lowering or even diabetes remission. On the other hand, the process of titrating a tablet formulation of insulin and the level of hypoglycemia risk with an oral insulin remain open questions for us. Oral insulin on the whole is clearly a much more complex proposition than oral GLP-1 agonists, though we expect Novo Nordisk is the company that is most likely to be successful in this area. Biocon is the other main contender in this field; it shared in its 1Q16 update that it expects to initiate phase 2 trials for oral insulin Insulin Tregopil in the next year. Oramed also recently reported full results from its phase 2 trial of its oral insulin ORMD-0801, but the company has not been historically confidence-inspiring.
  • Novo Nordisk has discontinued development of its other phase 1 oral insulin (OI320GT/NN1957). The phase 1 oral insulin was likely terminated due to a decision by Novo Nordisk to focus on its resources on its phase 2 oral insulin candidate.

Faster-Acting Insulin Aspart

  • An FDA decision for Xultophy and Faster aspart is expected by October 2016. This is the most specific timeline we’ve heard for the approval of this product thus far. A European CHMP decision for faster-acting aspart is also expected in 4Q16. Faster aspart will be the first “next-generation” rapid-acting insulin analog to reach the market. Full phase 3 results from the Onset 1, Onset 2, and Onset 3 trials presented at ADA 2016 demonstrated significant but modest improvements in postprandial glucose control, non-inferior or very modestly superior A1c reductions, and similar hypoglycemia with Faster aspart compared to NovoLog or basal insulin alone.

Other Pipeline Candidates

  • Novo Nordisk has discontinued development of its phase 2 GLP-1/GIP dual agonist NN9709 due to “portfolio considerations.” Management shared that a phase 2a proof-of-concept study for GLP-1/GIP dual agonist NN9709 met its primary endpoint for glycemic efficacy but the development program was terminated nonetheless. We assume the candidate did not quite meet Novo Nordisk’s internal bar for advancement – a very high standard we’re sure given the increasingly high bar for new diabetes drugs and previous comments from Novo Nordisk executives emphasizing the need for new diabetes drugs to demonstrate the potential for market differentiation through additional cardioprotective or hepatic benefits. Both Lilly and Sanofi currently have phase 1 GLP-1/GIP candidates in their phase 1 pipelines and we’re eager to get a better sense of how candidates in this class fare in clinical trials.
  • Nonetheless, Novo Nordisk maintains a robust clinical development pipeline, including a phase 2 anti-IL 21/liraglutide treatment (NN9828) for beta cell preservation in newly-diagnosed type 1 diabetes, a phase 2 program for semaglutide in obesity, a phase 1 once-weekly injectable basal insulin (LAI287/NN1436), a phase 1 liver-preferential prandial insulin analog (PI406/NN1406), a phase 1 gut hormone PYY 1562 (NN9747/8) for diabetes and obesity, a phase 1 long-acting amylin analog AM833 (NN9838) for obesity, and a phase 1 glucagon analog G530L (NN9030) for obesity.

Questions and Answers

Q: You've estimated low to mid price decreases following the US pricing guidance for 2017. That seems relatively wide range. Could you give us more detail on that?

A: I think the understanding of low to mid would probably be in the 2%-3% to 5%-6% range. The announcements by Express Scripts and CVS/Caremark were released on Monday, so this was our first opportunity to comment on the pricing situation in the US. This is the price impact we see on the entire portfolio of products in the US, and it is both an effect of increased pricing pressure in basal insulin but also in growth hormone. Of course, there are also a number of swing factors. You get into discussions about what the mix of our product sales is going to be next year, what the final negotiations will be on the plans that have not yet been closed out for 2016, how employers are going to sign off to the various plans presented by the PBMs, what list prices will be, etc.

Q: I think we've all been anticipating some price pressure on the basal insulin market, but I would like to hear your views on whether you still have the ability to raise prices on Victoza and NovoLog where we haven't seen that much price pressure and the competitive dynamics may be easier. Do you still think you can raise the list price and then give some of that back on rebates for those two products?

A: It is correct that we have all anticipated that the basal segment would be impacted because of the entry of generics and because it's going to be a three-player market in the future, with the concentration that we've seen on the buy-side. This year we have seen a negative impact on NovoLog and NovoMix in particular, largely because of contract loss that we have had in the US, which has resulted in a very strict control on behalf of the PBM. We have ended up with a far fewer patients continuing on our products than we had anticipated, and that gives the net negative price component for us.

For NovoLog and for the pre-mix segment, we are anticipating to continue to see modest negative price development. We hope and believe that there will be a possibility for some positive impact from the GLP-1 segment given that this is largely becoming a competition between Trulicity and ourselves. But this is, of course, still uncertain as we don't know exactly what the competition is going to do in the GLP -1 segment. Our anticipation would be that there might be still some pricing power in the very strong franchise we have with Victoza. But all of this has been factored into the guidance for 2017.

Q: Express Scripts suggested in the commentary that the position of basal insulins was subject to review based on the impact of biosimilar. So, I just wanted to get an idea of how final the situation when Express Scripts ceases as it relates to Novo.

A: It is our anticipation and our expectation that if we roll forward to 12 or 18 months we will see a bifurcation of the basal market. So, one group of products will be viewed as similar: Lantus, Basaglar, and Levemir. (It is questionable whether Toujeo will fall into that category; it is slightly different in terms of its potency and its action profile.) We expect that the SWITCH data will improve the label of Tresiba, and we will then find Tresiba in a separate category of the basal market. This will be our approach to any review that is taking place by the big payers.

Q: On Ryzodeg and Xultophy, if I back out the sales of placebo from next generation insulins and I get sales of DKK 81 million in Q1 and DKK 80 million in Q2. Was is responsible for this seemingly low growth? One would have expected at this point in the early stage of the launch that the sequential growth would be higher than that.

A: It's reflecting the fact that we had to decide to withdraw Xultophy from the German market. Hence there was a substantial decline during 2Q16 in the sale of Xultophy (DKK 20 million), which impacted the overall numbers.

Q: Could you comment on whether you've seen any differentiation in the pricing for 2017 between Levemir and Tresiba?

A: In certain channels we are able to distinguish between Levemir and Tresiba, Tresiba being a higher-priced product and therefore taking home a higher net than Levemir. In other channels, we have to be more aggressive to get Tresiba onto the market, and there would be then in some channels no premium to Levemir.

Q: Your midterm guidance implied flat global diabetes pricing. Does that aspiration for still stand, and if not, how is the mix of pricing versus pipeline contribution in the midterm guidance changing?

On a global basis, we assumed that prices will be broadly flat. With the development we've subsequently seen for the US, it is apparent that the pricing assumption near term for is going to be slightly more adverse than what we had in our guidance, at least for the US. On the other hand, the labels that we can operate under for core products like Victoza and Tresiba are slightly better: the changed labels for Tresiba and Victoza are anticipated to happen mid-2017 based on the filing of data both of the SWITCH data and the LEADER trial. In the long-term financial guidance we provided in early February we noted that we had not assumed a positive impact from the LEADER trial and we didn't have full knowledge of the outcome of the SWITCH trial when we provided that guidance.

We strive towards our long-term targets and haven’t in any way revised them. We still believe that they are ambitious and relevant goals for Novo Nordisk to pursue based on a market-leading portfolio of diabetes care product and a diabetes care segment where we continue to see substantial increases in the number of diabetic patients around the world. It's a good opportunity for Novo Nordisk to pursue, but clearly in a more adverse US pricing environment.

Q: With the recent move by CVS excluding Lantus, I wonder what Sanofi might do when they come in with a short-acting insulin in 2017. They will be very intent on obtaining market share on that, so when we think about 2018 and 2019, should we think about the insulin that’s taking another step down more broadly?

A: It is correct that in the arms race between Lilly and Sanofi, Sanofi has stated that it intends to further develop a short-acting insulin for the US market which will be a biosimilar of Humalog. You'll have to ask Sanofi what they intend to do in terms of price spot. In shorter-acting modern insulins in the US, we’re looking at rock-bottom net pricing. It would be rather difficult, I think, to anticipate that Sanofi would be going much lower. A couple of years ago we saw very, very aggressive pricing impact in the short-acting segment, but less so recently in 2016 and into 2017. I am not of the expectation that this would further significantly erode the short-acting price picture of modern insulins. One could also argue that Sanofi already has a fast-acting insulin that they could decide to apply an aggressive pricing strategy to in the US if they wanted to. Although I think that's probably less of a concern.

In terms of Tresiba’s progress, I’d like to revert to what we set as our ambition level when we initiated the launch in the US at the start of this year – we said we would aim to acquire 5% of the basal market within a 12-month period. The latest script data indicates that we are at 2.9% or so. I think we are well on track to achieve the broad positioning of Tresiba in the market. We're quite comfortable with the progress.

Q: Tresiba’s ability to differentiate has been strong in some accounts, but your penetration has been rather low in terms of the overall US market. Should we think about this product more right now as a product that will be targeting patients who have a high need to prevent hypoglycemia? Or do you still think the marketing strategy of looking for this as the premium applied-for-everybody product in the United States is still relevant?

A: We believe that Tresiba is a premium product that should be broadly applied for all patients because it has a unique long duration of action, it has unique flexibility in terms of dosing anytime during the day, and it has been shown to significantly lowers hypoglycemia. This is relevant for many, many patients; therefore, in our view, it should be more broadly applied.

Q: If you could talk about the head-to-head with Toujeo – what endpoints are you trying to prove?

A: The comparison of glargine U300 vs. degludec up until now shows what we would’ve hoped for and expected, namely a low degree of variability in the degludec profile. In-patient, day-to-day variability was several-fold higher for insulin glargine U300. That tells us that if we do a large trial and take into account eating consumption, we would expect to see higher potency of the insulin degludec molecule and reductions in hypoglycemia during the maintenance phase. When you use a sub-potent molecule in the titration phase, the algorithm only allows you to go up or down by two units, or 1.5 units in the case of glargine U300. So, we’ll be monitoring during the steady state period, which is everything beyond the first few weeks of treatment. It’ll be a study beyond 26 weeks, with around 2,000 patients, monitoring the overall clinical profile with the aim of achieving superiority for Tresiba.

Q: What are the decision points that you’re waiting for on oral insulin?

A: When we started on semaglutide in February of last year, we went through several subsequent updates before management made the go-ahead decision for phase 3. Things are slightly more complicated here, because in absolute potency terms, you need a lot more oral insulin than you do oral semaglutide (which I believe is one of the most potent biological molecules in the realm of diabetes). So, we have that consideration. We also have to consider the target product profile. How will this stack up against oral GLP-1? Which segment should we use it for? Is it a way to get early insulinization? All in all, a lot of considerations that management will have to confront in the time to come, and then we’ll get back to you in the second half of the year.

Q: Are you not now big pharma given your growth level vs. what you’re spending on R&D? Looking forward, what do you need in order to continue to grow within big pharma?

A: We are, indeed, becoming a big company. But we think our business model is slightly different in that we see ourselves as a very focused diabetes care company with a portfolio of interesting drugs in other areas of biopharmaceuticals. We have some headwinds in the biopharmaceutical area, so growth in future years will have to come from our diabetes business. This includes a leading portfolio of insulins in a world with phenomenal need for intensified insulin therapy. We will be rejuvenating our short-acting portfolio with Ryzodeg. We had great sales for Tresiba. In two-to-three years, we think it will become clear that we have the leading product in the basal insulin segment. And we also have combos. We can combine Victoza with basal insulins – in that class, we have the best-in-class drug with Xultophy. Increasingly, we’ll see more share of growth coming from the GLP-1 segment. We see very strong script growth. We see relatively stable pricing and in some instances, opportunities to raise net prices. By 2018 or 2019, we’ll have the best daily injectable GLP-1. We’ll also have the best weekly injectable GLP-1 based on the current results we’re seeing for semaglutide. And we even have, right in front of introduction, an oral version of GLP-1 that will open up a whole new field for us. Finally, if we stretch our definition a little bit to include obesity and prediabetes, then I think it’s reasonable for us to have the ambition of growing our diabetes portfolio 10%. We see the need is there. And we have the new drugs.

Q: Do you see semaglutide cannibalizing Victoza as patients switch over there, or do you see it helping grow the market further? Will you be able to recover lost GLP-1 market share with semaglutide?

A: It is our intention to expand the market. We think that GLP-1 agonists ought to be used by far more diabetes patients than are currently using the products. In the future, there will be options for daily or weekly products. We will have the best-in-class in both of these segments. We would like to create a situation with formulary access which gives choice to patients and providers. Then, if you go for efficacy, you would probably end up choosing the weekly semaglutide. If you go for the very convenient once-daily injection, you would end up choosing Victoza. In reality, I think the GLP-1 market in the future will be divided between Eli Lilly and ourselves. We’ve elected to capitalize on semaglutide’s high efficacy, using it as a lever into new areas such as non-alcoholic steatohepatitis (NASH), next-generation obesity compounds, and so on and so forth.

Q: Can you talk a little bit about the long-term gross margin trajectory, beyond 2017? Especially taking into consideration challenges to formulary access, the introduction of biosimilar insulins, things like that.

A: One thing kind of lacking in your view about our evolving financials is the constant upgrade we see within our international operations business. In these regions, we continue to see a high proportion of sales coming from human insulin, which is gradually being upgraded to a more advanced, modern insulin product. We’re also beginning to see meaningful adoption of next-generation products and GLP-1s. So, things aren’t solely dependent on the US. But if pricing pressure continues to evolve in the insulin space in the US, there is drag. But we have a positive mix effect coming from the new portfolio, and from the upgrade of patients in emerging markets. It’s going to be a little play between those two factors that’s going to affect our evolving financials over the years.

Q: Can you remind us when Victoza will lose its exclusivity in the US? How do you envision a biosimilar introduction might impact the GLP-1 market at that time?

A: The first to expire will be liraglutide in the US in the first half of 2023. For other compounds, including insulin degludec, it’s 2029. For semaglutide it’s 2031, and for oral semaglutide, it’s potentially 2035. As a company, we’re clearly invested in getting the most efficacious product to be mainstream before patent expiration happens. We’ll have about a five-year period between the launch of semaglutide and the patent expiry of Victoza. The introduction of GLP-1 biosimilars also offers opportunity to expand the market significantly, especially for GLP-1s in emerging markets, where we believe there is huge need. Due to price and other considerations, GLP-1 usage is currently way too low. We’re going to end up with a portfolio like we know it in insulin – with premium products and with more generalized products which enable us to expand significantly the usage of GLP-1s globally.

Q: Given the declining pricing environment in the US, can you describe your commitment to continue spending on R&D materially ahead of your diabetes peers? If Victoza doesn’t get reimbursed by Express Scripts, does it make sense to invest in a cardiovascular landmark trial for semaglutide?

A: On spending for R&D – we are of the belief that innovation is the future. We will spend ahead of the curve to stay in the lead in terms of being able to introduce innovation. I’m of the opinion that CV benefits demonstrated for Victoza will eventually translate into data on the label, and I think such a label update will be meaningful in our discussion about formulary access. I don’t necessarily say it will have an impact on price, but it will certainly affect our ability to get access in the future. The two biggest cost drivers to the health burden of diabetes on society are cardiovascular problems – two-thirds die because of that – and kidney problems. It appears as if liraglutide and semaglutide are both doing good things on both of these major diabetic complications. From a health economic standpoint, it is absolutely important to document on the label data that is unique to your product for CV and kidney benefits. We’re actually spending ~12% on R&D, so many people would argue that we have a relatively modest spend range, or at least an appropriate spend range.

Q: What have you learned from launching Tresiba in the US that might help you fine-tune the Xultophy launch over the next six to 12 months?

A: The launch of Tresiba in the US has confirmed that our approach to launching works. Through feedback, we’ve learned that we could be a little more articulate about coverage so that it’s clear to providers for which patients they can prescribe the product. On that front, we may need to be more vocal so that people are well-informed. We’re dealing with two products that are already very well covered – 71% in the US for Tresiba and 86% for Victoza. Hopefully we can communicate this coverage very clearly to achieve an efficient launch for Xultophy ­– promoting where there’s access for patients and waiting in places that don’t yet have access. Given the good feedback on both individual components, we’re confident we’ll be able to generate excitement around Xultophy.


-- by Abigail Dove, Helen Gao, Payal Marathe, and Kelly Close